Pepperfry eyes first profit, Rs2,000 crore topline in 2019

Pepperfry eyes first profit, Rs2,000 crore topline in 2019
23/02/2018 , by , in News/Views, the country’s largest furniture and home products marketplace, hopes to turn profitable next year with a gross merchandise value (GMV) of Rs2,000 crore, as it plans an aggressive expansion in its offerings as well as in physical footprint.

The six-year-old marketplace, which also sells other brands like Hometown, Godrej and Neelkamal among others, apart from its own private labels, has set a target of Rs1,400 crore of GMV this year.

“We hope to become profitable in 2019 as we already are in cash profit and hope to touch a GMV of Rs2,000 crore as we expect sales to improve under the GST regime,” chief category officer at Pepperfry Hussaine Kesury told PTI.

After the reduction in goods and service tax (GST) from 28% to 18% in November, he said the sales have improved and expects this to continue, helping attain the topline target by 2019. “In fact, we have set a target of becoming a billion- dollar brand by 2020, given the overall momentum in demand,” Kesury said.

The city-based company is backed by big-ticket investors namely Goldman Sachs and Zodius Technology Find (a cumulative $100 million in series D funding since 2015), Norwest Venture Partners ($43 million since 2011 in three instalments), and Bertelsmann India Investments ($5 million since 2014).

The company nets a little over 50% of its volumes from home brands, and around 30% of total sales happen through studios, the retail stores where no actual sales happen, he said, adding 75% of the volume comes from furniture. On expansion of its physical stores, he said, they already have 25 and will add 10 more by April.

“Studios get us good traction as conversion rate is over 65%. We feel physical presence as one of the most effective way for brand building and most of the new stores will come in small towns like Indore where we just opened a studio,” Kesury said.

According to him, the next level of studio expansion will mostly be through the franchisee route, after its success in Bengaluru. Talking about house brand expansion, he said early this week they launched Clouddio, offering mattresses, pillows and mattress protectors. The organized mattress market is worth around Rs6,000 crore and is growing at 38%, according to Kesury.

The company’s house brands portfolio consists of nine brands in the furniture and modular segments and the entry into the mattress segment is in line with its strategy of expanding its own brand portfolio as this segment has higher margins, he said, adding he expects this portfolio to account for 15% of the revenue in the first year.

Pepperfry is present in 500 cities with delivery services to 5,000 locations and has 0.5 million registered customers of which over 60% are repeat customers.


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