US-based Houzz bets on local content for success in India

Houzz’s entry into India may increase competition for local players such as Urban Ladder and Pepperfry


Houzz is an online scrapbook that allows designers and home service professionals display their work.
Houzz is an online scrapbook that allows designers and home service professionals display their work.

US-based home design firm Houzz Inc. which opens its India website on Monday is hoping to capture the market with local content and communities, the company’s co-founder said.

Houzz is an online scrapbook that allows designers and home service professionals display their work. This is its fourteenth launch in the past two years

“Since we have community members from every single country around the globe, we have to decide how to prioritize and each country we go into. We have a strong demand from the local professional community here. In India, even prior to the launch, we have about 50,000 active professionals which is an enormous number,” said Adi Tatarko, co-founder and chief executive at Houzz.

“Secondly, it is about global interest that we get from our community and a lot of people are searching for different products and ideas and interacting with professionals in India. There is a lot of interest for designs and products and materials that are produced in India,” she said.

According to industry experts, the entry of Houzz may increase competition for local players such as Urban Ladder and Pepperfry. “Content-based commerce is on the rise. The level of engagement in this model will be far higher than the incumbents’. Overall customer experience will be better because you have far more higher level of interaction,” said Sreedhar Prasad, partner, e-commerce and start-ups at KPMG in India.

“In the broader ecosystem, there is a big question on what happens when an international major comes into a segment which is winner-takes-all by nature. If you are going head-on against these guys, you need to have a strong differentiation,” said Ashish Goel, co-founder and chief executive at Urban Ladder.

Urban Ladder, which has so far raised $77 million from Sequoia Capital, Kalaari Capital and SAIF Partners, among others, and Pepperfry, which has raised about $160 million from Goldman Sachs and Norwest Venture Partners, among others, unlike Houzz, have in-house designers for consultation.

Bessemer Venture partners-backed Livspace, which has so far raised $28 million in funding, comes closest to Houzz with a focus on home and interior design. However, its focus is on content, not communities.

India has seen the likes of Amazon and Uber make a dent in the market share of homegrown rivals such as Flipkart and Ola, respectively.

Houzz is yet to launch in China, a market where Amazon.com Inc. and Uber Technologies Inc. have burnt their hands.

Houzz has a 10-member team in India which will work on localizing content and expanding the community of designers. It is headed by Sanjay Nadkarni, co-founder and chief executive at Babyoye.com, which was sold off to Mahindra Group in February 2015.

Houzz, which was started in 2009 by the husband and wife duo of Alon Cohen and Tatarko, has so far raised about $213 million from Sequoia Capital, DST Global, New Enterprise Associates and Kleiner Parkins Caufield & Byers and T Row Price among others. During its last fund raise in October 2014, the company was reportedly valued at $2.3 billion.

It has an e-commerce marketplace and an advertising service for professionals; however, these two services will not be available in India.

“The marketplace will be the second phase. It will not take much time because of the size of the community here and the strong demand for Indian products. We want to leverage on the fact that India is a big hub for products and materials,” said Tatarko.

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