Furniture etailers sit pretty on rising sales
MUMBAI: After books, garments and consumer electronics, now furniture sales too are growing exponentially in the online retail space, with specialist startups FabFurnish, Pepperfry and Urban Ladder leading the push while big players Flipkart and Amazon are yet to enter this vertical.
Online players account for just about 1% of the Indian furniture retail market, which is expected to double to about Rs 1.2 lakh crore in three years on the back of increased supply of newer residential and commercial real estate in the country. But with new-age urban consumers increasingly opening up to the idea of shopping for their teakwood dining table or book-shelf on the internet, ecommerce companies in the country see huge growth potential.
Gurgaon-based FabFurnish has set gross sales target of Rs 300 crore by the end of this year, up from Rs 200 crore at the end of last year, while Mumbai-based Pepperfry targets Rs 500 crore in gross sales in the next 15 months.
Mehul Aggarwal, co-founder and MD of FabFurnish, said the company plans to have 8-10 stores by end of 2015 and expand to eight more cities from four at present. Launched in March 2012, FabFurnish operates in a hybrid retail model with franchisees operating brick-and-mortal outlets.
"In the long run, marketplace is a great model to follow in this business. But in the short term, it is better to follow a hybrid and controlled marketplace where we have a strict quality check on all items that get delivered to our warehouse," said Agrawal, an IIM-Calcutta alumnus.
The 150-people-strong company is backed by Rocket Internet, one of the largest e-commerce focused venture capital firms in the world. While furniture e-commerce players enjoy high net margin rates of 20% to 25%, large horizontal internet retailers have not yet made a mark in this market.
Among the big players, only Snapdeal has launched a furniture category. Flipkart has openly said it is open to buyouts in such verticals, provided the team matches its culture, while Amazon is yet to open a furniture vertical in India. But specialist retailers don't see much threat from big players. "It is a very difficult space. Companies need to spend 24-36 months to perfect logistics systems and carriers, because you cannot carry a dining table on a scooter," said Niren Shah, MD at Norwest Venture Partners India, which has invested in Pepperfry.
"It's challenging for horizontals to enter into the space," he added.
Pepperfry, cofounded by former eBay India head Ambareesh Murty in 2011, follows a 100% marketplace model without any offline presence. Agrawal of FabFurnish said, "In a horizontal play, furniture will be just another vertical. The seriousness needed in terms of design and product display will get diluted."
Managing logistics, too, is a challenge. Transporting just one readymade large wooden bed and table from Delhi to Bangalore and back under free returns policy could cost an e-tailer more than the price of goods. Ashish Goel, founder and CEO of Urban Ladder, which raised Rs 120 crore from a group of investors led by Hong Kong-based SteadView Capital in June, said, "We e-tailers have to work to build the right products and also provide vendors with design support."
He said Urban Ladder is growing 15% to 17% month on month.
"It's too early in furniture e-tailing to take market share from each other as everyone is still creating the space," Goel said.
MUMBAI: After books, garments and consumer electronics, now furniture sales too are growing exponentially in the online retail space, with specialist startups FabFurnish, Pepperfry and Urban Ladder leading the push while big players Flipkart and Amazon are yet to enter this vertical.
Online players account for just about 1% of the Indian furniture retail market, which is expected to double to about Rs 1.2 lakh crore in three years on the back of increased supply of newer residential and commercial real estate in the country. But with new-age urban consumers increasingly opening up to the idea of shopping for their teakwood dining table or book-shelf on the internet, ecommerce companies in the country see huge growth potential.
Gurgaon-based FabFurnish has set gross sales target of Rs 300 crore by the end of this year, up from Rs 200 crore at the end of last year, while Mumbai-based Pepperfry targets Rs 500 crore in gross sales in the next 15 months.
Mehul Aggarwal, co-founder and MD of FabFurnish, said the company plans to have 8-10 stores by end of 2015 and expand to eight more cities from four at present. Launched in March 2012, FabFurnish operates in a hybrid retail model with franchisees operating brick-and-mortal outlets.
"In the long run, marketplace is a great model to follow in this business. But in the short term, it is better to follow a hybrid and controlled marketplace where we have a strict quality check on all items that get delivered to our warehouse," said Agrawal, an IIM-Calcutta alumnus.
The 150-people-strong company is backed by Rocket Internet, one of the largest e-commerce focused venture capital firms in the world. While furniture e-commerce players enjoy high net margin rates of 20% to 25%, large horizontal internet retailers have not yet made a mark in this market.
Among the big players, only Snapdeal has launched a furniture category. Flipkart has openly said it is open to buyouts in such verticals, provided the team matches its culture, while Amazon is yet to open a furniture vertical in India. But specialist retailers don't see much threat from big players. "It is a very difficult space. Companies need to spend 24-36 months to perfect logistics systems and carriers, because you cannot carry a dining table on a scooter," said Niren Shah, MD at Norwest Venture Partners India, which has invested in Pepperfry.
"It's challenging for horizontals to enter into the space," he added.
Pepperfry, cofounded by former eBay India head Ambareesh Murty in 2011, follows a 100% marketplace model without any offline presence. Agrawal of FabFurnish said, "In a horizontal play, furniture will be just another vertical. The seriousness needed in terms of design and product display will get diluted."
Managing logistics, too, is a challenge. Transporting just one readymade large wooden bed and table from Delhi to Bangalore and back under free returns policy could cost an e-tailer more than the price of goods. Ashish Goel, founder and CEO of Urban Ladder, which raised Rs 120 crore from a group of investors led by Hong Kong-based SteadView Capital in June, said, "We e-tailers have to work to build the right products and also provide vendors with design support."
He said Urban Ladder is growing 15% to 17% month on month.
"It's too early in furniture e-tailing to take market share from each other as everyone is still creating the space," Goel said.
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