The second Covid wave and the consequent business disruption have pushed furniture e-tailer Pepperfry’s plans to file for an IPO by several months.
Ashish Shah, co-founder and COO, Pepperfry, told BusinessLine . “We got very close to profitability in the Oct-December quarter of 2020 with less than 1 per cent of losses incurred during the quarter. On January 26, 2021 we hit our highest ever sales of ₹11 crore in a day, a great number to hit at the beginning of the year. We were coming back very strongly as a business after the first Covid wave, starting from July last year and in September as we were edging close to profitability, we announced our IPO plans in the next 12-18 months. But, the second Covid wave has set us back and we should be ready to file for an IPO 12-18 months from now.”
Elaborating he said, last year around mid-May after the national lockdown was lifted all e-commerce deliveries were allowed. However, this year a lot of large markets like Bengaluru, Delhi and Mumbai are closed, and now slowly Bengaluru opened last week, Mumbai will hopefully open up tomorrow, followed by Delhi. While this year the government allowed our warehouses and distribution centres to remain open, a lot of markets were closed from the delivery standpoint. Even with 50 per cent of markets open, we were able to do 65 per cent of business. Business is not weak, when all the markets open up, I think we will be profitable from month one of resuming business.
FOFO studio
In a bid to move to profitability, Pepperfry has re-architected its business over the last two years to introduce shipping fees, assembly fees, improved its margins, made changes in sourcing from its sellers, etc. In the last five months, Pepperfry has opened 20 new FOFO (franchisee owned, franchisee operated) 1200 sq ft – 1500 sq ft studios in Guwahati, Agra, Dimapur, Chennai, Madurai, Dhanbad, Kozhikode, Raipur, Jammu, Vizag, Shillong, Jamnagar, among others. It has 73 studios in 38 markets pan India at present, of which 32 are FOFO studios.
The e-tailer aims to drive local entrepreneurship with the launch of 200 plus, small format Studios in the next 12 months. It targets to accomplish this through its newly crafted FOFO program called the Pepperfry Accelerator Program.
“Our existing FOFO program required an investment of ₹40 lakh – ₹50 lakh per store, this new program will require an investment of ₹15 lakh for a 400-500 sq ft studio. We plan to pitch this to college students, corporate employees (who earn ₹40,000– 50,000 per month), home makers etc and to all those who have lost jobs and want to own a sustainable business. Our pitch is ‘Build your own Business, be your own Boss.’
These stores will be opened in neighbourhoods where there are over 5,000 apartments, in townships of large corporations and not on highstreets. Each store will have 25 pieces of furniture and all the stores will be branded the same with a start-up kit provided by Pepperfry. Shah says, if an entrepreneur does over ₹11 lakh sales/month, it will be a profitable business.
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