Ashish Shah, COO, Pepperfry co-founded Pepperfry.com in January 2012 and leads category management, business development, customer support and supply chain functions. Presently, Pepperfry has one million plus users who have subscribed to the website and the number is growing every day. In the last three years at Pepperfry, Shah has driven a strong track record of results, execution excellence and improved efficiency across category management and operational functions. He has built a proprietary ‘Large Item Distribution Model’ that allows for door delivery of large furniture items’ in more than 120 towns across the country.
Ashish is an internet industry veteran with 16 years of experience across start-ups and large multinational companies. In his last assignment, Ashish was the head of e Bay Motors business for India and Philippines apart from being an integral part of the eBay India management team.
In a conversation with exchange4media’s Deepa Balasubramanian, Shah spoke about the e-commerce growth, challenges, Pepperfry’s marketing strategy and plans. Excerpts.
E-Commerce has been booming for some time now, especially in 2014. Please tell us about some of the trends in the sector.
The e-commerce Industry is undergoing a huge change. The industry has been growing at a rapid clip in the country. It started with high traffic broad horizontals operating across sectors like electronics; the next of growth witnessed large vertical growth like fashion. Now, with the emergence of new industry developments there is a strong focus on other high-growth verticals like home, health and sports. For example, Pepperfry, which is a leading online e-commerce business in the home segment, will grow as the vertical grows.
With online players opting to go ‘Omnichannel’ overall customer experience is all set to change. With major players setting up offline brick and mortar stores, the current trend is to move beyond the checkout cart. Pepperfry is looking at setting up ‘Experience Zones’ to give a touch and feel of the products to customers and thus, motivating them to log in and shop on the website. These experience zones will serve as pure play familiarity outlets.
Lastly, there will be a spurt in the growth of ancillary services. Providing additional services especially in the home segment like designing and consulting are set to become important features. Pepperfry rolled-out ‘In a day Carpenter’ service early this year and will look at adding more services to deliver end-to-end customer experience.
What are the challenges for e-commerce business in India? What kind of growth that the industry is witnessing currently?
The biggest challenge is poor infrastructure and supply chain. E-commerce as an industry can grow exponentially, provided the infrastructure and the ability to scale up and deliver products to every corner of the country develops at the same rate.
Poor last mile connectivity due to missing links in supply chain infrastructure is limiting the access to areas where a significant portion of online customers reside.
For a country as big as ours, the internet penetration has covered only 10 per cent of our population. This is in stark contrast to the global average of 35 per cent, and much below the average of the developed nations at 78 per cent. We have a population base, which is big enough for a thriving e-commerce industry, but the e-commerce potential at the moment is limited by the broadband penetration.
The plethora of local tax regimes is also a huge challenge for e-commerce. The implementation of GST is now a pressing need in the seamless world that technology operates in and any budget measure that indicates an early implementation of GST regime would be a value addition to the business.
For a specialised vertical like furniture, large item distribution poses as a huge challenge. There is no prototype in the online industry for a vertical like furniture that can be imitated. It was a huge challenge that we overcame by pioneering our own ‘Large Item Distribution model’ that enables for door delivery of large furniture items in 120 plus towns across the country. This model hasn’t been attempted by any other company in the past. By making significant investments in that area we have built a hub and spoke model that covers a majority of our orders. This comes from our business orientation that ‘when you take risks, you will make mistakes. But you should be the best at fixing them.’
What is Pepperfry’s marketing strategy going forward?
Our first 360-degree campaign has just been unveiled and will be live for a few weeks now. In continuation with the current campaign, we plan to concentrate on building the brand and increasing visibility in the coming months.
An integral part of our marketing strategy is Pepperfry Experience Centres. They will act as our Brick and Mortar presence. We plan to introduce four Experience Centres in key cities by the end of the year.
The idea is to build confidence for our products in our customer’s minds and enable them to make the right purchase decision. These centres are an extension to our recent marketing campaign and will help us to break barriers of shopping for high-value items like furniture online.
As far as reports are concerned, electronic goods are the highest selling categories online. So, what made you start home and furnishing portal?
Worldwide, markets have a couple of large horizontal players and multiple segment focused players. The trend reflects the growth of high traffic broad horizontals operating across like electronics followed by vertical growth like Fashion. The third wave was the online furniture, home, health and sports business as a strong vertical.
We launched Pepperfry two and half years back as we had anticipated the same growth trajectory for e-commerce industry in India, which was also triggered by the need to fulfil an unmet customer need for a wide range of quality furniture and home products in India at one place in January 2012. The need for a wide range of products exists across all town and classes in India. Of the 200 towns with a population greater than two Lakh, all the organized offline retailers put together are present in only 20 cities. Pepperfry has shipped products to customers in more than a 1000 Indian cities till date.
What is the size of the online furnishing business in India? Have customers accepted the online purchase format or do they prefer see offline purchase online?
The furniture and home vertical is a 20 billion industry out of which furniture comprises 55 per cent and Home Décor & Furnishing comprises 45 per cent stake, respectively. In the next three years it is all set to become a 32 billion business.
Globally online home businesses contribute about 15 to 20 per cent of the total online business while comparatively in India is fewer than two per cent currently. This is set to change in the coming three-five years with leading Indian home players set to reach the global standards. Pepperfry sees a huge opportunity to lead this growth.
Can you share how many brands you work with today and what can we expect from Pepperfry in the future?
In the furniture segment alone there are more than 70+ national brands with leading names like Mudra, Nilkamal, Spacewood, @Home, Durian, Furniture Kraft and Evok that work with us, there are more than 150+ traditional non-branded manufacturers who have been associated with us. The number of merchants in other categories include 1000 plus brands like Tupperware, Prestige, Housefull, Bombay Dyeing, Bajaj, Springfit, Swayam, Stellar, Eureka Forbes, Coirfit, Hawkins, etc.
How do you measure the social impacts that your business generates and the monetary value of conversions that occurs due to visits via social networks?
Social media plays a crucial role in the overall business objectives at Pepperfry.com. Every visit is tagged and tracked to measure the impact using analytics platform and thus, gauge the conversion rate. Depending on the objective of the activity we track the imprints of the post through third- party analytics tools.
What are your forward-looking plans for the next two years? Can we expect any new product/ category offering from the brand?
At our current pace, we will cross the Rs 500 -crore sales mark over the next 12 months. Pepperfry has been built on strong unit economics with high contribution margins and low fixed costs and we hope to turn profitable in a couple of years. Presently, we are working towards growing our supply end by adding new products on a regular basis. For this festive season alone we added more than 5000 items to our portfolio. Another important growth function is the supply chain and logistics. We have our Pepperfry Fulfilment centers in Mumbai, Delhi, Jodhpur, Bengaluru and Kolkata and have recently opened in Goa, Vadodara and Cochin. Our last mile delivery has been extended to 250 plus cities and towns.
As mentioned earlier Experience Centres form an important part of our marketing initiatives and going further we plan to increase the brand visibility.
What is your take on the Big Billion Day Sale and its unwanted backlash on the social media?
It was a great initiative that enabled to spread the word on ecommerce and thus, the growth of the market. Customer expectations from e-commerce companies are high, and therefore supply chain, logistics, and customer support have been the key focus areas for any successful e-commerce company.