PEPPERFRY CASE - SECTION 3 GROUP 1

PROBLEM STATEMENT

Pepperfry, a leading online retailer of furniture, has identified the following areas to improve
its sales and generate more revenues. Those are:
 Enhance customer experience by leveraging the company’s service design
 Leverage Customer Experience to achieve competitive advantage for customers’
next decision journeys
 To achieve 20 million customers by 2020

Business Environment Analysis: P.E.S.T.E.L. 

Economic
The present organized residential furniture market in India valued at USD 400 million, was expected to touch a yo-y growth rate of
27 per cent to reach USD 1.3 billion by 2020. 
According to the Managing Director of Norwest Venture, online retailing of furniture is expected to improve with time. 
Indian salaries have been on the rise. 

Social – Cultural
Out of India’s entire population, only a mere 18% had access to the internet. 
Few consumers are still skeptical towards online shopping. 
Convenience is a key to online shopping. 
Urbanization is gaining steam, and customers have become more demanding and value-conscious. 
The product was explored at least 15-20 times by the potential customers before arriving at the purchase decision.

Technological 
Rapid internet penetration.
Inclusion of virtual reality into the nuances of shopping. 
Improved supply chain. 

Legal
Copyright infringement by competitors. 
 Competitor Analysis

 Competitors are FabFurnish, UrbanLadder, StichWood, CustomFurnish and Wooden

Street. Along with other e-retailers such as Flipkart, Amazon, and Snapdeal. 
 Pepperfry controls 50% of India’s furniture market among other exclusive players.
 The non-exclusive players control a significant 10-15% furniture market share.
 The above competitors do not provide the studio like experience that is provided by
Pepperfry. 
 Pepperfry has an improved logistic network. 
 In September 2016, Pepperfry and UrbanLadder raised USD 160 million and USD 80
million, respectively.

S.W.O.T. ANALYSIS

Strengths Weakness Opportunities  Threats

1. Pepperfry had the first-
mover advantage in the
furniture market and
controlled 50% of the
exclusive market share.  2. Susceptibility towards
2. The online-offline hybrid
business model has given
Pepperfry an edge over
the competitors in the
exclusive segment.  complete omnichannel
3. Pepperfry developed
their hub and spoke model
for the supply chain.
4. Pepperfry Studio
provides consultations
through interior designers
rather than salespersons.
5. Pepperfry has a fast
moving inventory.  subscription-based
6. Ingenuity in marketing
techniques. 
1. Pepperfry can
1. Poor last-mile 1. Only 18% of the
improve its supply
connectivity.  Indian population has
chain. 
access to the internet,
damaged product 2. Creating an providing a threat to
omnichannel platform online buying.
delivery. 
by having large stores
3. Pepperfry currently 2. Reluctance towards
does not offer a with large inventory.  online shopping of
3. Improving customer furniture. 
platform to its experience, e.g., in the 3. Threat of design
process of searching,
consumers.  plagiarism. 
buying, or consuming.
4. Pepperfry’s market 4. Threat from non-
leadership in the online 4. Constantly upgrading exclusive players. 
Virtual Reality /
furniture space is not as
Augmented Reality
aggressive as fashion. 
experience. 
5. Providing furniture
rentals and moving to
business models. 
Consumer analysis

 Consumers do not indulge in impulsive buying as far as furniture is concerned.

 Lack of touch and feel compromises consumer spending on products sold online. 
 Customers deep search a product before finalizing. 
 Consumers are skeptical about online shopping. They prefer brick and mortar
stores. 
 Online shopping was preferred by a few customers for convenience, to compare
prices, and for discount offers. 
 With the improvement in technology and lifestyle changes, consumers have become
more demanding and value-conscious.

Solutions

 Penetration into Tier-II & Tier-III cities:

o providing more offline stores with more inventory to improve customer
experience
o further expansion of the Hub-and-Spoke model. For example, an inventory in
Tier I city like Mumbai can act as a Hub and can supply the goods as per
customer demands to the nearest Tier-II cities like Pune, Nashik as depicted
in the map below.
o

 Introduce customer loyalty programs that provide furniture exchanges and discounts
on repeat purchases. 

 Provide in-store refreshment and a recreational area so that customers can spend
more time at the store. 

 Provide tailor-made solutions for customers

 Take customer feedback and work on the metrics time in time out.

 Target advertisements to eliminate the inhibitions towards online shopping. 

 Improve quality control in handling products intended for delivery which would result
in fewer or no damages. 

 Provide furniture assembling services with the existing home delivery services by
trained technicians.

 Provide furniture insurance while delivering products. 

 Engage with customers online through an improved VR-AR experience.