The home furnishing industry in India is a great opportunity for companies to capture. Its market in India ispegged to be around USD 20 billion. Moreover, a large number of unorganized players exist who are not able to cater effectively to the demand due to logistics and infrastructure issues. This led to a number of start-ups in this space, backed by big VCs. One of them is the Goldman Sachs backed Pepperfry.

Pepperfry is a furniture and home décor marketplace, owned and operated by TrendSutra Platform Services Private Limited. This company is a wholly owned subsidiary of Trendsutra Cyprus Ltd., incorporated in Cyprus. It operates on a marketplace model and competes with Urban Ladder and Livspace in the furniture e-retail segment in India. Another key player in the segment is FabFurnish which operates on an inventory-led asset-heavy model.

Financial performance

The company reported a revenue of INR 25.3 crores in FY 14-15 against a loss of INR 88 crores. This is a revenue growth of more than 200% from INR 7.5 Crore in the previous fiscal. Losses nearly tripled from INR 30 crores in the previous fiscal.

In comparison, it close competitor Urban Ladder had reported a revenue of INR 19 crores and a loss of INR 58 crores in the same period.

In FY 14-15, Pepperfry‘s expense on ‘Advertisement and Business Promotional Expense’  shot up five times of that in FY 13-14. It was the largest head in their total expenses, accounting for about 60% of it. Employee benefit expenses stood at INR 15 crores, 13% of total and 1.5 times of that in the previous fiscal.

Pepperfry was founded by Ashish Shah and Ambareesh Murty (both former eBay employees), in July 2011.

According to their website, it covers more than 1000 cities in India, has more than 2 million registered users and more than 1000 merchants on its platform. They claim to have fulfilled more than a million orders. Pepperfry currently leads the online furniture market and sources most of its products from Jodhpur.

Pepperfry Funding

All of their funding has been routed through their holding company TrendSutra Cyprus ltd. Total funds of INR 433 crores have been infused into the company with latest being INR 179 crores in October 2015. In comparison, Urban Ladder has raised funds of INR 460 crores so far.

These companies are incurring huge Advertising and Promotion expenses, Pepperfry and Urban Ladder spent INR 68 crores and INR 40 crores, respectively on the same. For the time being it might be justified as the furniture e-tail market is in the early stage of growth and is yet to mature. They also offer heavy discounts to attract customers who have become accustomed to the offline unorganized retail sector. How long will this trend continue and when will these companies become profitable, if they do at all, is something that we will have to wait and watch out for.

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This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with a natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, co-founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.

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Shopclues reported its revenue figures for FY 2014-15 at INR 79.2 crores with a loss of INR 101 crores. This is a revenue growth of ~150% over INR 31.6 crores in the previous fiscal with a slightly higher increase in the loss figure (INR 38 crores loss in previous fiscal).

To put these numbers in perspective, this revenue is roughly half of what Snapdeal’s revenue (INR 168 Crores) was in FY13-14 and while the latter’s loss in the same year was about INR 265 Crores, slightly more than 2.5 times that of Shopclues’ loss this year.

About Shopclues

Shopclues (Clues Network Private Limited) was founded by Radhika Aggarwal, Sandeep Aggarwal and Sanjay Sethi in 2011. Shopclues.com is an online marketplace and provides a platform to buyers and sellers through their website. It operates in the Indian online retail industry which is dominated by major players like Amazon, Flipkart and Snapdeal.

Revenue Model

Shopclues offers the customers an online marketplace to purchase retail products, the charges for which contribute to its revenue.

Shopclues also offers advertisement and marketing services to the companies on its website. Its home page, category page, all brands page page, etc. are available to publish ads on. Also, it gives the option of email banners, custom designing of viral deals, sponsored listings as well as the option to insert marketing collateral, retail coupon or product samples in its shipping boxes.

Shopclues’ Revenue and Expenses

Around 64% of the revenue comes from the sale of services and 30% from advertising and marketing services. Advertisement and marketing services, which probably refers to the native ads service to sellers on their platform, has grown considerably in this fiscal and has increased its share in the revenue pie two folds. The following chart and table depict a breakup of their revenue:

[table id=6 /]

The biggest expense for the company is their shipment charges (33%). While the company spent only INR 2 crores on advertisements in FY13-14, this has gone considerably up – INR 25 Crores – in this year, probably attributable to use of mass media advertising channels such as television commercials. The following chart and table give a breakup of their major expense heads.

[table id=7 /]

Shopclues has been trying to differentiate itself in a market dominated by giants, by focusing on unstructured/ unorganized categories which contributes to roughly two-thirds of its gross merchandise sales unlike other marketplaces, which tend to focus on mobile, electronics, computers and branded fashion. They currently hold a market share of less than 10% in the segment.

This article was originally published here by Team Tofler.

Author– Vishal, a Sci-fi enthusiast, engineer by mistake and writer by choice, combines his eye for numbers with natural flair for storytelling to churn out Tofler’s blogs.

Editor –  Anchal, founder at Tofler, is a CA, CS and has more than 5 years experience in company analysis. She likes to explore and track companies, their performance and senior management.