Business Model of Pepperfry | How does Pepperfry makes money?

Dev Gupta Dev Gupta
Sep 14, 2021 5 min read
Business Model of Pepperfry | How does Pepperfry makes money?

Launched in 2013, Pepperfry has more than 60 lakh registered users and has 1 million+ home products. Pepperfry has changed the way of buying furniture. The idea of buying furniture from the comfort of your life fascinated many Indians. That is why they have 7 million+ visits on their website.

Today, if I ask you to buy furniture online, Pepperfry would automatically pop up in your mind. They have grown rapidly in these years. They deliver their 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 dΓ©cor like furnishings, lighting, beds, tables, chairs, cabinets, kitchen appliances, bathing equipment, mattress, and so on. The tagline of Pepperfry is 'Happy Furniture to You'.

Founders of Pepperfry are Ambreesh Murthy and Ashish Shah. They have over 10,000 sellers on board. They have also opened 60 Pepperfry Studios in 18 Indian Cities. In these studios, a wide range of furniture is displayed so people can come and physically see all the furniture. They have also tied up with Quikr in 2018 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 ages group of 35-45. They are also making efforts to increase consumers in their mid-20s to early 30s.


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Business Model of Pepperfry

Pepperfry follows the Omni-channel strategy where they allow their customers to order products anytime, anywhere from any device. The habits of people have changed during the pandemic and they prefer to buy products online. Pepperfry employs the Managed Marketplace Business Model. They have connected with small and medium 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) Concept of Buying Furniture Online:

Gone are the days when people used to visit places and buy products from the physical stores. Due to Amazon and Flipkart people have gotten used to this process of buying their favourite products from the comfort of their home.

Furniture was something that still didn't make its way Online. I know many other platforms sold furniture online before Pepperfry but they took this to a next level. The concept of buying Furniture's online fascinated many Indians, so Pepperfry started to capture the market.

2) Pepperfry Studios:

Pepperfry Studio
Pepperfry Studios

Apart from their Online Presence they also introduced Pepperfry Studios. In these Studios, people can visit and explore all the types of Furniture. Having your business presence in the offline market is very essential. Pepperfry knew this and they started to expand these studios in various Indian Cities.

In India people tend to physically check products and services, these Studios helped them to gain the trust of the people. This led to an increase in their Sales. About 25% of the business is generated from these Studios.

3) 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 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 these people they created powerful campaigns that resonated with their target audience. They also provide various discounts which help them to increase their 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 with 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, discount 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,” he explained.

Conclusion:

Pepperfry is an inspiration for many startups. Their Business and Revenue Model is simple yet effective. They understood what Indians wanted and designed their Business Model accordingly. Most Importantly, 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. This Furniture is not for sale but people can check the product quality and design and then place the order Online.

What is Pepperfry?

Pepperfry is an online marketplace headquartered in Mumbai that deals in furniture and home dΓ©cor.

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 with 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.

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