Flipkart has figured out that it needs more product categories to keep online shoppers engaged. The Bengaluru-based e-commerce major has re-launched the furniture category at scale and has also unveiled a furniture private label, Perfect Homes.
Flipkart has re-launched furniture category at scale - it is delivering to 84 cities - as it attempts to get new shoppers online and also increase spends of existing customers. The launch comes just in time for the pre-Diwali great Indian shopping season when online retailers go all out with launches, offers and discounts.
The 10-year-old company had launched the category two years ago as a pilot to test the market. About a year ago it started building infrastructure, creating a network of suppliers and putting in place systems and processes to scale up the category.
Nandita Sinha, who heads the furniture category at Flipkart, says:
Our pilot was to learn about the industry and customer pain points. We figured out that the customer experience in the industry was very poor; there are no large-scale logistics players focused on furniture, reliable and quick installation is very important for customers and, most importantly, there is a dearth of good quality furniture at affordable prices. We picked each of these challenges and solved them.
Flipkart has brought on board furniture brands like Lazy-Boy, Home Town and Peps. It has also got manufacturers from Indian furniture hubs like Jaipur, Jodhpur and Nagpur. The company has also gone to large international manufacturers in China and Malaysia, centres known for specialised and quality furniture.
The company has also brought about 600 products across 22 product categories under its quality guarantee scheme, Flipkart Assured. While regular categories go through a six-step quality check process, furniture that is shipped through Flipkart's logistics arm Ekart will go through a 20-step process. It is also offering 10-day returns and up to five years warranty, depending on the product and brand.
The complexity of this category is due to the non-standardised nature of products. Depending on the type of furniture and design, products can be bulky, come in shapes that do not easily fit into a box, are packed as multiple pieces and so need to be installed, and made of fabric that can easily get dirty. The company realised early on that logistics would be an important piece of this pie. So it set up separate "tech-enabled furniture logistics" under Ekart; this went live a few months back. Flipkart did something similar with large appliances - setting up separate end-to-end logistics for this category.
Nandita says the technology ensures seamless picking up, packaging, shipping and installation of products that have been dismantled, packaged and stored as multiple pieces. Flipkart is also offering installation at time slots picked by customers in 84 cities. The installation is done by Flipkart subsidiary Jeeves, earlier used by the company for its large appliance installations.
We worked with Jeeves so that raising queries, scheduling time slots for installation, requesting for exchange etc become a seamless online experience for customers.
The company has set up two furniture-only warehouses in Bengaluru and Mumbai, ensuring two to three-day delivery and installation in these cities during regular load days. It also uses its regular warehouses to stock furniture and some products are shipped directly by the seller. Flipkart claims it can do delivery and installation of furniture even in Tier-2 cities in under a week.
"We are getting a lot of orders from cities like Coimbatore, Vishakapatnam and Ernakulam and not just from the metros. We consider this a big win," Nandita says.
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During the pilot, the Flipkart team also realised that there was an opportunity to cater to those setting up homes for the first time. They needed quality, multifunctional furniture at affordable prices and there were very few sellers who had products for this segment. Flipkart's in-house brand, Perfect Homes, is meant to bridge this gap.
Adarsh Menon, Head of Private Labels at Flipkart, says:
We have built an in-house team of industry experts for Perfect Homes. One of the things we do with private labels is to identify and build a high-quality sourcing ecosystem, which includes manufacturers, sellers and logistics partners. This is what we did with Perfect Homes too. We identified suppliers, screened them for quality and built the ecosystem."
Most of the suppliers for Perfect Homes are based in China and Malaysia, Adarsh says. Flipkart has already launched a couple of product categories under Perfect Homes and will scale this up to 10 soon.
Flipkart has followed a category-approach to power growth. While a wide range of categories is available on its marketplace, the company creates depth one category at a time. It first built up the mobile phone category, then scaled up fashion and consumer durables. These three categories are the biggest contributors to sales for Flipkart. It has identified furniture as the next category as the market is large and still heavily unorganised.
According to a Research and Markets report, the furniture market in India will grow to $27 billion by 2022. Only about 10 percent of the industry is organised, with a fraction of that online. Players like Pepperfry and Urban Ladder have been around for a few years but have barely scratched the surface. In FY 2016, the largest online furniture player Pepperfry had revenue of Rs 98 crore. This shows there is scope for growth.
However, this is not an easy market to capture. The logistics are expensive and process-heavy. This is also a high-involvement purchase category and "touch and feel" becomes important - one of the reasons why Pepperfry and Urban Ladder have set up brick-and-mortar experience centres.
Nandita says Flipkart will not go the experience centre route, adding that cataloguing and visual technology today can ensure that customers are not surprised or shocked when the product reaches their home. She also promises that the company will offer solutions using new technologies like Augmented Reality and Virtual Reality to help customers get a sense of how a piece of furniture will look in their homes.
With Flipkart's biggest annual sale event Big Billion Days just a week away, it will be clear pretty soon whether it has got a winner on its hand.
(With inputs from Athira A. Nair)