The chief marketing officer of Pepperfry, Kashyap Vadapalli, shares more with FE’s Srinath Srinivasan on the fast-growing branded furniture business, why building a brand will be important to stay in the market and why competition is good for this space.
By Srinath Srinivasan
Pepperfry has been vocal about its desire to raise over $150 million to power its offline business, as per news reports that came out early this year. It is also expected to become a unicorn in 2021 by leveraging omni-channel growth. The brand has also been investing heavily on marketing activities with over Rs 135-crore spent on marketing and advertising in FY19. This number is expected to increase further in the current financial year. The chief marketing officer of Pepperfry, Kashyap Vadapalli, shares more with FE’s Srinath Srinivasan on the fast-growing branded furniture business, why building a brand will be important to stay in the market and why competition is good for this space. Excerpts:
How is digital bolstering your position in the market today?
Traditionally, furniture businesses were mostly retail – brick-and-mortar based and gave very little shopping options. We started as a digital first business and sought out to solve for the service element that needed to be addressed in this segment. Digital let us address four pillars in this journey – awareness, customer acquisition, retention and engagement. We decided to standardise all the information that we showcased about a piece of furniture. Today, digital is much more than that. We have Augmented Reality (AR) features on our app to place a piece of furniture in a given space and see how it fits. We provide details on our online platforms that may not be found in stores regionally. With the data we collect from our online platforms, we exactly know our customers’ needs which translate into better service and products.
Our sites today have around 4 lakh unique hits every month, which is huge in this segment. In terms of marketing, our presence on digital platforms has grown significantly higher – 60% of the marketing budget is invested in digital media, about 45% on performance channels and 15% on brand/content initiatives. In 2018, Pepperfry participated across various platforms – TVF, Girliyaapa, Filter Copy, Dice Media, Miss Malini, The Better India, etc. These are all digital first content and are widely present across social media. With our 65 studio pepperfry outlets, we have become omni-channel, assisting customers at all points.
What gives you the bandwidth to disrupt the segment and compete with legacy players and how?
We have an advantage over legacy players because we adopted technology since the beginning. We collect furniture from hundreds of manufacturers across the country. Previously, most of it were exported and only 5% came into Indian market. Moreover, customers were also evolving. Furniture is a lifestyle aspect today. We used technology to connect these two selling points – offer an experience that resonates with customers’ lifestyle and provide a huge variety of indigenously developed products that were not available before. By doing so, we solved the problem of access for customers and the problem of scaling businesses for manufacturers. Legacy players have always approached this segment with a pure retail mentality, which is a tough nut to crack especially when the market isn’t mature. With traditional retail model, the problem of capital, space and scaling come up. That is why after 30-40 years, their growth hasn’t been as quick as ours.
With competition adopting digital and going omni-channel, how do you plan to differentiate yourself in the market?
Ours has always been a managed marketplace business model. We work with Indian manufacturers and also a few importers. Just in terms of scale, we have access to different price points, genres, types and designs. We don’t stop with just one kind of customer but holistically look at the entire furniture market which is `1,50,000-crore in size and growing. Sometime last year, we achieved market leadership and our consumer recall data show that we are on top of our customers’ minds. We aim to strengthen the gap between us and our customers by tapping into the customer data that our competition lacks. When we started we recognised that our partner, distribution, logistics, servicing and digital infrastructures must be strong. Since 2014, we have keenly invested in them and in parallel, we strengthened marketing as well. Now, we are also omni-channel. As we continue to do it, our competition will have to play catch-up. What we believe is that competition will be more segmented and targeted. Somebody will focus on modern furniture and someone else on solid wood furniture. We will continue to cover the entirety of the market.
How do you see market consolidation affecting brand names/ businesses, both on the supply and distribution sides?
What is actually happening is, we are enabling customers to shift from an unorganised form of furniture business to a very organised format. We are growing rapidly and we expect our competition to also see some degree of growth. At this stage, everybody will be happy with their own market share. Eventually, as the market matures, players will find it difficult to attract growth capital.
What will really trigger market consolidation in this business are market maturity and scarcity of growth capital. At this point, from a mere furniture business, brands will have to diversify into offering better services and experiences to stand in the market. Even though the timeline for this to happen is unpredictable, we are already working on providing a better customer experience looking at the speed at which the market is getting organised. Rise of competition will only speed up this process and it’s good.