Flipkart eyes on becoming India’s largest furniture retailer by year end

BENGALURU: Flipkart has set its sights on becoming India’s largest furniture retailer by the end of this year with an ambitious target to register a 15-fold growth in the high-value category, which also promises to deliver healthy profits. The nine-year-old company has so far relied primarily on categories such as electronics, mobiles and apparel to fuel its rapid growth.

This year, the need to temper growth with profits has led the Bengaluru-based company to seek out newer product categories like home furnishing and automobiles that deliver both large transaction size and margins. Launched just six months ago, furniture is now one of the top categories for Flipkart as it squares up to stiff competition from specialised portals such as Urban Ladder and Pepperfry. Also in the fray is Kishore Biyani’s Hometown, which recently acquired Rocket Internet-owned Fabfurnish to build an ‘omnichannel strategy’,which involves selling both online and offline.

“We have just scratched the surface,” said Sandeep C Patil, a senior director at Flipkart, who claims his company is now among the top five furniture retailers in the country. He declined to share specific sales figures but indicated that the company would target growth by focusing on its bank of 75-million registered users. “Furniture is a $20 billion market, which is bigger than the mobile phone market,” said Patil. Flipkart could be aiming for furniture sales of up to $ 400 million or Rs 2,600 crore on its platform by the end of 2016.

EThad earlier reported that Norwest Venture-backed Pepperfry expects to post growth of at least 150% in fiscal 2017, after ending this year with a gross merchandise value of Rs 1,000 crore.

Urban Ladder expects to hit net revenues of Rs 1,300 crore this year, while a Future Retail spokesperson said that the company expects Hometown and Fabfurnish to generate business of Rs 800-1,000 crore by the end of fiscal 2017.

“Right now verticals are bigger than horizontals in the category, but even after launching in October we are quite close to them in size,” said Patil. “If our projections hold, we will be multiple in size of verticals.” The company aims to also seal exclusive online tie-ups with brands like Godrej Interio and get international selection.

There is good reason why retailers are honing in on this high growth, high-value category. The average sale price for items of furniture is around Rs 15,000-Rs 20,000 while items for home, including pots and pans, sell for an average of about Rs 1,000. In a recent report, investment firm Morgan Stanley predicted that furniture and home furnishing will be the next big category for large horizontal ecommerce companies, as it is a highly fragmented business with small offline players. However, managing logistics and the supply chain are the key pain points in this category, the report cautioned.

Flipkart, a late entrant will have to also contend with the head start gained by rivals like Urban Ladder and Pepperfry that have built welloiled logistic networks. Flipkart has started engaging with investee company Jeeves Consumer, which until now provided after sales service for electronics and home appliances, but is now being roped in to help install large furniture.