 "Decoding Ratan Tata's love for Urban Ladder: It's not all about design")
Interest in design is not the only reason for Ratan Tata to invest in online furniture brand Urban Ladder.
The online furniture business is among the fastest growing and is expected to become as big as electronics and fashion categories soon. Besides, online furniture sales also get jaw-dropping margins: 50% or more for each piece sold.
So while Tata may have been enthused about the design and quality capabilities of selling furniture online, make no mistake about where he’s parked his money - it is a category which should offer handsome returns very soon. Tata’s decision to invest an undisclosed amount in Urban Ladder was announced yesterday.
COO Rajiv Srivatsa told Firstbiz that funds raised through four rounds of invetsment (including Tata’s) will be used to build backend supply chain and sourcing besides investment in technology and tech startups.
Urban Ladder gets a large chunk of its furniture manufactured in Rajasthan and then Delhi, Bengaluru and Mumbai become good secondary sources of furniture manufacturing for it. Srivatsa claimed his company is growing 20-25% in sales month on month and had already raised $26.5 million in three rounds of funding before Tata came in board.
FabFurnish is another successful online furniture retailer. MD Vikram Chopra said the entire online furniture category has invited just $50-60 million in funding since 2012 “but investments will go up significantly as the market is being scaled up rapidly”.
FabFurnish began two years ago and is already eyeing over Rs 220 crore in sales this fiscal. It has been funded by Rocket Internet, one of the promoters of online fashion major Jabong. Chopra, however, declined to disclose the quantum of funding. He merely said as of now, there was no immediate requirement of more funds for FabFurnish.
Pepperfry, which claims to have grown 100-fold in two-and-a-half years of operations, is eyeing sales of over Rs 1,000 crore by the end of 2015. Being an early starter, Pepperfry has already invested significantly in strengthening logistics and infrastructure for shipping bulky and high-value furniture items.
A statement said Pepperfry has built a proprietary, large item distribution logistics hub and spoke shipment model through contracted trucking arrangements in the last two years.
The statement also claimed that Pepperfry has successfully established last mile delivery in 127 towns directly and plans to extend its reach to 400 towns directly through its own last mile delivery infrastructure by the end of next year. Till date the company has shipped furniture across 2,700 towns across the country, and today it sells a piece of furniture every minute.
Online furniture retail, according to estimates by the players themselves, is about Rs 750 crore now and accounts for an insiginificant share of the Rs 1.5 lakh crore total furniture market in India. With unlimited potential and increasing investor interest, it should attain rapid growth easily.
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