Pepperfry eyes Rs 3,500-crore GMV, breakeven in three years

Pepperfry, the largest online furniture and home product marketplace, has set a target of achieving breakeven over the next three years when the five- year-old startup expects a GMV of around Rs 3,500 crore.

The city-based marketplace, which has so far raised $160 million from a clutch of global investors like Goldman Sachs, Norwest Venture Partners, Bertelsmann India Investments and Zodius Technology Fund, will be looking for more funds again over the next six months for expansion.

"Having already achieved our December 2016 GMV (gross merchandise value) of Rs 1,000 crore as early as October, we are hopeful of reaching the Rs 3,500 crore-GMV milestone over the next three years and also turn profitable," Pepperfry co- founder and chief executive Ambareesh Murthy said.

Set up in January 2012, Pepperfry had Rs 700 crore GMV in 2015 and expects to grow at much faster clip going forward. The city-based startup's co-founder and chief operating officer Ashish Shah chipped in saying earlier in the year, they had set a target of clocking Rs 80 crore in GMV every month which has already been crossed.

The company that employs around 2,000 people, out of which half in the supply-chain side alone also, have plans to grow the customer base five-fold to 20 million by 2020 from the present 4 million, Shah said. 

Murthy said the higher growth in the recent months was aided by the interest-free, with no processing fee EMI option launched recently, which effectively offers 12-15% savings on their purchases. The company has tie-ups with close to a dozen credit-card issuers for this scheme.

On expansion plans, Murthy said they will be nearly trebling physical presence through Brand Studios to 36 by the end of this year from 13 at present. Excluding the rentals, each studio involves around Rs 40 lakh investment, he added.

When asked about sales conversion from studio visits to actual buying, Murthy said the basic purpose of studios is to offer a touch-n-feel to customers and no sales happen at the studios and it has done really good for them with almost 25% of visitors end up ordering online. Also, close to half of their customers are repeat buyers, Shah added.

Since inception, Pepperfry has built a market leadership as the largest furniture marketplace by offering great value, a large variety of curated merchandise with a over 1 lakh items from over 10,000 merchants. 

Shah said over the past five years, Pepperfry has processed over 4 million shipments creating, and today it reaches out to 500-plus cities. It has 18 fulfilment centres spread across the country and 40 trucks covering over 500 cities and a 3 lakh sqft depot at Bhiwandi near here. "The plan is to double our supplier to 20,000 over the next two years also to take the number of products to 1.5 lakh from the present 1 lakh levels," Murthy said.

On fund-raising, Murthy said, they had raised Rs 210 crore funding from existing investors like Goldman Sachs, Norwest Venture Partners, Bertelsmann India Investments and Zodius Technology Fund. "Though we have enough money in the bank, we will be looking at more funds over the next six months. So far we have mopped up USD 160 million including the USD 30 million four months ago and USD 100 million last year," Murthy said, who refused to share the valuation of the company.

On margins, Murthy said the average margin is 40% for him as well as for the seller and said coffee tables are the most sold item of furniture on Pepperfry, while beds and sofas are the highest yielding products. "Furniture is a very high margin business and this is the main reason why we discontinued our seconds business we launched last year in the major metros," Murthy said.

On markets, Shah said Southern cities led by Bangalore and Chennai contribute almost 60% volume followed by Mumbai and the Western states, and then Delhi-NCR. Shah said they sell one furniture or home d cor item every 25 seconds and average value of shipment is Rs 18,000 for a wooden furniture and Rs 4,000 for decor.

Furniture which contributes 75% in sales value and 35% in volume, is the largest of the eight categories it hawks. 

Pepperfry's other offering include, kitchen appliances, lamps & lightings, home d cor including beddings, and mattresses, and therefore hawks products from many other brands such as Home D cor, HomeShop, Godrej, Bosch Home Appliances, Amberville, CasaCraft and Bohemiana among others.

On the impact of sales after the note ban, Murthy said there was a 15-20% dip in volumes in the first fortnight as people were confused. But that has already been compensated by rise in sales since then and on a week-on-week basis sales are clipping at 5% now.