Why Pepperfry isn’t worried about the entry of IKEA or Pottery Barn
The furniture market is largely unorganized, say founders Ambareesh Murty and Ashish Shah, so the big win goes to those who organize the cluttered space.
Perhaps every startup brand has a history of ‘almost went bankrupt’, but Ashish Shah and Ambareesh Murty’s Pepperfry did indeed come dangerously close.
Three months after launching the furniture market in 2012, both founders realized they had put all of their savings into a plan that had “no playbook”. And soon, they hit a snag – they were down to their last Rs. 5 thousand. However, they went ahead with their plans for an offsite location anyway. “We thought, ‘If after all this we only have five lakh rupees left, and if we’re going to fail, we’re going to fail in a burst of glory,’” shares Murty, CEO of Pepperfry. His team of 20 went to Goa.
He remembers having a fit of paranoia upon boarding the flight, with thoughts of ‘what will happen if the flight crashes’. And what would their wives think about not having money in the bank?
“I actually wrote myself an email and sent it to my own account, hoping my wife (maybe she was nostalgic) would check if something [untoward] it happened. The subject line was: Where did the money go?” he adds.
But all is well when it ends well, as they say. Three weeks later, Pepperfry secured an investment of Rs. 24 million. Shah, the company’s COO, says: “That was our first big challenge. We did well.”
In 2012, the two former colleagues decided to leave their well-established careers and break into a space that hadn’t been interrupted before: the disorganized furniture market. Soon after, Pepperfry was born.
The hindsight, however, is 20:20, and even more so when looking back on a journey of 10 years. “Everything changed the first day we launched it,” says Murty. The duo set a goal of 50 orders per month, they received over 1,000 orders. “We always had the ambition to make it big, but it accelerated surprisingly,” she adds.
Talking about the brand name, Murty says: “Pepper is the seasoning and frying is the sizzle. The brand is a huge extension of the two of us and our relationship. I think we both have quirks in our personalities.”
He remembers how, in the beginning, they put three things on the whiteboard: the desire for the company to be Indian, honest, and have fun along the way. “Pepperfry came from that,” he adds.
Another favorite name that didn’t make the cut was ‘Tribal Fair’. “We liked it, but it didn’t convey our strangeness. We still own the domain,” says Shah.
Not playing to compete
A decade ago, buying furniture usually meant going to a store, looking at a few options, and asking the shopkeeper for more. The salesperson pulled out a catalog or magazine, the customer chose the design, and the order was placed. That was it.
“Our thesis was that India is buying by catalogue; we wanted to give customers a furniture catalog they would never get tired of. Our thinking is that we don’t change fundamental buying patterns, we just restructure them,” says Murty.
Shah adds that the model should never be touch-sensitive. “Customers always sold a catalogue. And we did it in a place where the real estate market is also limitless,” adds Shah.
But what about Pepperfry Studios – the brand experience outlets? Shah says they were “playfully opened”. But they worked out as a good move as they opened over 100 studios in the last 10 months alone.
All this goes to show why the founders weren’t worried when big international players like Ikea or Pottery Barn entered India. “The great victory in our market is not one brand gaining share from another. Our market is largely disorganized, so the big win goes to those who organize the disorganized space. When a player like this comes in, we are happy; let’s all collectively organize the disorganized sector,” says Murty.
Shah adds that if Ikea wants to sell via Pepperfry, they’ll be perfectly happy. “We’re not about one type, we’re all about variety. We want to get everyone online,” he adds.
Adapting to today’s world
Technology is a big part of the Pepperfry model. In a post-pandemic world where online furniture shopping has surged, the company is making sure to tap into all the customer insights it can to prepare for the next 10 years. “We consider ourselves a technology company. We have a solid set of algorithms on the backend,” says Shah, while Murty adds that they consider Pepperfry “a consumer technology company with a fantastic supply chain.” That they sell furniture is just incidental.
“Omnichannel is about building trust; it’s not about touching and feeling. Our customers are online, on their phones or in the mall. Seven out of 10 people leave the studio shopping for something, and yet it’s still mostly online,” says Shah.
One from the road
Building the brand was not a smooth path to success; Shah and Murty often had to make up the rules as they went along. “We knew there would be a lot of obstacles, even in the simplest of things,” says Murty. But they learned from it.
“No one has told us that fundamentally, the size of our ambition is still small. We realized this very early on, however. Second, we would make a lot of mistakes – and we did. But I hope we were also good at fixing them. Nobody told us that, at the end of the day, this is a pretty lonely job,” says Murty.
Shah says he didn’t foresee how much responsibility this would become. “Even if we thought we wouldn’t run this in five years, well, that’s also a liability. Because you have to build it to keep it working. The responsibility continues to increase every day. [There are] 30,000 people working with us, and there’s a responsibility for that too. It’s not just about what we build as a business, but also the livelihoods we impact,” he says.
Source: Brand Equity.com