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Pepperfry - mbacasecomp.com€¦ · Pepperfry 195 M 2580 M 34 stores Urban Ladder 110 M 945 M 10...
Transcript of Pepperfry - mbacasecomp.com€¦ · Pepperfry 195 M 2580 M 34 stores Urban Ladder 110 M 945 M 10...
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PepperfryNew Horizon
OSB Consultants
Carmen Bassim Joanna Salame Johnny Khalil Jad Rizk
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Executive Summary
Issue
Challenges
Strategy
KPI by 2021
over 4 years
How can Pepperfry build new revenue stream to pave the way
to profitability while keep on innovating as an omnichannel
powerhouse?
Growth Issue Profitability Issue
Improve Consumer experience in India & Diversify
to B2B Internationally
Revenue increase 28% NPV 385M INR
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Overview
Analysis
Strategic Alternatives
Implementation
Financials
Risks & Mitigation
Conclusion
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Environmental Analysis
Analysis Strategy Implementation Financial & Risks
Booming Real Estate
Increasing Affluence
Growing Middle Class
Furniture industry growth from 25b to 35 b in 2020
Online portion worth 700m $
Indians becoming more conscious of their homes
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Environmental Analysis
Analysis Strategy Implementation Financial & Risks
Booming Real Estate
Increasing Affluence
Growing Middle Class
Furniture industry growth from 25b to 35 b in 2020
Online portion worth 700m $
Indians becoming more conscious of their homes
A huge opportunity for growth exists today in the Indian market
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Pepperfry Strengths
Analysis Strategy Implementation Financial & Risks
• Largest furniture e-tailor in India
• Offering a curated platform
• All transactions are made profitable
• Lead to the establishment of a supplier ecosystem
Market Leaders
• 34 present physical stores
• Focusing on the franchise model to grow
• Use of digital marketing Omnichannel
presence
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Pepperfry Strengths
Analysis Strategy Implementation Financial & Risks
• Largest furniture e-tailor in India
• Offering a curated platform
• All transactions are made profitable
• Lead to the establishment of a supplier ecosystem
Market Leaders
• 34 present physical stores
• Focusing on the franchise model to grow
• Use of digital marketing Omnichannel
presence
Pepperfry lead to the organization of the Indian furniture retail industry achieving
revenue growth CAGR of 65%
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Pepperfry’s Supply Chain
Analysis Strategy Implementation Financial & Risks
Sourcing
• Large base of manufactures
• Providing them with support and analysis
Storage
• 3 Fulfillment centers
• 17 distribution centers
• Automated warehouse
Packaging
• Box manufacturing unit in Jodhpur
• Deliveries control by management team
Delivery
• Damage rate <2% compared with global average of 6%
• Route planning based on data
• 1st time delivery rates of 92% and NPS >60
Assembly
• 70% done on same day
• Use of mobile app to locate and recruit carpenters
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Pepperfry’s Supply Chain
Analysis Strategy Implementation Financial & Risks
Sourcing
• Large base of manufactures
• Providing them with support and analysis
Storage
• 3 Fulfillment centers
• 17 distribution centers
• Automated warehouse
Packaging
• Box manufacturing unit in Jodhpur
• Deliveries control by management team
Delivery
• Damage rate <2% compared with global average of 6%
• Route planning based on data
• 1st time delivery rates of 92% and NPS >60
Assembly
• 70% done on same day
• Use of mobile app to locate and recruit carpenters
SC is well established and Pepperfry grabs any opportunity at continuously improving
and developing itself
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Continuous Growth and Improvement
Analysis Strategy Implementation Financial & Risks
Focusing on decor and
utilities
Launching 10 House
Brands
Offline studios
doubling in 2019
New customer
base (furniture rental )
Partnerships with 1400 architects
and interior designers
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Competitive Landscape
Analysis Strategy Implementation Financial & Risks
Vertical
Horizontal
OnlineOffline
Omnichannel
Durian
Godrej
Home Town
Ikea Pepperfry
Urban Ladder
Livespace
Homelane
Amazon
Flipcart
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Competitive Landscape
Analysis Strategy Implementation Financial & Risks
Vertical
Horizontal
OnlineOffline
Omnichannel
Durian
Godrej
Home Town
Ikea Pepperfry
Urban Ladder
Livespace
Homelane
Amazon
Flipcart
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Competitive Landscape
Analysis Strategy Implementation Financial & Risks
Funding in
USD
Revenue in
INRPhysical Presence
Pepperfry 195 M 2580 M 34 stores
Urban Ladder 110 M 945 M 10 stores
Livspace 27.6 M 224 M 7 cities ~ 7 stores
Home Lane 25 M 340 M 8 stores
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Competitive Landscape
Analysis Strategy Implementation Financial & Risks
Funding in
USD
Revenue in
INRPhysical Presence
Pepperfry 195 M 2580 M 34 stores
