Pepperfry targets gross merchandise value of $1 billion by 2021

So far, it has raised around $200 million in six rounds of funding.

Currently, Pepperfry has a portfolio of over one lakh products that range from furniture, décor, and kitchenware to bed & bath, lights and cleaning supplies.

While 80 percent of the company’s current revenue is generated from furniture, 70 percent volume of transactions is recorded in the décor and utility segment.

Studio strategy The Mumbai-based firm pioneered the omni-channel model in the home and furniture industry through the launch of its first Studio in Mumbai in 2014. At present, Pepperfry has 43 Studios in 18 Indian cities. Of these, 12 are franchises. Each of its stores are located in key catchment areas.

Studios are essentially offline experiential centres for discerning Pepperfry customers, who are seeking design inspiration through touch and feel of the products, Shah said.

For a big-ticket category such as furniture, he feels it is essential to engage the consumer through multiple touchpoints, especially in niche markets.

“Consumers from these markets have a high purchasing power and aspire to acquire branded, design-forward furniture. However, their access to it is limited in Tier II markets,” he stated.

Its Studios business currently contributes 30 percent revenue and Shah expects it to contribute 45 percent sales by 2021.

Though Pepperfry's consumer base is rapidly evolving and is embracing the online buying trend, customers still prefer to ‘touch and feel’ in the pre-purchase process, especially before ordering big-ticket products such as furniture. This has prompted Pepperfry to expand its Studios’ footprint through the franchise network, across niche markets such as Indore, Goa, Thiruvananthapuram and Imphal.

“Our franchise model is a truly unique business model, with immense potential to scale, thus making it lucrative for potential partners. Unlike any franchise business in the country, it does not require the partner to hold product inventory and is based on 100 percent price parity,” Shah said.

Change in consumer behaviour Shah said there has been a notable shift in consumer buying behaviour from brick-and-mortar outlets to online channels.

He pointed out that while this is predominant in certain categories like gadgets and fashion, there is a surge in online demand for non-standardised categories as well, aided by availability of a wide variety of products at compelling prices at the convenience of a click.

“Consumers seek a seamless purchasing process, right from an easy site-navigation to varied payment mechanisms, last mile delivery and after-sales service. Personalised marketing and addressing specific needs further aids the process,” Shah explained.

Pros & cons of online-offline trade In a dynamic industry like furniture, Shah feels having a mono-channel model may have its limitations.

He said a slew of consumers are choosing to purchase online due to the availability of an array of products that meet their specifications.

However, he was quick to add that an online-only model may often leave potential consumers apprehensive of the quality and finished form of products due to the lack of touch and feel, especially when it comes to non-standardised commodities or large ticket products.

On the other hand, physical stores offer customers the luxury of touch and feel and the ability to seek real-time inter-personal information on the product or service from the brand’s personnel.

But a brick-and-mortar model is limiting both geographically and in terms of the SKUs (stock-keeping units) the store can hold, therefore restricting the company’s reach and the consumers' options.

Shah recognised the need to have multiple touchpoints and provide consumers a hassle-free and convenient shopping experience and that is when Pepperfry pioneered the omni-channel approach.