By Vaishnavi Gupta, Assistant Editor
Dec 07, 2022 / 10 MIN READ
Pepperfry has the largest omnichannel footprint in the country. The brand has over 200 Studios covering more than 100 cities with a total retail space of 2.4 to 2.6 sq ft.
Pepperfry’s Studios are based on two business models - Franchisee Owned Franchisee Operated (FOFO) and Company Owned Company Operated (COCO). It launched about 110 franchisee studios in the last 11 months and expects to maintain the same run rate.
“Customers who visit Pepperfry Studios now account for 36 percent of our business. The growth in Studio also resulted in an increase in the share of higher-margin D2C private labels, which reached 41 percent of Gross Merchandize Value in FY22,” said Ashish Shah, Co-Founder and Chief Operating Officer, Pepperfry.
“Our goal is to become a ‘neighborhood store’ as we continue penetration in cities and towns through our franchisee business model,” he added.
D2C: A Major Biz Contributor
The growth of e-commerce market and specifically the D2C has grown significantly over the pandemic. It is attributed to more customers getting online, during the pandemic, driven by necessity. It enabled the existing big D2C brands to get bigger and helped a slew of newer D2C brands to emerge. This period also made it important for brands to partner with their customers to deliver value to grow the business. In order to scale up any business and build a strong brand, it is important to deliver a clear value proposition to their customers. Exceptional customer experience and flawless execution are other key factors for scaling up.
Pepperfry also has a strong focus on its D2C strategy as it believes it is the best way to reach and connect with its consumers. The brand has its D2C private brands known as ‘House Brands’ to help fill in market gaps in style and price.
“Almost 42-44 percent of our business comes from our private labels and they deliver a high product margin for us,” Shah stated.
“Also, technology is an enabler of D2C brands. The way we built our technology helps our customers have an immersive experience. Our online sales approximately contribute 45-50 percent of our business,” he added.
Categories At Play
As of now, Pepperfry offers over 1 lakh SKUs across categories like furniture, décor, wall art, curios and showpieces, lamps and lightings, mattresses and bedding, carpets and furnishing, dining and bar, appliances, etc.
Recently, the brand has introduced the pet furniture category as pets as a segment is gaining traction and consumers are keen to provide the best quality products for them. Within this category, it offers a wide range of products like furniture, houses, crates, furnishings, toys, and grooming supplies for dogs, cats, and birds.
“Basis our need-gap analysis, we realized that accessibility and availability of pet furniture in terms of variety, quality, and customization is a huge challenge. We ventured into this category to build a large variety of offerings and address customer requirements in terms of product quality. We are going to focus on pet furniture, furnishings, and care, and our main objective is to provide a one-stop solution for our pet friends,” Shah asserted.
Additionally, Pepperfry has also launched an all-in-one DIY Furniture Care Kit for Fabric and Solid Wood Furniture products. These care kits are easy to use and are specifically curated for customers to make their furniture look new for years.
24-Hour Furniture Delivery Service
The launch of Pepperfry’s ‘world-first’ 24-hour furniture delivery service in Mumbai, Delhi-NCR, and Bangalore aims to bring delight to customers as they place orders by 9 pm and receive products by the next day.
“Since the launch of this project, we have witnessed an 18-32 percent uptick in demand in those cities. A 24-hour delivery window is not something that customers look forward to as furniture is a heavy ticked-sized item. Given that we are the largest D2C big box company in the country, we took this challenge to pioneer as an industry first to delight our customers,” explained Ashish.
Pepperfry identified key markets where it intended to launch this service at a cost-effective rate. Mumbai Metropolitan Region (MMR), Bangalore, and Delhi NCR appeared as the top 3 clusters, and it enabled storage at these locations as part of its plan. The next step was to design a dynamic process that identifies fast-selling SKUs and convert them to build to stock model that is stored in its warehouses and delivered to customers within 24 hours of order placement. “We ran operational planning parallelly, and for the execution process, we made various shop floor changes like changes in shift timings, realigning workforce, and practices, etc. to achieve our goal,” he noted.
Tech at Forefront
Pepperfry's relentless innovation has helped it stay ahead of the curve. Discovery and inspiration define its customer journey. So, it has made significant investments in AR and VR to expand its curated digital catalog.
“Our virtual catalog steers conversations toward over 1 lakh offerings on Pepperfry’s website,” Shah said.
The brand has also revamped its UI and UX website to ease the customer journey. Aligned with its goal to provide a shopping experience tailored to the unique needs of home and living customers, it has introduced the Martech stack for hyper-personalization. India is leading the curve on CX delivering personalization using BOTs at a scale that could only have been imagined a decade ago. Pepperfry launched a chatbot ‘Pep’, powered by Haptik that made it super convenient for its customers to transact, get support, and experience superlative buying experiences through personalization at scale.
“Technology has found its way into the roots of logistics too. At Pepperfry, inventory planning, route optimization, vehicle load optimization, and intelligent WMS are some areas where we have integrated new-age technologies - AI, ML, Neural networks, IoT harbor for operational efficiency,” he added.
Expansion Plans
Talking about the offline expansion plans, Shah stated north is a very important market for Pepperfry and it is planning to expand through its FOFO Studio model.
“Himachal, Ladakh, Kashmir, etc. have difficult terrains and remain as unexplored markets. We are looking at catering to such markets where we can become serviceable to residents of such regions,” he explained.
On the technology front, the brand will continue to invest in technology, particularly in AR (augmented reality) and VR (virtual reality), for the online business.
“We believe in the next few years customers would want to virtually touch and feel products, and turn, rotate, and place the furniture in their rooms. Purchase decisions will be driven by variety, and that can happen only through technology,” he concluded.
Pepperfry has the largest omnichannel footprint in the country. The brand has over 200 Studios covering more than 100 cities with a total retail space of 2.4 to 2.6 sq ft.
Pepperfry’s Studios are based on two business models - Franchisee Owned Franchisee Operated (FOFO) and Company Owned Company Operated (COCO). It launched about 110 franchisee studios in the last 11 months and expects to maintain the same run rate.