What You Must KnowAbout Multi-Channel Strategy -Ambareesh Murty, CEO & Co-Founder of Pepperfry
• Pepperfry is the first furniture marketplace to build its own logistics network
• Without an inventory model in place, Pepperfry was able to serve customers from various segments
• Critical business decisions on omnichannel, franchise model and advertising
Starting as an online model only, Pepperfry today boasts of the tremendous growth seen through its portfolio of 57 stores in over 25 locations. And as the CEO & Co-Founder of Pepperfry, Ambareesh Murty has played an integral part in the magical growth story of the company.
Omni-Channel is the way:
Uniquely, Pepperfry has been able to explore markets laterally by defying the standard procedures of customer segmentation, and rather focus on used case segmentation. It believes that retail and online services do not need to compete with each other, are instead complementary, and should be leveraged to enhance the customer experience.
Ambareesh shares that when Pepperfry opened its first store in Mumbai, it was a conscious decision to not expect large sales from the store but rather be perceived as experience centers where customers can come and interact with the products.
“To my mind, the same customer could be online, offline, and on mobile. Therefore, all businesses need to think omnichannel”, he says.
The “UN-COOL” Market Place Model:
Dwelling on its innovative customer acquisition strategy and in its quest for building a business for scale, Pepperfry was one of the early adopters to a pure market place model which basically means carrying zero inventory. In fact, it became the first furniture marketplace to build its own logistics network including expanding its services to over 500 cities in India, through its Big Box Supply Chain.
While discussing this strategy in detail with Ankur Warikoo on the Building It Up with Bertelsmann podcast, Ambareesh spoke about wanting to build a business that caters to every household by offering a wide variety of products and the same degree of experience without having any inventory behind it.
In the initial years, Pepperfry did go through a rollercoaster ride due to its marketplace model, as its delivery timelines were longer than its competitors and an inventory-based model would have fetched greater margins. However, in the longer-run, the business model reaped fruit as Pepperfry was able to cater to a wider variety of customers and provide them the same degree of experience, without carrying any inventory baggage.
Specialization is the key:
With the presence of well-established horizontal players such as the Amazon and Flipkart which also sell furniture and home décors, it becomes increasingly important for vertical e-commerce brands like Pepperfry to create a unique value proposition for its customers and resonate as a specialist in the sector.
Ambareesh, in his candid style, explains this phenomenon with the help of a very simple example. He says “when it comes to a high involvement category product, example when you catch a cold, you go to the general practitioner who is right next to your house but if you, unfortunately, break a leg, you would go to an orthopedic only because there is a value to the specialization and it being a far higher involvement. Similarly, in a high involvement category such as furniture and home décor, a customer looks for specialists which therefore carves out the market for Pepperfry.”
Winning trust through Quality Assurance:
With more than 90% of the furniture market being unorganized and a majority of horizontal players selling only branded products, quality assurance became the key in defining Pepperfry’s credibility while being on a marketplace model.
Another aspect that Ambareesh highlights as Pepperfry’s focus areas is providing a vast variety of products at a better price whilst proving a seamless experience to the consumer. He also urges modern-day entrepreneurs to stay focused and sign up for a long time because then only one can build true value for their brand.
These were excerpts from our podcast series Building it up with Bertelsmann. Tune in to the podcast here to catch the full episode of Ambareesh Murty as he shares more insights on adding value to your start-up.
