Bengaluru: Pepperfry (Trendsutra Platform Services Pvt. Ltd) has launched a so-called house brand for modular kitchens called Mangiamo in a move that is expected to boost gross sales and improve margins for the online furniture marketplace.
The brand is expected to account for close to one-tenth of the company’s overall house brands business in the next one year, said Ashish Shah, Pepperfry’s co-founder and chief operating officer.
House brands are essentially brand names used by a retailer for a product line specifically developed for the retailer and usually sold at a lower price than products from other brands.
Pepperfry, India’s most well-capitalized homegrown online furniture business, has raised more than $160 million from Goldman Sachs, Bertelsmann India Investments and Zodius Capital among others. The company already owns seven other private brands: Woodsworth, Mintwud, Casacraft, Amberville, Bohemiana, Mudramark, Mollycoddle and Primorati.
The company partners with businesses that manufacture designs developed for its house brands which currently account for about a third of the units listed on Pepperfy and about 45-50% of the company’s revenue.
“There is a nuance to the modular business and you cannot sell a single piece without consulting. If an online company has to do kitchens, it has to have significant muscle on ground. We have 11 studios so far and will have nine more by the end of this year. Customers meet our design consultants here, show us a basic layout and we make suggestions," Shah said.
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Mangiamo, which is priced between Rs75,000 and Rs14.5 lakh, will currently be available in Mumbai, Pune, Bengaluru and Delhi.
Pepperfry has also partnered with Homelane, an online modular furniture services start-up backed by Sequoia Capital, to propel the modular kitchen category.
Industry experts peg the modular kitchen market in India at about Rs2,500 crore currently and expect it to touch about Rs6,000 crore by 2020. The average ticket size of Rs3-5 lakh is significantly higher than an average order value of about Rs15,000-20,000 for furniture, which significantly boosts gross sales and revenue.
According to Shah, margins for house brands could vary between 35% and 60%, while he expects Mangiamo to fetch margins of about 40%.
The company has partnered with Bengaluru-based Evershine and Pune-based Rawat Brothers for manufacturing modular kitchens under the Mangiamo brand.
“We do not market house brands differentially on our marketplace. Our business is about democratizing choice for customers. We have always spoken about variety. The new listings in the marketplace will far exceed the private brands. I can empanel many more sellers every month. The idea is to have national brands, regional brands and house brands on our marketplace," Shah added.
The so-called private labels or house brands have become a recourse of choice for most e-commerce companies in India, especially in the fashion and lifestyle categories, because of the higher margins.
For instance, online fashion store Myntra says about 25-30% of its business comes from private labels, while Amazon India has started rolling out private labels in fashion. Even online lingerie store Zivame has moved away from being a marketplace to a brand.
Pepperfry’s closest competitor, Urban Ladder, which has so far raised about $77 million from Sequoia Capital, TR Capital and Kalaari Capital among others, has started moving towards becoming a brand from an online furniture store. The company has undergone a branding overhaul as it awaits approval for a single brand retail licence from the Department of Industrial Policy and Promotion.