Urban Ladder 110 M 945 M 10 stores
Livspace 27.6 M 224 M 7 cities ~ 7 stores
Home Lane 25 M 340 M 8 stores
Pepperfry is still the market leader which will attract more suppliers & consumers
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
Focus on in house brand to drive expansion in Rural India2
▪ Increase revenue share of in house brands
▪ Increase profit margins and grow in attractive Indian market
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
Focus on in house brand to drive expansion in India2
▪ Increase revenue share of in house brands
▪ Increase profit margins and grow in attractive Indian market
Improve Consumer experience in India & diversify to B2B Internationally3
▪ Increase ARPU in attractive Indian Market
▪ Organize access for businesses in GCC & Italy to Indian manufacturers
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Expand B2C in Neighboring Countries
Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
1
Advantages Disadvantages
▪ Might not benefit from
first mover advantage
▪ Increase customer reach ▪ Limited growth
▪ Leverage experience &
established reputation
▪ High opportunity cost,
Indian market is still
attractive
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Focus on in house brand to drive expansion in Rural India
Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
2
Advantages Disadvantages
▪ Leverage data analytics ▪ Not in line with the
company’s vision to be an
ecosystem
▪ Better Quality Control ▪ Increasing competition
▪ Increasing profit margins ▪ High capital expenditure
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Improve Consumer experience in India & diversify to B2B Internationally
Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
3
Advantages Disadvantages
▪ Leverage experience &
achieve economies of
scope
▪ Increase ARPU from the
Indian consumer
▪ Elevate Pepperfry’s image
to be a portal to Indian
craftsmanship
▪ Moderate capital
expenditure
▪ New Revenue Stream ▪ Need to create a new
network
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Strategy: Decision Criteria
Analysis Strategy Implementation Financial & Risks
Cost Revenues
Growth Vision
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Strategy: Decision Criteria
Analysis Strategy Implementation Financial & Risks
Cost Revenue Growth Vision total
Expand B2C to neighboring countries - + + + +2
Expand in house brands in rural India -- ++ ++ - +1
Improve customer experience &
diversify to B2B internationally--- +++ +++ +++ +6
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Strategy: Decision Criteria
Analysis Strategy Implementation Financial & Risks
Cost Revenue Growth Vision total
Expand B2C to neighboring countries - + + + +2
Expand in house brands in rural India -- ++ ++ - +1
Improve customer experience &
diversify to B2B internationally--- +++ +++ +++ +6
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
Focus on in house brand to drive expansion in Rural India2
▪ Increase revenue share of in house brands
▪ Increase profit margins and grow in attractive Indian market
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Strategy: Alternatives
Analysis Strategy Implementation Financial & Risks
Expand B2C in Neighboring Countries1
▪ Leverage on successful business model to scale
▪ Choose markets where business environment is similar to India
Focus on in house brand to drive expansion in India2
▪ Increase revenue share of in house brands
▪ Increase profit margins and grow in attractive Indian market
Improve Consumer experience in India & diversify to B2B Internationally3
▪ Increase ARPU in attractive Indian Market
▪ Organize access for businesses in GCC & Italy to Indian manufacturers
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Recommendation
Analysis Strategy Implementation Financial & Risks
Improve consumer experience in India and Diversify to B2B
internationally
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Road To Success
Analysis Strategy Implementation Financial & Risks
Improve
Enhance Consumer Experience
O2O Synergy
Diversify
Expand to B2B
Win-Win
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AR : New Innovative technology
Analysis Strategy Implementation Financial & Risks
Pillar 1
Augmented Reality for Pepperfry items online & offline
▪ Augment Option on
Pepperfry online platforms
▪ Implement Instore AR
What?
▪ Use in-house tech experts to
develop Augment feature
▪ Raise in-store Awareness
through buzz-feed & BAs
How?
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AR : Physical Store Experience
Analysis Strategy Implementation Financial & Risks
Pillar 1
Heard of AR or physical store
In-storeBrowse items
Take online & home
Neelesh Shah
35 year-old
Consumer
touchpoints
In-store Brand
Ambassadors
Awareness of AR
In-store Brand
Ambassadors
show AR scanning to
Consumers
Buzzfeed via
influencers using AR :
Nikita Bhateera
+
E-Word Of Mouth
Try Item in the
house make
purchase
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AR : Online Experience
Analysis Strategy Implementation Financial & Risks
Pillar 1
Online browsing
Chose an item
Try AR Make
purchase
Kavin Shah
31 year-old
Tech Savvy
Consumer
touchpoints“Let’s see if it goes
with your house?”
