Business Model of Pepperfry | How does Pepperfry make Money?

Launched in 2013, Pepperfry has more than 60 lakh registered users and 1 million+ home products. Pepperfry has changed the way of buying furniture. Indians loved the idea of buying furniture from the comfort of their homes and that is why the company has 7 million+ visits on the website.

Today, if I ask you to buy furniture online, Pepperfry would automatically pop up in your mind. The company have grown rapidly over these years. The company delivers its products in more than 500 cities in India. But, how did the company become so successful? To answer this we need to understand their business model.

About Pepperfry
Target Audience of Pepperfry
Business Model of Pepperfry
What is Unique about Pepperfry's Business Model
How Does Pepperfry Make Money?
FAQ

About Pepperfry

Pepperfry is an online marketplace headquartered in Mumbai that deals in furniture and home décor like furnishings, lighting, beds, tables, chairs, cabinets, kitchen appliances, bathing equipment, mattress, and so on.

The founders of Pepperfry are Ambreesh Murthy and Ashish Shah. The tagline of Pepperfry is 'Happy Furniture to You'.

The company has launched 100+ studios across 57 cities in India  In these studios, a wide range of furniture is displayed so people can come and physically see all the furniture. In 2018 Pepperfry tied up with Quikr for a furniture exchange program.

Pepperfry also launched a furniture rental service in September 2018. People can rent furniture and can use it for a period of 6, 9, or 12 months.

Target Audience of Pepperfry

The target audience of Pepperfry is people between the age group of 35-45. The company is also targeting people who are in their mid-20s to early 30s.

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Business Model of Pepperfry

Pepperfry follows the omnichannel strategy where they allow their customers to order products anytime, anywhere from any device. The company employs the managed marketplace business model.

They have connected with small and medium-sized business merchants and artisans. These merchants can sell their products through Pepperfry.

The category team meets the sellers to check the quality of products and once approved they take some products from them. These products are sent to the studios for photoshoots.

The photos of the products are then placed on their website. When a product is ordered from the website, it is brought from the sellers and delivered to Pepperfry's warehouse.

What is Unique about Pepperfry's Business Model

1) Pepperfry Studios and Franchise Model:

In India, people have a habit of checking products and services physically. To gain the trust of the people the company launched Pepperfry studios where people can explore all the types of furniture in offline mode. People cannot buy furniture from these studios. Although these stores help consumers make big purchases online.

The interior design professionals that are working in these studios provide free consultations to customers for their home interior needs. About 25% of the business is generated from these studios.

The company has also started a franchise program where small entrepreneurs can own a franchise with Pepperfry and run a profitable business.

The franchise-owned studios work on a 100% price parity and do not require the partner to hold product inventory.

“Omnichannel has always been an integral part of our growth strategy and our existing franchise program has helped us expand our offline footprint by creating several touchpoints across major metros and Tier 2 cities." added Ashish Shah.

2) Powerful Marketing:

Pepperfry has collaborated with many Influencers and YouTubers. As we all know YouTubers and Influencers have many followers. This helped in brand awareness and people started to buy products from Pepperfry.

During the initial days of Pepperfry, their ad campaigns were focused on getting the audience's trust. Later on, their ad campaigns shifted to providing specific benefits like looks and design of products.

High-quality images are placed on the website to attract people. The company found out that 65% of the customers are women.

So, to attract them Pepperfry's team created powerful campaigns that resonated with their target audience. They also provided various discounts which led to an increase in sales.

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How Does Pepperfry Make Money?

The revenue model of Pepperfry is straightforward. They earn money by selling products. About 80-85% of Pepperfry's Revenue is generated by selling furniture in the solid wood furniture category. They have a revenue of Rs 500 crore per annum.

The main reason for high revenue according to Ambreesh Murthy is that the gross margin is as high as 45% while the contribution margin is only 25%. Also, after deducting various costs such as direct cost, logistics, and discounts Pepperfry claims that they earn a contribution margin of 25% - about Rs 2,025.

''Also, the cost of customer acquisition is very low. In fact, we have a high rate of repeat purchases. This has been possible as we sell a range of ancillary products including mattresses, bedsheets, pillows, etc. While a customer may buy a bed once in three years, she does return to the website to purchase related products at least three times a year,” Ambreesh Murthy explained.

Conclusion:

Pepperfry is an inspiration for many startups. Their business and revenue model are simple yet effective. They understood what Indians wanted and designed their business model accordingly. Customer satisfaction is the most important aspect of their success.

FAQ

Is Pepperfry an Indian Company?

Yes, Pepperfry is an Indian Company started by Ambreesh Murthy and Ashish Shah in 2013.

What is Pepperfry Studios?

In these studios, people can come and see all the furniture. The furniture is not for sale but people can check the product quality and design. Once they are satisfied they can order the furniture online.

What is Pepperfry?

Pepperfry is an online marketplace headquartered in Mumbai that deals in furniture and home décor.

What is the revenue model of Pepperfry?

The revenue model of Pepperfry is straightforward. They earn money by selling furniture products. About 80-85% of Pepperfry's revenue is generated by selling furniture in the solid wood furniture category.

How many products does Pepperfry have?

Pepperfry has 1 million+ home products ranging from beds, tables, chairs, cabinets, kitchen appliances, bathing equipment, mattress, furnishings, lighting, and so on.