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Relevance of online
platform for Furniture
Industry
AGENDA
E-commerce - Why e-tailing?

Furniture e-tailing Why Furniture as a category will do great online?

Understanding Customers - Who are they and whats in it for them?

Implications What do brands/vendors need to do?
Before we start What do you think of
online?
Online is for discount mongers cheap cheap cheap!
60%+ sales without discounts
Repeat purchases are significant shows genuine interest

Online is for urban population hi-tech youngsters!
40% sales outside top 10 cities; expected to rise to 60%

Only low value products sell online
Maximum basket size 2.5 Lacs; 70-80% revenues from orders above Rs. 3,000
Online has excessive returns loss making proposition
<5% returns when managed properly, and doubles the conversions online
L-commerce - Why e-ta|||ng?
Indian retail market is largely unorganized
E-tailing is providing impetus to growth of organized segment
Powever, overall share of e-commerce ln lndla wlll sull be mlnlscule (~1) compared
Lo uS (~9) and Chlna (7-8)
3
3
12
20
2003 2010 2013 2020
0
10
20
30
Crganlzed as a of 1oLal 8eLall
13-13
23-30
60+
Cverall 8eLall Crganlzed SegmenL e-Commerce
CAGk CI kL1AIL
CAC8
>90 market sn|| unorgan|zed today
L-commerce |s expected to grow S nmes
faster than overa|| reta||
2"%)0(3 4)"5() 6(7(+)08
2
9

3
6

4
6

6
0

8
0

1
3
7

1
9
0

2
7
3

3
7
6

3

1
0

1
3

2
2

3
0

0
100
200
300
400
2007 2008 2009 2010 2011 2012 2013 2014 2013
0
23
30
unlque users (mllllon) eneLrauon ()
Increasing penetration of internet is fueling
e-tailing growth
4

3

7

8

1
1

1
3

2
1

2
8

4
3

2007 2008 2009 2010 2011 2012 2013 2014 2013
0
23
30
users Lransacung onllne (mllllon)
Lxponenual growLh of users LhaL wlll be Lransacung onllne
8y 201S, 30 of Ind|an popu|anon w||| be
us|ng |nternet
10 of Internet users are a|ready transacnng
on||ne
2"%)0(3 9:(&'%7 ;7<=+1(7
Consumers are also spending more time
online to aid their purchase decisions
71
64
29
24
13
9
6
3
19
10
0 20 40 60 80
lamlly
lrlends
Cnllne producL revlews
roducL web slLes
Search englnes
ulscusslon forums
Soclal medla slLes
lnuenual bloggers
1v
news sources
SCUkCLS CI kLCCMMLNDA1ICNS ICk UkCnASL
3
0

4
3

2011 2013
0
23
30
73
100
123
130
DAIL AVLkAGL 1IML SLN1 CNLINL
MlnuLes spenL onllne (lndla) uSA
9

1
3

1
8

3
3

1
9

<3 3-10 10-13 13-20 20-30 >30
0
13
30
43

o
f

u
r
c
h
a
s
e

S
e
s
s
l
o
n
s

LLNG1n CI A UkCnASL SLSSICN (MINU1LS)
Cn||ne sources are a|d|ng purchase dec|s|on
of Ind|an consumers.
.who connnue to spend more nme on||ne,
sn|| beh|nd g|oba| peers though
2"%)0(3 9:(&'%7 ;7<=+1(7 2"%)0(3 4>! (#!"==()0( )(?")1
Diversified access ensures that next growth
wave comes from smaller cities and towns
8
0