Augment item
Receive
recommendations
Popups
suggesting AR
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Road To Success
Analysis Strategy Implementation Financial & Risks
Improve
Enhance Consumer Experience
O2O Synergy
Diversify
Expand to B2B
Win-Win
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AR : New Innovative technology
Analysis Strategy Implementation Financial & Risks
Pillar 1
Augmented Reality for Pepperfry items online & offline
✓ Strengthen Position as Omnichannel Powerhouse
✓ O2O synergy
✓ Increase conversion rate
✓ Decrease time of conversion to purchases
Why?
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AR Added Revenues
Analysis Strategy Implementation Financial & Risks
Pillar 1
20% Revenues from
studios
Current Status
80% Revenues from Online
100% Higher average order
35% Revenues
from studios
After AR
65% Revenues
from Online
Incremental average GMV Increase of 11%
Increase ARPU
by 15%
Increase ARPU
by 5%
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Road To Success
Analysis Strategy Implementation Financial & Risks
Improve
Enhance Consumer Experience
O2O Synergy
Diversify
Expand to B2B
Win-Win
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Diversify to B2B internationally
Analysis Strategy Implementation Financial & Risks
Pillar 2
PepperfryM2M.com
What?
✓ New customer base
✓ Leverage on knowhows & capabilities
✓ Improve relationship with Indian Merchants New
revenue streams
Link between Indian Merchants (SMEs) and International
furniture merchandizers i.e. Italy & GCC
Why?
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How to implement PepperfryM2M.com?
Analysis Strategy Implementation Financial & Risks
Pillar 2
Go to Italy & GCC City Test: Qatar
Create B2B Platform
1. Offline: Hire experts Sales-force to go to Qatar and visit
major manufacturers with PepperfryM2M offers
2. Online: Ads of PepperfryM2M.com on B2B Platforms
Step 1
Production capacity managed through local SMEsStep 2
Shipment through third-party logistics to Qatar Step 3
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Road To Success
Analysis Strategy Implementation Financial & Risks
Improve
Enhance Consumer Experience
O2O Synergy
Diversify
Expand to B2B
Win-Win
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Mutual Benefit – International Merchandisers
Analysis Strategy Implementation Financial & Risks
Pillar 2
New Revenue stream
+
International expansion
Cheap Supply
+
High Quality
Pepperfry Merchandisers
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Win-Win
Analysis Strategy Implementation Financial & Risks
Pillar 2
New Revenue stream
+
International expansion
Cheap Supply
+
High Quality
Pepperfry Merchandisers
Increase
Sales at
low cost
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Timeline & Cost
Analysis Strategy Implementation Financial & Risks
Millions INR 2018 2019 2020 2021
AR service Development 200 30 30 30
AR Marketing Launch 150 20 20 20
B2B - Salesforce 10 15 20 25
B2B – Digital marketing 80 100 130 200
Total Cost 1B INR
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Gross Merchandise Value and Revenue
Analysis Strategy Implementation Financial & Risks
6.5
50
7.5
2017 2021Baseline Strategy
Total Incremental Revenue over 4 years 5.75B INR
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Incremental Profits – Millions INR
Analysis Strategy Implementation Financial & Risks
NPV over 4 years 385M INR
(342)
(1)
79
365
(400)
(300)
(200)
(100)
-
100
200
300
400
500
2018 2019 2020 2021
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Risks & Mitigation
Analysis Strategy Implementation Financial & Risks
Risks
AR development might
take longer than planned
to implement
Privacy issue when dealing
with European businesses
New Skillset needed to
develop consumer
clusters & advanced
algorithms
Mitigation
Agile development &
focus on incremental
value
Comply with GDPR
imposed by EU in May
2018
On the Job training for
most qualified employees
Probability Impact
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Conslusion
Issue
Strategy
KPI by 2021
over 4 years
How can Pepperfry build new revenue stream to pave the way
to profitability while keep on innovating as an omnichannel
powerhouse?
Improve Consumer experience in India & Diversify
to B2B Internationally
Revenue increase by
28%NPV 385M INR
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Appendix
Analysis Strategy Implementation Financial & Risks
INR Million 2015 2016 2017 2018 2019 2020 2021
Revenue 992 2,001 2,580 4,283 7,109 11,802 19,591
Profit (1,255) (2,992) (2,486) (2,303) (1,452) 672 5,122
Cost 2,247 4,993 5,066 6,586 8,562 11,130 14,469
GMV 2,202 5,122 6,500 10,790 17,911 29,733 49,357
Incremental
GMV B2B 50 100 500 2000
GMV AR 1,187 1,970 3,271 5,429
Total 1,237 2,070 3,771 7,429
Revenues 491 822 1,497 2,949
Profit 147 247 449 885
Costs 440 165 220 225
Final Profit (293) 82 229 660