Service is our biggest differentiator: Kashyap Vadapalli, Pepperfry
Kashyap Vadapalli, CMO, Pepperfry tells us how Pepperfry is aligning its business and communication objectives for this year to stand out amongst competitors
Pepperfry has been on the block since 2011, but at some point around 2014, it’s popularity exploded as they launched their television campaigns. Some of their famous campaigns such as “For those who like this and those who like that” grabbed a lot of attention and eyeballs. The TVC was about a couple innocently wandering in to buy new furniture for their house. While the boy was drawn to dark sheesham furniture, the girl preferred light and subtle furniture. The TVC showed the two different choices of two individuals and there comes the tagline of the campaign where Pepperfry claims to get each individual’s choices covered.
The furniture market globally and in India has been growing aggressively and is set to do so in the coming years. The range of indigenous furniture available in India includes both residential and contract system furniture. Manufacturers in India usually use a three-tier selling and distribution structure, comprising of the distributor, wholesaler, and retailer. The market is mainly concentrated in A, B and C category cities (the top 589 cities). A and B type cities together constitute 33 per cent of the total market. With a healthy economy and increased household and institutional spending, the market is growing steadily.
Talking about how the emergence of the online retailer is changing the spectrum of Indian customers from moving on to local furniture dwellers to the trusted ones, Kashyap Vadapalli, CMO, Pepperfry shed some light on how Pepperfry is aligning its business and communication objectives for this year to stand out amongst all other competitors.
“The furniture and home products market in India is extremely large. There are various estimates, but the realistic estimate would be that about 200,000 crores of business in the home and furniture segment every year. Out of which about 100,000 crore is what we call loose furniture- when people are buying dining tables, beds, etc. And about another equivalent of 1000 crore is fixed furniture, for example, modular kitchens and wardrobes or fixed work through carpenters and so on. Roughly 90-95% of this is unorganized, for example, local furniture dwellers such as carpenters, etc”, added Kashyap.
When Pepperfry started 6-7 years ago, the market situation was unorganized approximately 90-95% and only 4-5% was organized offline national chains.
Speaking about the growth of Pepperfry and the brand recall amongst the consumers, Kashyap stated, “When the online sales started, we began to grow aggressively in the organized sector. Pepperfry has already transformed the furniture market in the country. We run a brand track where we ask more than 1500 people every month and we have been doing this for the last 6-8months in terms of keeping brand matrices like the top of mind, brand recall and overall recall. Pepperfry is almost at 100% with people who can recall Pepperfry. Their spontaneous recall is at almost 98-99% and we are at the top of mind with a wide margin. We are at number one and the player on number two is less than half of us”.
The Battle Between the Organised and Unorganised Furniture Market
Brands such as Pepperfry, Urban Ladder, and Ikea are expected to bring standardization in terms of quality, raw materials, product dimensions, supply chain, and inventory stocking to an extremely fragmented furniture market and thus provide consumers with more reasons to turn to the organized space.
“Our task as Pepperfry is not really to stand out against a number 2, 3 or 4 player because they are really far behind, our task is really to help the unorganized players the ad market to become organized. More and more customers, instead of going into local stores or working with local carpenters, prefer an organized player and they’ll come to us first based on our pricing, our services, and variety”, explained Kashyap.
He further added, “We have truly invested in developing this market. The most important step of developing this market is actually the supply side which is where we work as a market place works; very closely with a lot of merchants and manufacturers. We work a lot with manufacturers directly and help them to bring their supply on the site, unlike electronics and apparels which is very easy. The furniture market is based on unstructured data. Firstly creating that unstructured data and then structuring it. Working with a lot of manufacturers directly unlike e-commerce websites, who are not very comfortable working with them, so the owner of these e-commerce websites work with traders, aggregators, and distributors. We work a lot with small manufacturers in hubs such as Jodhpur etc.”
Pepperfry's Marketing Mantra
In a short span of 7 years, Pepperfry has been able to successfully entrench its position as a leader in the home and furniture segment with an online traffic market share of 60% plus. Growing at a CAGR of 83%, their mission is to be in 20 million homes by 2020. Discussing how they built and marketed their brand, Kashyap shed light on the media spends in the furniture category.
