Kitchen appliances brand Wonderchef is now betting on the growth of the shared economy in the country and has in line, launched ‘Wonderent’ to offer home and kitchen appliances on rent at typically around 5 per cent of the actual cost of the product. With monthly rental starting at Rs 199 for appliances, the brand is aiming the rental business to bring about 10 per cent of its total turnover in two years time, Ravi Saxena, Founder and CEO, Wonderchef, told FinancialExpress.com. “Net of all costs, we have been able to get a 42 per cent contribution per product from Wonderent, which is a healthy contribution and in terms of investment, it has been almost zero for us since we have partnered with a tech company Rentity to facilitate the rental service,” he said. Ravi Saxena also talked about the expansion plans at Wonderchef which includes retail expansion in tier-III cities as well. “We have about 25 outlets of our own and in the next two years, we will have around 40 exclusive outlets. We are looking to invest around $ 20 million in the next two years for all our expansion plans,” he added. Wonderchef had registered a turnover of Rs 450 crore the previous year and is hoping to take it to Rs 600 core in FY2023.
Watch full conversation here:
Here are edited excerpts from the interview.
You recently entered into the appliance rental segment with ‘Wonderent’. Do you think the rental model of business will work in this category? What are the rental tariff and duration like for the appliances at Wonderchef?
We have been able to foresee the trends in the industry for coffee, baking, and automatic appliances. All these machines, however, are premium and people mostly like to try these products before making an investment. So through our rental model, we are empowering people to try our product for 3 or 6 months before they buy it. There is another segment of people which I cal transient population, consisting mainly of students or migrants, who have realised that they need these machines, like an OTG or a mixer-grinder, or cooktops, for just a couple of years. Renting makes it possible for this population to rent the appliances for some money and we are getting a tremendous response.
The rental duration can be chosen by a customer between 3,6,9 or 12 months with an option to renew. The rent is typically about 5 per cent of the cost of the product. Post this duration, these products are returned, refurbished and are available for the next customer.
What kind of investment went into starting this new service and what are your marketing strategies around this?
We are not a tech company to be able to pull this off on our own; so we have partnered with a platform called ‘Rentity’ to help streamline the process and provide us with the technology we need for the rental service. They provide us with a widget that gives customers the option to ‘Rent Now’ and so, for us, the cost actually have been zero.
What percentage of sales for Wonderchef comes from rural markets as compared to the urban markets?
In terms of geography, we are a pan-India brand. We get almost equal business from the North, South, and the West of India and slightly lesser business from the East. In terms of our spread in metros or tier-I cities, we operate in about top 50 cities of India. About 70 per cent of our business comes from tier-I cities and about 30 per cent of it comes from tier-II and -III cities. The focus is of course on the expansion of tier-III networks because there is a very long runway there and the bottom of the pyramid of India is very thick and we are focusing on these areas both through our online presence and expansion in our retail network.
Tell us about your retail presence and your expansion plans. Are you waiting for inflation to cool down for category expansion and other plans?
We are in about 2,000 outlets of modern trade, 14,000 outlets in general trade and we have about 25 exclusive outlets of our own.We also retail through alternate channels, which include our network of 75,000 women entrepreneurs associated with Wonderchef and they are selling our products in more than 2,000 towns across the country. Our exclusive outlets are mostly in metro cities but we are also present in tier-II cities like Kanpur, Chandigarh, Amritsar, Coimbatore and Lucknow. Some of our outlets are also franchise outlets and they do very well, sometimes even better than our own outlets.
We are an aggressive company and this year also, we are planning to expand by around 40 per cent over last year. Inflation is a part of life. Currently, we are present in 14,000 MBOs, but we can be present in 50,000 outlets. So in a way, we are only present in 25 per cent of the outlets where we can be present. But we are treading cautiously. We have about 25 outlets of our own and in the next two years, we will have around 40 outlets. We are being careful about opening new outlets as we want our outlets to be profitable. These outlets will be opened in premium malls and premium high streets. Meanwhile, our retail expansion would continue to grow with partner stores; and from 14,000 we will be in about 25,000 MBOs in two years time.
What kind of investments are you planning for all the expansion plans and new initiatives?
Investments are a continuous part of our journey and we are not shy of it. We have continuously invested our cash back into development and innovation and staff, and this has led us to be one of the top two players in the industry right now. We have some private equity investors as well. Between internal accruals and external funding, we are looking to invest around $ 20 million in the next two years for all our expansion plans.
What kind of surge or rise in sales are you expecting this festive season? Are you preparing for a surge in orders, if at all, in terms of logistics, supply chain, etc.?
The season has led to a surge in demand from all channels for corporate gifting, personal gifting, etc. Even the regular purchases are rising as during festivals people refurbish their kitchens and prefer buying appliances on festival days like Dhanteras. Our business, although a year-round business, gets around 40 per cent of annual sales during the quarter of August-September-October. In terms of preparations, we have beefed up our supply chain. We have already added 4 additional warehouses across India as our inventory levels rise during this time. We launched festive schemes and offers.