Five years since its inception in 2011, online furniture marketplace Pepperfry now has $160 million in its kitty. In Series E funding today, existing investors Goldman Sachs, Norwest Venture Partners, Bertelsmann India Investments and Zodius Technology Fund have put Rs 210 crore into the market leader’s expansion. The Economic Times has reported that the company might also raise another Rs 150-200 crore in the next four weeks from a new set of investors.
In a statement, Pepperfry has claimed that this is the largest investment raised by a vertical-focussed, pure-play e-commerce company in India this year. Pepperfry’s last round of funding happened in July 2015 at a valuation of $250 million. The Series D had about $100 million – when Goldman Sachs and Zodius Technology Fund entered the list of investors. TV Mohandas Pai and Ranjan Pai also participated in the round through Zodius Technology Fund.
The fresh funds will be used to scale Pepperfry’s logistics and service network, and to expand the footprint of its experience centres, Pepperfry Studios, from six Tier I cities to 20, according to the ET report. Pepperfry owns 17 fulfillment hubs and a delivery fleet of over 400 vehicles.
In the statement, Ambareesh Murty, Co-founder & CEO of Pepperfry, said, “Our mission is to help 20 million customers create beautiful homes by 2020. We are doing this through a differentiated, profitable business model and I thank our investors for believing in the team and for being great partners on this journey.”
Evolution of the industry
For urban youth, online portals are now the first option for buying furniture – a phenomenon that would have been unthinkable four years ago. Co-founded by Ambareesh Murty and Ashish Shah, Pepperfry has shaped the industry to an extent. Serving in about 500 cities, Pepperfry claims that more than three million customers have made purchases from over 10,000 merchants on their platform so far.
Pankaj Makkar, Managing Director, Bertelsmann India Investments, said, "The Indian Internet story has just begun and the furniture category is set to witness explosive growth over the next couple of years. Pepperfry is an exceptional brand and is well positioned as the market leader to ride this next wave of market expansion."
Pepperfry, which claims to have around a 50 percent share of the market, earned Rs 1,000 crore in sales in the last fiscal year. It aims to triple this by March 2018, says the ET report.
India’s furniture sector is 90 percent unorganised. Of the organised, only one percent is online. Four-year old Urban Ladder, founded by Rajiv Srivatsa, is making waves too – although their funding is far behind Pepperfry’s: about $77 million in four rounds. The industry is now seeing a lot of action – with more players coming in with innovative business models.
Furniture is one of those few categories in e-commerce where quality and designs triumphs discounts. Younger players like Livspace, Woodenstreet, Homefuly and furniture rental startup Furlenco are all establishing themselves in the sector. Horizontal players like Snapdeal also finds furniture category generating high revenue and margins due to high ticket size. Once the Swedish furniture giant IKEA enters India, the competition is bound to get fiercer.