We are in the process of filing our draft prospectus: Pepperfry COO

by decwells
We are in the process of filing our draft prospectus: Pepperfry COO

BANGALORE: Furniture marketplace Pepperfry is gearing up for a public listing as it deepens its offline presence in big cities and small towns to get closer to consumers. In 2021-22, the company plans to expand its franchise store network, invest in technology for online business and enhance supply chain capabilities. Ashish Shah, Pepperfry’s co-founder and COO, spoke to you about expansion plans, the impact of the pandemic, and a proposed initial public offering (IPO). Edited excerpt:

What are the furniture retail trends emerging from the pandemic?

AS: Appreciation for home and home decor has grown significantly due to the pandemic. People have been spending a lot of money to upgrade their interior design, furniture, etc. In some ways, furniture and home decor have become a category like fashion. Demand related to home office furniture is strong and continues to be strong. Earlier, people would call carpenters to make furniture at home for 1-5 months. A lot of that has moved online, especially with the need for loose furniture that can be easily replaced. We’ve never been a custom furniture business, so this helps our business a lot.

From August-September 2021 to date, we have seen strong demand. Most living room furniture—seats and bars, sofas—is where people are now obsessed. Home office furniture, which has tripled during the pandemic, remains a top category. The earlier pace of growth may have slowed, but demand remains high.

How does Pepperfry’s omnichannel approach work?

AS: Furniture as a category has developed quite late in the e-commerce business. We opened our first store in December 2014, when not many people were talking about omnichannel in India. Today, we have customers who come directly to our website and make a purchase. About 70% of our business comes from organic traffic.There is also a second group of customers who buy larger items rupeeWith a budget of 150,000-200,000, I want to visit the store before buying furniture online. This portion will continue to be large. Our Pepperfry studio focuses on these clients. Omnichannel will be very important in our strategy.

We have 175 studios in 91 cities, including Franchisee Owned Franchisee Operated and Company Owned Company Operated stores, and have added 100 studios in the past 10-11 months.

We need to get into the community and get closer to the customer. When we opened our first store, the goal was to show customers all the materials and fabrics we use, and then bring them online to show them the full catalog. My catalogs are 3D models, better than offline catalogs. This is the only way to buy furniture in the future.

Pure online sales account for 60% of our overall sales, with the rest coming from offline omni-channel business.

How important is it to be outside the subway?

In addition to subways, we also operate in smaller towns and this model works well for us. We need local expertise and execution. Local partners are important when you move to a city where you haven’t worked. One of the key criteria when we sign a franchise is that we don’t want investors. We want people, entrepreneurs, to sit in stores and run them. The franchise model is the only way to expand. When we open a store in a new small city, it’s like activating an entire location or geography, and a new customer base. While big cities are still important, future growth, say 5 to 7 years from now, will be driven by smaller towns. Also, my customer base didn’t change when we moved into a new region. Even though we are in Raipur, we are still catering to the mass market (mass prestige).

What are Pepperfry’s expansion plans for 2022-23?

AS: We’re bullish on the omichannel game, which helps us penetrate deeper into the metropolis and expand our footprint in smaller towns. We will continue to invest in technology for our online business, especially AR (Augmented Reality) and VR (Virtual Reality). This is because product categories can be displayed online, not offline. We believe that over the next few years, customers will want to virtually touch and feel products, then turn, rotate, and place furniture in their rooms. Buying decisions will be driven by diversity, which can only be achieved through technology.

We are expanding our catalog and entering new family related categories. We also need to expand our supply chain capabilities. From 26 distribution centers last year, we now have 32 and will continue to grow. We will continue to open franchise stores (usually 700-2000 square feet). We’ve grown from just being on the street to being a neighborhood store. If we see 2000 apartments in a particular location, we can open a store there.

How are your IPO plans going?

AS: We are filing our DRHP (draft red herring prospectus). Bankers and lawyers have been appointed. Our losses have decreased by 50% and we are excited about the IPO. We are on a good path.

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