Online furniture seller Urban Ladder expects to get its Foreign Investment Promotion Board (FIPB) approval this quarter, even as the company readies itself to become a single brand retailer and reduce dependency on the online-only format. The online retailer had applied last year to the Department of Industrial Policy and Promotion (DIPP) seeking to convert its current marketplace model into a single brand retailer.
This will pave way for the company to convert its existing arrangement with sellers and vendors into a contract manufacturing relationship mode. Urban Ladder has more than 40 sellers on its platform. Speaking to FE, Urban Ladder, co-founder and COO, Rajiv Srivatsa, said, “We are hoping to get the FIPB approval this quarter. Post the approval, sellers will become manufacturers i.e. contract manufacturers”.
Urban Ladder has so far raised $92 million from Sequoia Capital, SAIF Partners, Kallari Capital and Steadview Capital. The company is planning to open around 10 offline retail stores in 3-4 cities in India. The first store will be opened in Bengaluru this June.
The company had posted a loss of `181 crore for FY16, as against the loss of `58.5 crore it incurred during FY15. Urban Ladder also plans to raise another last round of capital soon. It is looking for $20-30 million in the coming round, which it believes could happen towards the end of the fiscal.
Srivatsa said that the contract manufacturers will take orders from Urban Ladder, then manufacture, label and supply it back to them. “Overall it is not about saving costs, but more about centralised buying and quality practices and processes. That will indirectly save costs for us. The entire idea of getting into single brand is that we will get to work with a smaller base of vendors and ultimately better returns”, added Srivatsa.
The online home décor seller is also eyeing to increase its revenue share from new home buyers, despite a slowdown in real estate sector. During FY15, its revenue from new home buyers who look for interiors and modular kitchens, was just 10% of its total revenue. Now it has increased to 25% of its total revenue.
– Sameer Ranjan Bakshi