“Furniture as a category if you look at all the media spends and share of voice, if you look at TV for example, over the past 5 years we possibly have a share of voice which is 70-80%. Nobody else advertises furniture on TV. We identified very early on that the biggest Indian customer differentiator is service. While variety and value are the two pillars, I think service is the biggest differentiator. Kasyap emphasized how they realised that while building a brand it was not just about telling their customer that they have thousands of designs or it’s not about telling them about discounts.
"Performance marketing can drive the value message very easily, the brand has to be built on service and happiness. After realising this all of our communication has been largely focussed on providing customer services. We’ve done some campaigns on value but largely if you see 70-80% of our narrative, it’s been build on the entire service promise”, added Kashyap.
Today Pepperfry reaches to 500+ cities and aims to expand to the Tier III and IV cities, thereby doubling its footprint via its omnichannel model.
Commenting on this, Kashyap said, “We went omnichannel almost 4 years ago, so we realised that this is a category where irrespective of how much descriptions and what great images you have on the site, a lot of people would want to get inspired by actually seeing the item. Today we have 43 locations across the country where customers can experience our products. Some of our studios are as big as 10,000 sq ft. We are also expanding our omnichannel footprints. From 43 we are planning to go 150 stores in the next 12-18 months.”
Talking about the marketing budget for the year 2019, Kashyap explained, ‘Typically our budget is roughly about 50% online and 50% offline. About 80% of our offline budget, which is 40% of our overall budget, is usually television and the balance is split between cinema, radio and outdoor. The 50% that we do online again 75% of it is dedicated towards performance and the balance of 25% is what we call digital brand which is the area where we have started working over the last 18 months with such online content platforms as Miss Malini and FilterCopy.’
‘From the overall budget perspective, we have been fairly aggressive in terms of investing. So our budget over the next 12 months I would say would be upwards of 200 cr,’ added Kashyap.
The Entrance of IKEA into India
Since a global giant like Ikea, the world’s largest brick and mortar furniture chain has entered the Indian market, Pepperfry is also in the process of digitising its product catalogue, enabling customers to drag-and-drop virtual looks in its Studios.
Discussing this, Kashyap said, “When we talk about e-commerce often people think that its a game for only one or two players. So if there are two players in the market there is no space for the third player. While it may be true for horizontals like large players who do everything from fashion to households where it makes sense for only a couple of players to adjust. But the furniture industry is very specialised. I think furniture as an industry is large enough for multiple players to succeed in. If you have a strong reason for customers to like you whether it’s your product, catalogue or service, you can grow your business aggressively. I don’t see it as a small box where everybody is fighting and everybody occupies a different proposition.”
Comparing Pepperfry to IKEA, Kashyap commented, “I think few of the major differences among us are that our catalogues are very different and our price points as well. Not just that our target group is also very different so I think there is an opportunity for all businesses to grow. So we are not really worried that a global player has come in because we think that our strength lies in what we already do. Additionally, we have more robust and complete offerings and we operate on multiple levels.”
GST was the important key factors for deriving growth for the companies. As it was introduced in July last year, most of the furniture and home products were got into the 28% slab. Talking about how Was the year 2018 for Pepperfry in terms of revenue and the expectations from 2019, Kashyap said, ‘Earlier the entire ecosystem, whether it was manufacturers or artisans; everybody was operating at different states anywhere between the 10-12% slab. Suddenly everybody had to move to the 28% slab. There was a learning curve for everybody in terms of what is really their GST liability and how much can they claim it back from. GST is an added tax. So people didn’t know how the claim will work. I think that did cause some disruption because a lot of people in the supply chain didn’t know what they should charge. Later in November, a lot of home and furniture products moved on to the 18% slab and some of the products moved to 12%. So, December of 2017 to March 2018, has been fantastic for us. The business has grown tremendously, we have more than double. We expect 2019 to be better than in 2018.”
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