How this banker-turned-entrepreneur is making international furniture affordable for Indians

20th Oct 2016
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As a banker, Alok Duggal had, along with his family, moved cities multiple times. In 12 years, they had lived in nine different houses. “Every time, I had to buy new furniture, which cost a lot and did not always suit our tastes. This motivated me to solve a problem,” he says.

Alok had been a banker for 14 years and was working with France-based advertising firm JCDecaux in Bengaluru when Pepperfry and Urban Ladder came into being. It was the time when e-commerce in India was starting to grow roots beyond the metro cities. But the retail space in India was (and still is) largely unorganised, especially the furniture sector. The banker was a keen observer of the online furniture industry in India since the rise of the companies that have come to dominate the space today.  He felt that there exists furniture for the middle class and then furniture for the elite. But for the aspirational upper middle class, choices were few.

A year ago, Alok felt that the time was ripe to take a plunge into the multi-billion dollar furniture industry with an omni-channel business model. BREN Corporation owner Bhoopesh Reddy, who was interested in online commerce, invested $5 million in the venture. Founded in November 2015, Homestudio claims to be an end-to-end furniture solutions provider, from design to execution to customer service. Their technology enables customers to design kitchens and furniture online with the assistance of trained designers.

“We are creating a niche modular market of our own – we are filling the vacuum between the markets for the lower middle class and the elite, creating a space for the aspirational upper middle class,” says Alok. He claims to sell for Rs 75,000 what would otherwise cost Rs 3 lakh or more.

CLEO Milieu
CLEO Milieu

Entrepreneurship comes calling

Coming from a family that ran a steel manufacturing business in Punjab, entrepreneurship came naturally to Alok.  Originally from Chandigarh, Alok (38) had studied economics and sociology for his bachelors’ before pursuing an MBA. He says that sociology lessons skilled him in the management of people from different cultures and motivating them to work harder.

“I was school leader, college president, and had done internships in ten MNCs – all of which taught me how to build sustainability and profitability simultaneously in the business. I understood the furniture industry – so we keep low margins and are sustainable. Instead of discounts, we give lifetime service,” says Alok. He adds, “With international brands, you can’t bring down the costs. But you can manufacture at these brands’ outlets and then add your own label and lower prices – that’s what I am doing with German manufacturers.”

Homestudio provides ready-made solutions. ‘Out-of-stock’ scenarios never occur, because importing from Germany is already done. Alok believes that customers want to experience touch and feel before the purchase of furniture. “So offline and online together will work better. We worked it out with profit,” he says. Their office -with an experience zone and a warehouse- covers 20,000 sqft.

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Timing it right

Thanks to the exposure he had gained from working in a French company, Alok was knowledge of the European market, which has plenty of international brands. “But only a few of those brands had a presence in India, that too in pockets and affordable only for the elite. Since they do not reduce their prices, the aspirational middle class was faced with a vacuum, and became our target market,” says Alok.

Immediately after he left JCDecaux, he hired a few designers and started listing catalogues on the website for selling furniture. There was no marketing other than through social media. Besides Karnataka, Homestudio’s installations are done in Kerala, Delhi, Mumbai, Hyderabad and Chennai. Delivery is usually done within seven days, but customisation can take up to three months as items are manufactured in Germany, whether an entire room or one unit. Tie-ups with Bajaj FinServ and HDFC bank have enabled Homestudio customers to buy on EMI.

Homestudio targets those who are moving into 3BHK apartments, duplexes, pent houses or villas, as well as those who are upgrading their houses. Their R&D team has German-trained carpenters who provide customer service through call centres. Also, since NRIs don’t have the time to get a carpenter, they check out the catalogue and place orders online. Homestudio provides compact designs for kids’ rooms and home offices as well.

With prices ranging from Rs.8000 to Rs.1,50,000, Homestudio has more than 1000 listings in 12 categories. Their average ticket size is Rs.70,000 and they provide five year warranty and free lifetime service. On an average, furniture for 2bhk apartments cost Rs.7,00,000 and above, while those for 3bhk apartments start at Rs.10,00,000.

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Homestudio has a 51-member team now, and they have successfully done more than 500 installations in six months. They now have an m-site too, along with an app for customer service.

Expansion

Although Homestudio plans to expand to another 10 cities over the course of the next year, they are not looking for more investment. They have partnered with brands in Italy and Romania, apart from those in Germany. They now have a fully digital warehouse and will be opening up both installation and servicing to the entire southern market by November.

Alok says that although 90 percent of orders are from Bengaluru, there have been requests from people who come to the city from other parts of Karnataka and want to upgrade homes in their hometowns. “Architects from Hubli-Dharwad, Mangalore and Bellary have contacted us for single units too,” he adds.

Homestudio has tied up with seven builders, including BREN, Unishire, Vaishnavi, Adarsh and Spectra, for mock apartments. “Thus, we sell to customers directly. Even the builders prefer buying customised furniture to in bulk purchases.”

The online furniture industry in India has seen substantial growth in a relatively small period considering the high value of items. Industry experts believe that the next four years will see the sector exploding. A happier customer demands better designs and improved customer service. Alok believes that in 10-15 years, 20-30 percent of the furniture market will be organised. “More dependency will be on article wood and engineer wood – as the original wood will be more expensive. European countries have already moved on to it; the brands we collaborate with are doing the same.” Homestudio aims to be operationally profitable in five months, with the goal of achieving more than 1,000 installations this fiscal year.

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