6
0

4
0

2007 2012 2016
0
23
30
73
100
of LoLal cusLomers
Cn||ne p|ayers are ga|n|ng |ncreas|ng
bus|ness from sma||er c|nes and towns.
.as the p|auorm prov|des an |nstant vast
reach compared to om|ne organ|zed p|ayers
2"%)0(3 9:(&'%7 ;7<=+1(7
I||ustranve dep|cnon of reach of organ|zed p|ayers
8roadband reach and 3G penetranon
are key dr|vers
of revenues com|ng from top 10 c|nes
Bottomline: Indian e-commerce will witness
a huge growth ~$70 bn by 2020
0.3 0.4
0.6
1.6
9
2009 2010 2011 2012 2016 2020
0
3
10
13
20
INDIAN L-CCMMLkCL MAkkL1 SI2L (5 8N)
1oLal MarkeL Slze
33-60 CAC8 expecLed ull 2020
2"%)0(3 @&'%71)A )(?")17B 9&+CA71 (7<=+1(7
70
Cn||ne nome & Iurn|ture keta|| - Why?
lurnlLure
!ewellery
Pome lurnlshlng
klLchen
PealLh roducLs
Apparels
lashlon
Shoes
Cosmeucs
8ooks
LlecLronlcs
CompuLers
Appllances
nascenL CaLegorles
MaLure CaLegorles
Furniture Retail is on its course of being the
next big category for e-commerce
2"%)0(3 DC"E+C F(E.&'(G
Early signs indicate a promising yet
untapped opportunity
3
6
2

1
1
9

1
0
0

9
8

9
0

7
6

7
3

1
3

1
0

1
3

0
100
200
300
400
0
3
10
13
20
GkCW1n ACkCSS CA1LGCkILS IN L-CCMMLkCL
?o? CrowLh 8each
2"%)0(3 6(?")1 H 21+1( "$ (#!"==()0( .& @&'.+
Internationally, furniture has already emerged
as next big trend in online shopping
nome products are S0+
sa|es
1urnover: 51S0M (2012L)
1urnover: 5200M (2012L)
100 o growth, 7S
repeat rate
18+ on||ne v|s|tors (A|exa
kank: 294, 2appos: 737)
2S growth |n on||ne sa|es
1urnover: 5600M (2012)
1urnover: 51S0M (2012L)
Pome goods markeL ln u.S. ls $300bn and 6 of lL ls onllne
2"%)0(3 I)(77 )(C(+7(B &(J7 +)<0C(7
Case in point
11 M||||on members across 26 countr|es
33
33 sa|es v|a Mob||e dev|ce
urchase 8epeaL
66 kepeat purchases by members
S0 sa|es are home products
I
n

1
8

M
o
n
t
h
s

1S000 products on||ne
1S exc|us|ve
90 not ava||ab|e on
other ma[or webs|tes
66
2"%)0(3 I)(77 )(C(+7(B &(J7 +)<0C(7
Online search volumes are also rising rapidly
Expected to follow trajectory of established categories
2007 2008 2009 2010 2011 2012 2013
0
23
30
73
100
CNLINL SLAkCn ICk I1LMS IN GCCGLL
Shoes lurnlLure Wall Clocks 8ed SheeLs
2006 2007 2008 2009 2010 2011 2012 2013
0
23
30
73
100
lurnlLure
2007 2008 2009 2010 2011 2012 2013
0
23
30
73
100
8ed SheeLs
2"%)0(3 D""-C( K)(&'7
Even for e-tailers, Home and Furniture
provide a great business case
n|gher Marg|ns and
Lot of r|vate |abe|
S0 |ower returns than
|ndustry standards for other
categor|es
urchase 8epeaL
2-3x basket s|ze - both
number of |tems & ncket s|ze
Nascent but a|ready see|ng
repeats at 1S-2S
I|urry of e-commerce ventures dea||ng
|n nome & Iurn|ture over |ast year.
.as |t prov|des a great bus|ness opportun|ty
compared to other categor|es
And there are significant advantages over
the traditional physical model too

Network reach

Operational hours

Range of products



Product launches

Product pricing

Basket size

Floor negotiations

Retail Investment

Sales force

Warehousing cost



After sales

Delivery timelines

Product assembly
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hyslcal Cnllne hyslcal Cnllne
;#0"= 0+108.&- %?
18)"%-8 C"0+C ?)(7(&0(
Lastly, you can do so much more online!
Assortment + Depth
Why make a choice? Go wide and go deep

