Furniture e-tailers unfazed by IKEA entry

Sangeetha Chengappa Bengaluru | Updated on July 11, 2018

Go offline with experience centres; ready to take on Amazon & Flipkart, too

Online furniture and home-décor start-ups are pulling out all stops to take on online giants Flipkart and Amazon, and also IKEA, the world’s largest brick-and-mortar furniture retailer, which is set to open shop in India next week, with its first store in Hyderabad.

In the recent past, online players have done it all: Raised funds, expanded into new cities, increased their offline presence, created virtual-reality zones for customers, unveiled new products, and on-boarded design partners to create customised looks for every room.

All of this to wean away customers from traditional retailers, which have limited inventory and don’t offer designer looks.

Last month, HomeLane, which operates in four cities, raised $3.5 million. It plans to ramp up its experience centres from seven to 13 by December, and achieve ₹200 crore in revenue run rate by March 2019, up from ₹120 crore in the previous fiscal.

Urban Ladder appointed retail veteran Ajit Joshi as President & COO in July 2017, a month before it received its licence for single-brand retail trading. It has since, transitioned from a marketplace to an omni-channel consumer brand, and witnessed a 24 per cent surge in average order value after it opened its flagship large format store last July. The start-up raised $12 million earlier this year. “We are adding to our network of four stores in Bengaluru and one in Gurugram with two sofa lounges and two large-format stores in the next few months,” said Joshi.

After raising $38.5 million in March, Pepperfry is aggressively growing its footprint of experience centres. The start-up has 34 ‘Studio Pepperfry’ in 18 cities, and has signed up 17 franchisees, of which six are operational. Pepperfry plans to end FY2019 with 70 Studios. It is also in the process of digitising its product catalogue, enabling customers to drag-and-drop virtual looks in its Studios. “

“After a six-month market slowdown last fiscal because of demonetisation and GST implementation, we are back on track to achieving $1 billion in GMV by 2020-21,” said Ashish Shah, co-founder and COO, Pepperfry.

Livspace, which turned profitable last year, is on track to exceeding its target of $100 million in annualised revenue run rate and will achieve $120 million by March 2019, said Ramakanth Sharma, co-founder and COO, Livspace.

The start-up has earmarked ₹20 crore for its entry into the Hyderabad market this month. It delivers 500 home projects a month and has four VR-enabled design centres, which account for 95 per cent of its business.

None of the start-ups seemed overly concerned about IKEA’s entry, saying it addressed a very different segment of mass-market customers who tend to shop from the unorganised furniture market. Neither were they perturbed with Flipkart’s and Amazon’s concerted push to selling furniture.

“It takes time and expertise to build a supply-chain for furniture, it’s not easy to ship furniture across the country with zero damage. Additionally, our bouquet of private labels cater to different style sensibilities..., contributes to 55 per cent of our sales, (and) serves as a clear differentiator for our products,” said Shah.

As per RedSeer Consulting, the online furniture market in India was valued at $900 million in 2017, growing at 29 per cent, and was expected to grow at 50 per cent in calendar 2018.

Published on July 10, 2018

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