For e-Fur­ni­ture Cos, Suc­cess Source Code is Lo­cal

Fo­cus is on sourc­ing lo­cally and tight­en­ing the sup­ply chain to re­duce costs of lo­gis­tics and re­turns, two ma­jor pain points

The Economic Times - - Disruption: -

Payal Gan­guly & Aditi Sri­vas­tava

Ben­galuru: Buy­ing a sofa on­line is not un­heard of any more with chang­ing user be­hav­iour to­wards on­line shop­ping in In­dia. To make a profit sell­ing so­fas on­line is a dif­fer­ent story as on­line fur­ni­ture re­tail­ers try to take on big­gies like Flip­kart, Snapdeal and the com­bined en­tity of FabFur­nish and Fu­ture Re­tail who are look­ing to grow big in the seg­ment.

The fo­cus is on sourc­ing lo­cally and tight­en­ing the sup­ply chain to serve a spe­cific re­gion to re­duce costs of lo­gis­tics and re­turns, two ma­jor pain-points for the fur­ni­ture cat­e­gory. “We keep some of the prod­ucts in stock to en­sure avail­abil­ity while fur­ni­ture such as so­fas, wardrobe and mod­u­lar kitchens are sourced from lo­cal man­u­fac­tur­ers af­ter the or­der is placed as th­ese can­not be dis­man­tled. The lo­gis­tics cost for so­fas for ex­am­ple, can be as high as 12-15% of the MRP of the prod­uct when trans­ported on the line­haul,” says Kaustabh Chakraborty, vi­cepres­i­dent of oper­a­tions at Ur­ban Lad­der, which is backed by Se­quoia and TR Cap­i­tal.

The chal­lenge is greater in case of ver­ti­cal play­ers, who are fo­cused on end-to-end de­sign, dé­cor and fur­ni­ture mar­ket. “We are lever­ag­ing AskMe’s yel­low pages so­lu­tion to pro­vide a com­plete home to the user, start­ing from ser­vices, de­sign­ers and our mar­ket­place of fur­ni­ture. We will be launch­ing next­day de­liv­ery soon in close to 40 cities,” says Rahul Agrawal, CEO at Me­belkart, which is backed by listings site AskMe, which holds a ma­jor­ity stake in the com­pany.

In case of LivS­pace, which works as a turnkey con­trac­tor pro­vid­ing de­sign, in­stal­la­tion and fur­ni­ture as a ser­vice, the back-end tech­nol­ogy en­sures that the or­der is pro­cessed in a phased man­ner. “The big­gest prob­lem with fur­ni­ture is sup­ply chain and site de­pen­dence as it is bulky to move,” says Anuj Sri­vas­tava, co­founder of He­lion­backed LivS­pace.

“The dif­fer­ence be­tween lo­gis­tics cost for fur­ni­ture could be as high as 50% be­tween long-dis­tance de­liv­ery ver­sus the lo­cal de­liv­ery. The cost of man­ag­ing re­turns is also low when the fur­ni­ture is de­liv­ered from within the city,” says Man­ish Sai­gal, man­ag­ing di­rec­tor at con­sul­tancy firm Al­varez and Marsal. “The ero­sion of value is very high on re­turns in a cat­e­gory like fur­ni­ture. Hence, a sup­ply chain which in­volves move­ment within a city or de­liv­ery within a 200-km ra­dius is a plus,” says Sai­gal.

For in­stance, on­line mar­ket­place Zefo lists used fur­ni­ture and serves Ban­ga­lore-Mysore and NCR. The young com­pany re­stricts prod­uct move­ment within a 150-km ra­dius. “This has helped us drive ef­fi­ciency in trans­porta­tion as well as ware­hous­ing, elim­i­nat­ing the need for large fulfilment cen­tres main­tained by other etail­ers,” said Himesh Joshi, co­founder, Zefo.

MANISHSAIGAL MD, Al­varez and Marsal The cost of man­ag­ing re­turns is also low when the fur­ni­ture is de­liv­ered from within the city

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