EXCLUSIVE: An online furniture retailer in India saw its sales double after it opened physical 'experience' stores

• Their omnichannel strategy has worked well with close to 40% revenue coming in indirectly from their offline studios, reveals top Pepperfry executive.
• In an exclusive chat with Business Insider, Pepperfry says the company will increase the number Pepperfry Studio locations to over 100.
• Pepperfry has announced the launch of its Snooze Studios which will sell sleep accessories like mattresses.
• The startup aims to rake in a revenue ₹20 billion by the financial year 2021 through its in-house brands alone.

In the last eight years of its existence, Pepperfry has grown to be one of the success stories of India’s e-commerce boom but the startup’s Vice President and Head of Omnichannel expansion, Mihir Kulkarni, had an interesting revelation to make in an exclusive interview with Business Insider – the sales had doubled after they opened physical ‘experience’ stores.

“In every new catchment that we have opened up the offline studio, the city’s sales have grown by 90-100%. We now plan to take our store count up to 100 by the end of the fiscal year,” said Kulkarni.

Their omnichannel strategy has paid off. Pepperfry launched its first studio in 2014. Since then, they expanded it to 65 studios across 28 cities. “While we don’t sell directly through our offline studios, they contribute significantly to our sales. Close to 40% of our overall turnover comes from the online bookings made at these studios,” said Kulkarni.

This is a telling sign of the nature of evolution of the much-celebrated boom in Indian e-commerce.

Other startups like Craftsvilla, Faballey and more recently Popxo have also recently launched offline stores to further grow their business.

Amazon which had although pulled the plug on its global mall pop-up stores, didn’t give up on offline retail. Instead it launched ‘Presented by Amazon’ a range of kiosks.

Pepperfry is definitely doubling down on its offline efforts but it is also looking to keep its capital investment low. It plans to expand its presence in Tier-II cities in India but would rather have more franchisees than owned stores. “Currently, out of the 65 stores, 12 are through the franchise model. We expect the number to go up to 25 by the end of the year,” said Kulkarni.

The sleep market

Beyond physical stores, Pepperfry is also betting big on in-house brands particularly in, what Kulkarni likes to call, the ‘sleep’ market -- mattresses, bedsheets, pillows, and more. Pepperfry is pushing these new products through its in-house brand, Clouddio.

The startup aims to rake in revenues to the tune of ₹20 billion by 2020-21 through in-house brands alone. In 2017-18, Pepperfry had announced a gross merchandise volume of ₹15 billion. And, over half of its current revenue comes from in-house brands.

The e-retailer also announced the launch of Pepperfry Snooze Studios – its line of products for the sleep market – within its Studio Pepperfry.

Sleep smart

The sleep market is currently valued at $2.5 billion in India and is growing at 10%. Pepperfry is also experimenting with IOT-enabled products for this market– from beds that have an in-builtalarm clocks to ones that monitor sleep patterns. These products could hit the market in a few years.

“The sector is highly unorganised and in terms of consumer experience. It is a broken category. That is why we want to crack open the market with our successful omnichannel strategy,” said Kulkarni.

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