Bengaluru: Online furniture store Urban Ladder will roll out home interior solutions in April, a category that the company estimates will contribute about 15% of its revenue in the next year, said a senior company executive.
The move, which is expected to support Urban Ladder’s target of achieving revenue of Rs.800-1,000 crore by March 2017, comes at a time when furniture e-tailers are building additional layers of services on top of their core competencies to maximize use cases for the existing customer base. The service will be launched in Bengaluru and then rolled out in Mumbai in couple of months, before being gradually extended to all the 19 cities where Urban Ladder currently operates, said co-founder and chief executive Ashish Goel.
The initiative is being led by Parag Shah, director of category management, and Prakash Deep Maheshwari, director of strategy and new home solutions.
Urban Ladder has set up a 70-member team to work on this vertical and will investRs.12-15 crore to grow the category in the next 12 months. The company plans to fulfil about 150 projects a month and is exploring partnerships with real estate developers since new home buyers are the primary target audience for this service.
While consumers can choose from the repertoire of products currently available on Urban Ladder across categories, the company will partner with third-party vendors or brands for pieces such as floorings and wall paints—categories where Urban Ladder doesn’t deal in currently.
“This business has better margin structure, but it is very tough to scale. About one-third of our senior management bandwidth is working on urban interior solutions,” said Goel.
The move is expected to significantly boost Urban Ladder’s revenue as well as margins.
While industry experts peg the average order value for furniture at Rs.15,000-20,000, a home interior project could cost more than Rs.5 lakh.
After an almost two-year long slowdown in the real estate sector, home sales rose about 15% in the October-December quarter to 78 million sq.ft from the preceding quarter across India’s top 8 property markets, according to Liases Foras Real Estate Rating and Research Pvt. Ltd.
Mumbai Metropolitan Region (MMR) was the highest contributor of sales of homes both in the ultra-luxury and luxury categories—the latter being in the price range of Rs.1-2 crore.
To be sure, online furniture stores, like Urban Ladder (Urban Ladder Home Decor Solutions Pvt. Ltd) and Pepperfry (TrendSutra Platform Services Pvt. Ltd) have been rolling out additional offerings—be it big order value items, such as modular kitchens and furniture, or low-ticket size categories, such as home decor.
While higher value products help boost value of goods sold, which in turn surges valuations, categories such as home decor, which are priced lower, are targeted at facilitating repeat purchase—helping in customer retention.
“A customer who buys furniture, will buy other home-related products. So, the message is, if you are buying furniture, we will take care of some of your other requirements. This also helps to retain existing customers as it is not easy to get repeat users in this category, at least in the short-term,” said Harish H.V., partner at Grant Thornton India Llp, a financial advisory.
Urban Ladder’s move comes at a time when smaller rivals, such as HomeLane (Homevista Decor and Furnishing Pvt. Ltd) and Livspace.com (Home Interior Designs E-Commerce Pvt. Ltd) are offering end-to-end home solutions and design consultation to customers.
HomeLane has raised $4.5 million (about Rs.30 crore) from Sequoia Capital and Aarin Capital while Livspace.com has so far raised $8 million from Jungle Ventures,Bessemer Venture Partners and Helion Ventures.
India is home to about 170 start-ups in the segment, who have together raised over $280 million from investors, according to Tracxn, a start-up tracker.
Urban Ladder and Pepperfry, with $77 million and $128 million, respectively, in their kitty, are the most heavily funded companies.