O2O branding, collaborations are here to stay

Furniture e-commerce portal, Pepperfry, is looking to open more physical stores  across India this year, to serve as experience centres where prospective buyers can touch and feel the available assortment of products, as well as get home design consultation for free.

According to LiveMint, the move will help Pepperfry increase its visibility as well as beat a slowdown in online sales. It quotes Peppefry co-founder and CEO, Mr. Ambarish Murty, as stating that the offline presence will happen with the launch of a number of brick-and-mortar outlets over the next 12 months.

There is a similar push by Pepperfry’s rival, Urban Ladder, which plans to launch its own experience centres and is on course to widen its offline distribution channels.

Urban Ladder has launched a new brand identity and is on course to widen offline distribution channels beyond company-owned centres. It plans to launch at least three experience centres in Bengaluru, and is exploring partnerships with large format retail stores.

Branding exercise

Pepperfry, which opened its first offline store in Mumbai in 2014, does not sell directly from these stores. They essentially serve as experience centres. “About 17% of the customers who have bought on Pepperfry in the last one month would have gone to a Pepperfry studio in the 60-day period prior to the purchase,” said Murty.

According to Murty, the rate of growth for online customers is stagnating. “A lot of that was driven by fundamental macro-economic shifts, driven by an orientation that the companies had to improve their financial architecture.”

Pepperfry will invest about US$ 6 million this year to increase its store count from 14 (in Mumbai, Delhi, Hyderabad, Chennai, Bengaluru and Pune) to about 50 by year-end, mainly in several new cities including Ahmedabad, Kochi, Chandigarh and Lucknow.

Omni-channel sales

LiveMint reports that online retailers witnessed moderate growth last year as they brought down discounts and marketing spends, somewhat constrained by a slowdown in funding, as well as some government directives that barred them from influencing prices of products or focusing on a handful of sellers for a majority of sales.

According to a January 2017 study by RedSeer Management Consulting Pvt. Ltd., online retailers in India clocked about US$ 58 billion in gross sales last year, as against about $ 51 billion a year earlier, an increase of 13.7%. This is in sharp contrast to the year 2015, when sales grew 17-27% every quarter.

According to industry experts, adopting an omni-channel strategy -- where businesses have both offline and online presence -- is immensely important, especially for a category like furniture, which is not standardised and has high average order value. In the Indian market, where online sales are still evolving, an offline presence is part of the brand-building exercise.

The Tech Portal quotes Mr. Sreedhar Prasad, partner at KPMG India, as saying: “In India, everything with an online presence is being viewed as a start-up. Offline presence demystifies this start-up stamp on a company.”

He is of the opinion that omni-channel is the way forward. “Whatever apprehension was there with large furniture, which are high value, will go away with offline stores. An offline presence will reinforce a company’s brand value. Otherwise, they will be viewed as a start-up,” Sreedhar adds.

More collaboration

Urban Ladder, which bagged fresh investments of nearly US$ 15.2 million earlier this year, has been working on the extension of its services and expansion of business. It has now partnered with interior design and decor platform, HomeLane, for an additional channel of distribution.

Founded in 2014, Bengaluru-based HomeLane helps property owners furnish and install fixtures in their new apartments and houses. This partnership shows Urban Ladder is tapping every available avenue for revenues so as to boost the platform’s customer base.

With the assistance of HomeLane, the company aims to acquire new customers at a marginal cost and marketing expenses. It will work on a commission model with the second-hands store and convert the new home buyers coming to HomeLane’s platform into their own customers.

The Tech Portal quotes Mr. Sanjay Gupta, chief marketing officer at Urban Ladder,  as saying: “The customers who come to the HomeLane platform for modular and fittings solutions for their homes also have a need for loose furniture such as sofa, beds and other units which we would be providing them.”

Urban Ladder hopes that their new multi-channel distribution model will account for 4% of the furniture brand’s business over the next three years. It is also engaged in advance with other such business platforms and refurbished stores to increase its presence in India.

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