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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Urban Ladder Home Décor Solutions Pvt. Ltd., which owns and operates Urban Ladder, has reported its latest revenue figures. Urban Ladder’s operating revenue grew from INR 11 crores in FY 13-14 to INR 13 crores in FY 14-15, while the losses surged from INR 7.6 crores to INR 58.5 crores in the same period.

Financial Performance

Urban Ladder’s total revenue stood at INR 19.2 crores – INR 12.98 Cr from operations and INR 6.23 other income – in FY 14-15 compared to INR 11.9 crores (INR 11 Cr from operations) in the previous fiscal.

Looking at their P&L, it appears that they have shifted from an inventory led model to a marketplace model during FY 13-14 to 14-15. Revenue from ‘Sale of furniture’, which contributed 74% of their revenue from operations in previous fiscal, was nil in this one.

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Total revenue from operations grew by only 18% this fiscal. A total ‘Other Income’ of INR 6.2 crores, was mainly comprised of the ‘interest income and income from sale of current investments’. The book value of the current investments stood at INR 300 crores as on 31^st March, 2015. Following chart depicts their year on year revenue and PAT.

The loss for the company grew to INR 58.5 crores in FY 14-15 as against INR 7.6 crores in FY13-14. While the revenue grew only marginally this fiscal, certain expenses saw a tremendous increase – Advertising and Marketing expenses (grew by a whopping ten times) and Employee expenses (almost quadrupled) – thus increasing Urban Ladder’s losses many folds. There was also a spurt in the Courier and Delivery Charges (from INR 81 lacs to INR 4.9 crores) and Labour Charges (from INR 58 lacs to INR 3.9 crores). The company provides free home delivery of furniture and free installation.

About Urban Ladder

Urban Ladder was co-founded by Ashish Goel and Rajiv Srivatsa in 2012. It provides an online marketplace for furniture and home décor and operates across 30 cities in India. It provides the service through the website as well as 3 different mobile apps. Its major competitors include Goldman Sachs backed Pepperfry and Rocket Internet backed FabFurnish. As per the documents available with the Registrar of Companies, so far it has raised around INR 460 crores from multiple investors including Kalaari Capital, Sequoia Capital, SAIF Partners, Steadview Capital, Anand and Venky LLC, Ratan Tata and Massachusetts Institute of Technology (MIT) among others.

Urban Ladder was one of the early entrants in the online furniture retail space, which used to be a niche till a few years back. With a strong focus on quality, they are trying to build their USP on high end designs and great customer experience. With several established players and many more new ones coming in this space, battle is only going to get more intense.

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, 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.