Pepperfry bounces back, to launch 20 franchise Studios by March 2021

Sangeetha Chengappa Bengaluru | Updated on November 01, 2020

Ashish Shah, co-founder and COO

Allocates ₹11.5 crore marketing spend for festival period

Online furniture platform Pepperfry is restructuring operations, opening up more studios, shutting down unprofitable ones and increasing commission for franchisees.

Ashish Shah, co-founder and COO, Pepperfry, told BusinessLine that the start-up has witnessed a sharp increase in business after the lockdown was lifted with its robust supply chain/delivery infrastructure powering growth.

Shah said Pepperfry plans to launch 20 franchisee-owned and franchisee-operated (FOFO) experience Studios across Tier-2 and -3 cities by March 2021. During the lockdown, Pepperfry shut down seven Studios that were unprofitable in Mumbai and Bengaluru.

Studio format

“We have 60 experience Studios pan-India, of which 18 are FOFO. Of the 20 studios planned, 13 are already underway,” Shah said.

Commission on each online transaction made at the Studio has been hiked to to 15 per cent from 10 per cent. The capex to set up the small format Studios is ₹30-40 lakh, unlike the large format studios that require ₹70- 80 lakh. Studios contributed to 38 per cent of Pepperfry’s overall business pre-Covid. With the re-opening of studios, they are contributing 30 per cent of the overall business.

“Now, our home-office furniture category contributes 25 per cent to overall sales, vs 10 per cent pre-lockdown. Our first-time-buyers business grew at a faster rate than repeat buyers in Tier 2 cities and beyond” said Shah.

Profitability this quarter

Asked about Pepperfry’s business recovery, Shah said: “After the initial dip in sales during the lockdown, sales began to revive from mid-May with business emerging at 40 per cent of pre-lockdown sales,and full recovery in August. Today, the business is 120 per cent higher in comparison to pre-Covid levels and we are on track to become a profitable business this quarter (Oct-Dec).”

“What contributed to this is that we have our own supply chain and delivery infrastructure (300 vehicles, 1,000 staff) and hit the road as soon as the lockdown was lifted, after getting 22 distribution centres and three fulfilment centres reopened in under 10 days.”

Pepperfry has allocated ₹11.5 crore in marketing spend for the festival season sale for its TV and digital campaigns. It rolled back the 15-20 per cent salary cuts in July, gave out increments of 8-15 per cent in October and promotions to 5 per cent of its employees.

Published on November 02, 2020

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