Online furniture store Pepperfry plans to raise up to $60 mn, set up offline stores

New Delhi: Pepperfry.com, which claims to be the largest online furniture and home store, is looking to raise $50-60 million in a fresh round of funding in a couple of months as it expands its online presence and also prepares to set up offline stores in Mumbai, Delhi-NCR, Bengaluru and Chennai.

Pepperfry has been a spectacular success story, if one goes by its promoters’ claims. It has grown to four times in the last year and says it is now shipping 15,000 pieces of furniture a month.

The company was founded by two former eBay employees - Ambareesh Murty, who was a former eBay Country Manager and Ashish Shah who was a former head of eBay Motors-India and Philippines. Pepperfry initially offered a selection of products across multiple lifestyle categories but switched its focus to furniture and home decor last year. Initially, it was funded by the founders themselves, but they then raised $ 5 million in Series A funding from Norwest Venture Partnersin December 2011.

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The second round of funding got Pepperfry.com $8 million from Norwest Venture Partners (NVP) in 2013. Early this year, it raised another $15 million in the third round of funding led by Bertelsmann India Investments (BII), the strategic investment arm of the international media company Bertelsmann in India. Current investor Norwest Venture Partners (NVP) had also participated in this round.

Pepperfry has raised $28 million in three separate rounds of funding and the latest move to raise more funds is actually an ambitious leap - it wants to raise twice the amount it has raised till now, that too in a single round. Pepperfry.com has been using funds for marketing, improving supply chain and expanding reach of last mile delivery.

Ashish Shah, COO and co-founder of Pepperfry.com told Firstbiz his company has invested time and considerable efforts in scaling up aspects of backend and supply chain and logistics. These form the backbone of a furniture and home store business where large, bulky items need to be shipped and some amount of carpentry done after delivery is completed.

Shah said his company owns 55 trucks and the manpower which takes supplies to the customer’s doorstep and then installs the furniture and home store items.

Pepperfry holds no inventory, sources items from a network of suppliers and already has direct delivery to 127 cities across the country. Shah said the company had a GMV of Rs 100 crore in 2012 calendar but is eyeing Rs 1000 crore by the end of the next calendar year.

It also plans to expand the selection in current and adjacent categories, ramp up talent in merchandizing and operations, increase logistics and last mile delivery coverage to Tier II cities and introduce more features on the Pepperfry platform.

But it’s not just Pepperfry, its competitors in the online furniture market are also attracting investors. According to a report, Urban Ladder could get up to $80 million in a fresh round of funding from SoftBank and Tiger Global.

The third major contender in the online furniture market, FabFurnish, has seen investments from Rocket Internet, which is one of the investors of fashion and lifestyle major Jabong.

The online furniture market has suddenly become hot because investors have realised it offers jaw dropping margins - 50 percent or more for each piece sold online. The online furniture business is among the fastest growing and is expected to become as big as electronics and fashion categories soon. No wonder investors are rushing in to park funds in it.