Be closer to customers
Get instant and accurate feedback on what customers want and what they perceive
Leverage market intelligence
Data/Analytics/Behaviour/Patterns everything is at disposal
Run pilots/exclusivity campaigns
Will it work? Push customers online by maintaining exclusive ranges
Trigger impulse buying?
Understand|ng Customers - Who are they and what's |n |t for them?
31
0
10
30
26
14
9
3
7
49
0
11
26
23
14
9
6
10
1oLal CusLomer
Less Lhan 20
20-23
23-30
30-33
33-40
40-43
43-30
More Lhan 30
lemale Male
25-35 years is the key age group for Home
However, gender split remains equal
Clven only 20 onllne shoppers are women, Lhe caLegory has a slgnlcanLly hlgher
peneLrauon among women
2"%)0(3 @&'%71)A (7<=+1(7
60% sales comes from top 10 cities
South is the largest region with a ~40% share
29
7
23
37
2
CI SALLS IkCM DIIILkLN1 kLGICNS
norLh LasL WesL SouLh norLh-LasL
3S of a|| sa|es come from Metros,
60 comes from top 10 c|nes
South prov|des the |argest p|auorm for
on||ne sa|es contr|bunng ~40 of sa|es
3
3

2
3

4
0

MeLros nexL 6 Clues 8esL of lndla
CI SALLS IkCM DIIILkLN1 CI1ILS
of LoLal sales
2"%)0(3 @&'%71)A (7<=+1(7
2,093
1,349
1,634
1,823
2,163
2,278
2,323
2,412
2,391
2,748
2,988
1,673
2,443
2,391
2,940
3,482
3,247
3,418
1oLal CusLomer
Less Lhan 20
20-23
23-30
30-33
33-40
40-43
43-30
More Lhan 30
lemale Male
8
a
s
k
e
t

S
|
z
e

Men have a significantly higher basket size
than women across age groups
2"%)0(3 @&'%71)A (7<=+1(7
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20
10
12
16
21
24
24
26
23
13
11
9
12
13
17
19
20
23
1oLal CusLomer
Less Lhan 20
20-23
23-30
30-33
33-40
40-43
43-30
More Lhan 30
lemale Male Male
However, women depict greater loyalty and
have higher repeat rates
2"%)0(3 @&'%71)A (7<=+1(7
Critical to address consumer sentiments
across the board to enable online purchase
Can l LrusL Lhe webslLe?
Wlll l recelve Lhe producLs safely?
Wlll Lhe producLs geL dellvered umely?
Pow do l ralse my querles/concerns?
WhaL ume of Lhe day can l make Lhe purchase?
WhaL klnd of paymenL opuons are avallable?
ls Lhe varleLy of producLs sumclenL?
Are Lhe producLs dlerenL/unlque?
ls Lhe overall deal auracuve?
WhaL exacLly wlll l geL?
Pow can l experlence Lhe producLs?
Pow wlll Lhe producLs geL assembled?

1rust and Safety
Added conven|ence
Va|ue propos|non Demysnfy|ng products
1
2 3
4
Can I trust the webs|te?
W||| I rece|ve the products
safe|y?
W||| I rece|ve the products
nme|y?
-&+*+./$$0 1$'23$*4 2.
5!67 0+48
Addressing consumer sentiments:
Trust and Safety
1
What exact|y w||| I get?
now do I exper|ence the
product - 1ouch & Iee|?
now w||| the products get
assemb|ed?
Addressing consumer sentiments:
Demystifying products
2
Is there a sumc|ent var|ety
across categor|es?
Are the products d|erent or
un|que?
Is the overa|| dea|
auracnve?
Io|dab|e
Wa|| She|ves
3
3
0

2
0
0

7
3

3
0

3
0

3
0

Llvlng 8oom
lurnlLure
8ed 8oom
lurnlLure
ulnnlng lurnlLure
CuLdoor lurnlLure
8ar lurnlLure
Workspace
lurnlLure
0 230 300
# of Skus
Addressing consumer sentiments:
Value proposition
3
LCVL
Wa|| She|ves
now do I ra|se my
quer|es]concerns?
When can I make my
purchases?
What k|nd of payment
opnons are ava||ab|e?
0
30
100
11 AM - 9 M 9 M - 11 AM
CI SALLS 8 nCUk
33
Addressing consumer sentiments:
Added convenience
4
Imp||canons - What do brands]vendors need to do?
Focus on online
Exclusive range
Invest into systems and processes
On time delivery
Be flexible allow returns
A genuine focus is all it needs
Thank You