What you will learn in this case study?
1) About Pepperfry
2) The Idea of emergence
3) Business Model
4) Marketing and Promotions
5) Funding and Future Plans
Indian E-commerce is helping catalyze economic growth by creating new business segments, promoting competitiveness and ensuring the spread of business best practices. By providing access to markets across the world for Indian manufacturers and craftsmen, e-commerce is generating new employment opportunities and helping create India’s entrepreneurship ecosystem.
In the era of raining shopping sites; Pepperfry entered as a legend in its category. In November 2011, Pepperfry.com founded by former-eBay CEO Ambareesh Murty and one of his former colleagues at eBay, Ashish Shah entered the segment. In its initial days of launch, Pepperfry had a line of departmental store featuring apparel, bags and accessories, furniture & home decor, Jewellery and Perfumes & cosmetics.
It featured brands like Lotto, Little India, Peter England, Beverly Hills Polo Club, Octave, Allen Solly, and L’Oreal among others, and allowed users to browse various departments using filters for brands, product type, size, color, design and other variables. But later taking the benefit of the privileged category over the website, the business was fixed to Furniture, Home Decor, Kitchen & Dining, etc.However, Pepperfry.com started its operations on January 3, 2012.
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The idea of emergence
Ambareesh Murty spent over five years at eBay, and the last 3.5 years he was CEO over there. He had a rocking time at eBay and saw the potential for e-commerce in India. After spending his time at eBay he considered what he should be doing. He thought about the opportunity in India was huge and lucrative and had always the entrepreneurial streak.
When Ambareesh changed his LinkedIn status to ‘starting up’, a complete bunch of people reached out to him. They all interacted and figured out if they were thinking of the same stuff – building a great, lasting business. So they started this online store and because he got a chance to work again with people whom he had worked in the past, the initial stage of not having funds became a little bit easier, because they were all in it together.
The first round of investment from Norwest highly motivated them which came in just a month and a half ago before the inception.
Over the last year and a half, the management saw success in the furniture & home decor category; it contributed to around 80 per cent of the overall revenues. They also noticed that there were no really large online players in this space. And taking the benefit of the factor, the business was fixed to Furniture, Home Decor, Kitchen & Dining, etc.
The company offers free shipping on all orders. For the convenience of shopping and returns it introduced a 30 Days No-Questions-Asked 100% Money Back Guarantee for customers in 2014.
In December 2014 the company launched its first concept store “Studio Pepperfry”. This was followed by a similar Studio opening in Bengaluru.
The company recently celebrated a major milestone of successfully delivering one million customer orders.
Pepperfry operates on a “Managed Marketplace” model, which is an ideal platform for small and medium business artisans and merchants, who wish to sell their merchandize to millions of discerning customers. Currently, the website has over a 1000 plus merchant partners, who can showcase their design skills, craftsmanship and service orientation to customers across India and the world. For many merchants, it has become the primary source of their income.
Marketing and Promotion
• In October 2014 Pepperfry tied-up with Satchi&Satchi to release its first television commercial with “Happy Furniture to You” as its unique brand proposition. It was spread across radio, digital, outdoor and social platforms like Google, YouTube and Facebook. The company has launched a series of successful campaigns in the last few months.
• Other than its online presence, it has a deep impact through offline marketing. Pepperfry launched its first concept store Studio Pepperfry in Mumbai on December 18, 2014. The company launched another Studio in Bengaluru is May 2015. The brand has plans to open 20 such offline stores in top cities like Delhi-NCR, Bengaluru, and Chennai.
• The company has tied-up with HomeStop to launch the first Shop-in-Shop concept store in the category called “Pepperfry Live” at their Ahmedabad, Chennai and Mumbai outlets with similar store openings at various other HomeStop outlets. It also has pop-up stores at Mumbai, Delhi and Bengaluru airports.
• Over the social media platform Pepperfry has done a great job in engaging its customers with its lucrative deals and discounts. With over 5 lacs Facebook fans and 5000 followers, Pepperfry has become leader in home shopping marketplace.
• In April 2013, Pepperfry launched its mobile site that can be surfed on any web browser or mobile device. Apart from that, the company recently launched its app in June 2015 to assist millions of Android and iOS users to make their decisions in a more informed manner using the enhanced ‘Augmented Reality’ features. Using this feature, customers can virtually place the products in their home and share them with their family and friends. They can also pick any color to represent their walls to check how it looks.
• Pepperfry partnered with Rajasthan Royals in IPL 2015 to promote the brand name and increase engagement and sales.
Funding and future plans
Started by the group of people working in same industry, the initial fund was leveraged by the founders themselves. Then Pepperfry.com raised $5 million in Series A round of funding from Norwest Venture Partners in December 2011 before its actual launch. Again in 2013, it raised fresh funds worth $8 million from Norwest Venture Partners in the second round.
In an interview given to Startup Central in 2013, the founder Ambareesh Murty mentioned, “Our model is very different. We don’t think that you need that much money in India to build a really good ecommerce company”.
In 2014, the company raised $15 million in the third round of funding led by Bertelsmann India Investments. The company is currently in the process of raising funds for Series D.
It also plans to expand 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. The company aims to attain a run rate of 1000 crores by the end of 2015.
Pepperfry has successfully established the Last Mile Delivery in 127 plus towns and cities directly. It plans to extend the geographical reach across the country by reaching 400 towns directly through its own last mile delivery infrastructure by the end of 2015.
• Pepperfry gained the “2012 Red Herring Asia Top 100” award which honors the most promising private technology ventures from Asia.
• The company also won the “Pure-Play e-Retailer of the Year” at the Indian e-Retail Congress 2014 that recognizes outstanding performance and innovation in retail.
• Pepperfry won the Gold award at the Neons for Best Creative under the category of Retail Advertising for its Outdoor campaign – ‘Happy Furniture to You’.
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