Nailing it

Vishnu Kumar Trivedi grows paddy, potato and menthol mint on his farm in Barabanki, on the outskirts of Lucknow. His sprawling ancestral home has a hand pump, tractor, motorcycle, car, television, refrigerator and all other trappings of a modern, well-to-do farmer’s life. Interestingly, the sheesham wood dining table, teakwood bar cabinet, two multipurpose TV consoles and a 12-seater sofa were procured from furniture brands across India. No, Trivedi didn’t travel to Jaipur or Kochi to source any of them. His daughter logged on to Pepperfry.com and the family chose the designs.

Bangalore resident Shreya Vatsa has gifted her parents in Kolkata a ₹1.2-lakh massage chair, which can be customised for the arms and legs alone or for the full body. A trending item on Fabfurnish.com, over 100 pieces sell each month.

Swati Sinha, a Delhi-based marketing professional, wants to do up the interiors of her house. Twenty years ago, when her parents were setting up their place, they had clicked pictures of their favourite furniture pieces at friends’ homes and got the local carpenter to recreate them. Swati doesn’t have the time for a similar exercise. Her ally: Urban Ladder, a website selling curated furniture.

Online furniture sellers are offering serious competition to local carpenters and furniture stores as convenience and design trump factors such as cost and the Indian shopper’s predilection to ‘touch and feel’ before deciding.

“Six years ago, Indians didn’t buy books online; and four years back, they didn’t buy electronics online. All of that has changed completely, giving birth to multi-thousand-crore businesses in a very short time,” says Rajiv Srivatsa, COO and co-founder at Urban Ladder.

The furniture market in India is pegged at ₹80,000 crore, of which only about five per cent (₹4,000 crore) is branded. The nascent online furniture brands are working overtime to organise this humongous market and grab the biggest share possible.

Why wait for the carpenter?

“I am in the business of organising the unorganised furniture market. We bring the work of small artisans and SMEs (small and medium enterprises) online. We work with them, understand their designs and connect them with customers,” says Ashish Shah, COO and founder of Pepperfry.com.

Vikram Chopra, co-founder at Fabfurnish, prefers to call himself an online aggregator — bringing together furniture makers and customers from across the country. “We are aggregating furniture supply and putting it online. We are not just competing with offline players but also selling our private line and other brands.”

Fabfurnish retails all major regional and national furniture brands including At Home, HomeTown, Damro, Evok, Godrej and Durian. Its private label fetches about 30 per cent of the revenues. “When we launched two years ago, all our furniture was private label as vendors were not ready to work with us. Today, more and more vendors want to sell through us,” says Chopra.

That includes small brands from Jodhpur to Bangalore that are vying to get online through these websites. Private labels help the online stores introduce new ideas and connect with a much larger audience. “We have a small design team and consultants to innovate products,” Chopra says. Urban Ladder’s in-house design team is closely involved in the curation. “They give design inputs to both sellers and manufacturers,” says Srivatsa.

For Shah of Pepperfry, the design team is also responsible for merchandising and production. It includes architects and interior designers, who pick designs and models that appeal to the modern consumer.

So who is this buyer? Anyone in the 25-45 age group who is familiar with online shopping, appreciates good design and is usually time-starved. Fabfurnish’s research pegged this group’s annual income at ₹3 lakh to ₹15 lakh. “We found that getting furniture made from a carpenter is not cool anymore and the aspirational element is high,” says Chopra.

Nearly 70 per cent of the orders are coming from Tier I cities, but Tier II towns are swiftly jumping on to the bandwagon.

The online sellers typically source furniture from Churu, Jaipur, and Jodhpur in Rajasthan, western Uttar Pradesh, Kerala and the Northeast. Branded furniture is usually sourced from Mumbai, Delhi and Bangalore.

Pepperfry, for instance, routinely delivers 400kg wardrobes from Jaipur to Aizawl in Mizoram and Balasore in Odisha. Each quarter, furniture sourced by the company from across India travels to homes in 480 cities.

Delivery pains and gains

Logistics is predictably a huge challenge in India, but the online merchants are treading the patchy roads and rugged terrains with growing confidence. Typically, of their gross margin of around 40 per cent, nearly 20 per cent goes to logistics and 15 per cent to marketing.

The very nature of the business poses unique challenges. “Furniture can’t be sent by air, and while you can order smaller items to your office, furniture has to be delivered at home. So we must take an appointment before delivery,” says Chopra.

Fabfurnish offers an app that lets the buyer schedule an appointment and monitor the real-time movement of the truck delivering the furniture.

Pepperfry’s Shah relies on a hub-and-spoke model to resolve logistical issues and save money. He has brought down the delivery cost per order to ₹500. Apart from owning a fleet of 150 trucks to deliver large items across India, the company uses third-party trucks for long-haul movement.

“When you use third-party services, they charge for every piece of furniture,” he says. “We have created sorting hubs in Jodhpur, Mumbai and Bangalore. We get enough orders to move full truckloads of 32-feet containers, carrying 80 items at a time, from these hubs to large towns like Delhi,” he explains. Company-owned 19-feet trucks take over at these points and carry furniture to all the cities in the vicinity. “My scale allows me to undertake full truckloads for distribution and costs only ₹40,000 for 80 pieces in a truck, or ₹500 per piece,” he says. The company-owned trucks are manned by a driver, two loading-unloading staff and a supervisor. “The costs go down, as all I need to spend on are fuel and people,” he says.

Fabfurnish is building teams for assembling delivered furniture at buyers’ homes, as well as after-sales service. “Around 5 per cent of customers want extra polish or repairs. We are creating teams to handle these problems,” says Chopra.

Store at your fingertips

As sellers plug loopholes, consumers are gaining confidence in online shopping. Competitive prices are an irresistible factor too. Shah says Pepperfry products are at least 20 per cent cheaper than the competition as the seller works directly with small craftsmen and brands. The company currently clocks around 20,000 transactions a month. Fabfurnish on average receives 1,000 orders a day, with a basket size of ₹12,000 each. Urban Ladder registers around 300 transactions a day, with an average ticket size of ₹20,000.

The online success story has inexorably spelt the edging out of offline stores. Reliance Retail began exiting the furniture business last year, shutting down its Reliance Living stores in Bangalore, Delhi and Hyderabad. Future group merged its furniture and lifestyle format HomeTown with its consumer electronics format e-zone to come out of the red.

“Real-estate costs in India are prohibitive, making it difficult for them to grow. Many of the offline players are talking to us to create a separate portfolio for them,” says Chopra.

The online furniture players are witnessing a scorching 300-400 per cent growth in revenues every fiscal, but rather than focus on turning profitable, they are opting for further expansion and growth instead.

“We are increasing fixed costs, investing in warehousing, staff and technology. So break-even will not happen soon,” says Chopra.

Ditto for Pepperfry’s Shah: “We have just scratched the surface of this market. We want to scale up. As business grows and scale improves, the economics get better.” He is willing to wait for profits, even until 2016. With buyers like Trivedi clicking enthusiastically from Barabanki and beyond, that waiting game evidently holds a lot of promise.

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