Business Standard: March, 2014
At a time when Swedish furniture major IKEA is planning to roll out its stores in India, online retailers are becoming increasingly active in this segment.
German Rocket Internet-sponsored FabFurnish and Norwest Venture Partners-funded Pepperfry are among those who have entered the furniture segment. From Maharaja beds to wardrobes, these websites allow one to buy all furniture online.
It is expected leading e-commerce player Flipkart will step into the furniture category later this year.
The Indian home and furnishing market is pegged at about $20 billion (Rs 1.2 lakh crore), of which the furniture segment accounts for about half. As about 90 per cent of the market is unorganised, it is an attractive avenue for online players.
Also, margins stand at 10-25 per cent, making it competitive and on a par with the apparel space, say industry insiders. In relatively developed markets such as China and Brazil, the share of the home-and-furniture category in the overall e-commerce space is estimated at 15-20 per cent, encouraging numbers for Indian e-tailers.
Business models, products
Started in December 2011, Pepperfry works on a managed marketplace hub-and-spoke model. Most of its sellers are in Delhi, Mumbai, Jodhpur and Bangalore. The website hosts a range of local and international brands, providing designer made-to-order furniture. "Our target audience is the urban middle class aged 26-37 that is setting up homes," said Ashish Shah, chief operating officer and co-founder of Pepperfry.
Apart from leading furniture brands such as Nilkamal, the website also hosts micro and small manufacturers and direct sellers and works on a zero-inventory model.
FabFurnish's has a hybrid marketplace model, with both online and offline stores. "We think of offline as an experience, not as a sales point. Online is the way to reach the masses in every part of the country. Offline will also be an integral part of our aspirations to build customer trust," said Vikram Chopra, co-founder of FabFurnish. The company hosts international kitchen brands such as Lodge, Stoelze, Alfi, Narumi, Noritake, WMS, HI and Nachtmann. Furnishing brands such as Espirit, Santas and Spread are also sold through its website.
Most companies in the furniture category promise delivery between three and 20 days. About 90 per cent of the orders are prepaid; for orders of more than Rs 10,000 (on an average), one cannot avail of cash-on-delivery.
As the delivery mechanism is stretched (first, products are brought from vendors to the warehouse; subsequently, these are transported to consumers, often through third party suppliers), ensuring products aren't damaged becomes a challenge, says FabFurnish's Chopra.
Pepperfry's Shah says, "In the top seven cities from where we get about 70 per cent of our orders, we have our own branded trucks. We send orders to these cities through a network of local suppliers and transporters."