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
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