COMPETETIVE ANALYSIS ON ONLINE HOME FURNISHING BUSINESS-2015

Online Furnishing Market Overview

 India's home decor and furniture market is worth $20 billion (about Rs 120,000 crore), with less than 10 %
of it being organized play.

 Furniture makes up 2/3rd of the market, with the largest offline player's revenue pegged at less than $100 million.

 In furniture, out of 40%, 25 % is the larger furniture Furniture Market Growth ($ Billion)
items such as Sofa, Beds etc and rest small furniture items 25
such as linen, bar table, chair , stools etc
20
 There is a huge scope of this 25% of smaller furniture
items and rest 60% of pure home decor items in online
because of their smaller sizes, not much need of touch
15 Market
and feel and easy logistics comparatively. Size($
10
Billion)
 The organized residential furniture market is expected
to triple in size to become USD 1.3 billion in the next 5 5
years, growing at a CAGR of 27%; this would be around
~9% of the USD 15 billion (expected) residential furniture 0
market by 2020.
FY10 FY13 FY15 FY16 FY17 FY18 FY19 FY20
 Competitive Analysis – Overview

 Pepperfry: Market leader in the Indian online furniture space. Sources70-80% of the products from Jodhpur.
USP: Delivers wide variety of designs with customer reach spreading to 200+ cities.

 Fabfurnish: Second largest player in the Indian online furniture space. Has the widest variety of SKUs among
the horizontals. Largely operating in the market place model. USP: Focus is on providing affordable product
categories, appealing to wider audiences. FabFurnish says it targets the "affordable, mass market" category.

 Urbanladder: Smallest of the

three major vertical players.
100% private label with a strong
focus on quality and customer
experience. USP: High end designs
delivered through the best
customer experience. Urban Ladder is positioning itself in the "mass affluent" category.

 Mebelkart: A Bangalore based startup, Mebelkart provides a range of products including Bean bags, Seating,
Home furniture, Kids furniture and Décor. It claims to be ‘the biggest dealer in Beanbags and Office chairs’.
Also, it has tie-ups with some of the major furniture companies like Durian, Zuari, MoBEL, Rhome and Wood
Dekor.
 Competitive Analysis- GMV and Customer Insights

Online Player March 2015 furniture GMV March 2015 furniture GMV
(Estimated, post
cancellations), in USD Million 30
Pepper-fry 24 25
20
Snapdeal 17
15
Urbanladder 21 10 March 2015
Fabfurnish 19 5 furniture
Others – 0 GMV
Total 81
 Competitive Analysis- Online Trends

Google Trends:
 Competitive Analysis- Positioning

Company-vs- Postioning PepperFry FabFurnish UrbanLadder

Business Model Managed Inventory Model and Curated Online

Marketplace Managed Marketplace
Marketplace
Turnover (Rs. Crore) 400 200 200
Sellers Platform 1,500 2,000 20

Social Network 5,10,400+5,835 8,41,598+6,172 5,19,236+3,064

(FB+Twitter)

Funding News The company has Looking to raise its Recently raised $1
raised $13 fourth round of million in series A
million in total funding, targeting funding and is
with $8million in $50 million plus led looking to close a
Series A(2011) by existing investors Series B round in
and $5 million in Rocket Internet and coming months.
Series B (2013). Kinnevik
 Challenges

1) Supply chain and inventory management are the biggest challenges. Also demand forecasting is very hard in ever
changing economy as the interests and trends are changing rapidly with communication and internet taking over.

2) If the demand for a particular products soars up then its hard to fulfill it from the backend in comparison to other
categories such as Apparel or groceries where more options are available.

3) 25% of furniture category constitutes of large items such as bed, sofa, etc and these are the items which Indian
consumers still want to refrain from buying online as they want to have a touch and feel factor involved.

4)The need for touch and feel – In a survey conducted, about 36% of respondents felt that the need for touch and feel
is high in the furniture market. Further driving this need is the relatively high investment value for the product.
Players like Urban Ladder are trying to overcome this barrier by offering free home trials for certain product categories.

5) Low trust with the website – Online furniture players such as Pepperfry, Urban Ladder and FabFurnish are relatively
new to the online space unlike early online players such as Flipkart, Amazon etc and will need to earn and build its trust
and credibility. Building trust among customers is among the major focus areas for online retailers today. Having active
call/email support, customer centric return policies, strong customer support, payment/EMI options, a good customer
review system are some of the measures to build trust with customers.

6) Long Delivery times – Delivery time for online furniture retailers exceed that of physical stores significantly. This is
because most online retailers are yet to localise their production houses and shipments are made pan-India from
furniture hubs in Jodhpur etc. To compensate for this barrier, players are offering additional services such as free delivery,
delivery tracking and customer friendly return policies.
 Online Home Furnishing Analysis Overview-I

 Online Trends Show a very mixed picture where in PepperFry ;even though being the market leader in terms of
Revenue size; is being seen competing neck to neck with FabFurnish and UrbanLadder.

 The difference in the trend may be attributed to the various companies focus on different digital marketing
Strategies. While PepperFry looks to be a leader in Google Key Words Search trends, but conversions seems to be
favoring FabFurnish and UrbanLadder.

 Social Marketing and conversions for FabFurnish and UrbanLadder look working much better than PepperFry.

 FabFurnish with it’s combination of Inventory Model and Managed Marketplace Model has started to pick up
pace to lead the band of Online Home Furnishing Brands

 Private Labels with Great design and sophistication looks to be the mantra for expansion and gaining customers
while focusing equally on Delivery, Last Mile Interactions and Post Sale Services

 Preferences of furniture types differ from region to region. While shoppers in Bangalore might opt for light,
modern furniture with eccentric designs, Delhi shoppers like solid wood, antique and colonial. Mumbai, given the
space crunch there, prefers compact furniture. Engineered wood and wrought iron furniture sells well in non-metro
cities and towns because they are 10 to 40 per cent cheaper than the premium quality furniture.

 Each player is devising its own methods to woo shoppers. Some promise quick delivery and a
no-questions-asked-30-day-return policy, others ensure speedy assembly and carpenter services. Niche is another
wish. Urban Ladder is positioning itself in the "mass affluent" category. FabFurnish says it targets the "affordable,
mass market" category. The vendors have also developed apps on major mobile platforms.
 Online Home Furnishing Analysis Overview-II

 Offline, Brick & Mortar Stores presence has gained importance not to push sales, but merely to reassure
availability for installation and warranty services.

 These store also can serve as an Experience Point for Customers while making their connection with the brand
even more strong .

 Logistics being a key challenge for most companies, they have started pumping in huge amount of investors
money mostly to develop their Logistic Chain while also increasing their Support Crew Strength for delivering better
Last Mile Satisfaction.

 Horizontal Players like Amazon, Snapdeal and FlipKart are also trying to get a piece of the pie and have been
successful largely due to their superior presence in Delivery and Distribution Network setup and better brand
accustomisation with customers.

 With an average ticket size of Rs 15,000 and gross margin of 50-60%, the race is on among the big four players to be
the market leader with FabFurnish leading the way due to better Business Model and Digital Marketing Strategies
coupled with a good assortment of catalog.
Presented by
Amrit Kumar Panigrahi
amrit.kp2108@gmail.com