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Furniture and home products marketplace Pepperfry.com has raised ₹250 crore ($38.5 million) in a fresh round of funding from State Street Global Advisors, the asset management business of State Street Corporation, an investment management company with $2.78 trillion in assets under management.
The company expects to use the funds to take it to profitability in 12-15 months, after which it will prepare for an IPO, a top executive told BusinessLine .
Including this round, Pepperfry has raised over ₹1,200 crore ($196 million) of capital since it went live six years ago, making it the highest amount of capital raised by a furniture and home products company in India.
“The fresh funds will be deployed to expand Pepperfry’s omni-channel footprint with 40 stores in three months. This includes our own experience stores in 18-20 cities and franchisee stores in 16-17 tier 1 and 2 cities including Siliguri, Imphal, Visakhapatnam, Indore, Raipur and Vijayawada. We will also invest in developing in-store AR/VR technology for virtual touch-and-feel of Pepperfry’s entire catalogue of products within a 100 sq ft space and enhance our private label brand portfolio that contributes to nearly 55 per cent of our sales and gives us double the margins compared to other products on our marketplace,” said Ashish Shah, founder and COO, Pepperfry.
Plans are on to add more categories like a range of home renovation products and increase depth of offering within existing categories. Anandh Hari, MD – Private Equity, State Street Global Advisors, said: “We are excited to enter the Indian e-commerce market through our investment in Pepperfry. India’s large furniture and décor market is ripe for disruption and we believe Pepperfry’s unique strategy, proven execution capabilities and passionate team are the perfect ingredients for success.”
Market slowdown
Asked about Pepperfy missing its target of tripling its GMV run rate to ₹3,000 crore by March 2018, which it had set for itself in September 2016 after a fresh fund raise of ₹210 crore from existing investors, Goldman Sachs, Bertelsmann, Norwest and Zodius, Shah said: “The slowdown in the market last fiscal as a result of demonetisation and GST implementation has set us back by six months. Despite that, we grew at 40 per cent YoY last fiscal, which is really good.”
“We should reach profitability in 12-15 months by reducing costs and improving margins from private labels, after which we will prepare for an IPO,” added Shah.
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