How Pepperfry surpassed its pre-Covid sales volumes by 50-60% in October

• Since the start of Unlock, online furniture selling platform Pepperfry has witnessed good recovery, so much so that it surpassed its pre-Covid sales volumes by around 50-60% in October.
• We caught up with Kashyap Vadapalli, Chief Marketing Officer & Business Head, Pepperfry to understand how the brand navigated the few months of lockdown and adapted to the new world order, and the factors that helped them come out of this adverse situation relatively unscathed.

This has been an exceptionally difficult year for businesses across the globe. However, this has also been a year that has tested their resilience and how they reacted to the crisis has set the course for the rest of the year, and probably the next few years too.

This became the time when a company’s ability to be agile and adapt to changing times was tested and the companies that were able to do that are already seeing results, getting back on track their growth story.

While a lot of sectors were seriously impacted due to the lockdown, there were a few that got tailwinds due to the lockdown. One such segment is the online furniture industry. The pandemic has led to an increase in digital adaption across the country, making people who weren’t really shopping online come on board. The category also got a boost as with people staying at home, there was a need to furnish homes with suitable furnitures to make their houses suitable for working from home. Even students attending classes from home need proper furnishing to make the experience comfortable and it has led to more and more people spending on buying furniture online.

Therefore it is not surprising that Pepperfry has been witnessing a steady increase in demand and growth since May. In fact, in October, Pepperfry surpassed its pre-Covid sales volumes, and that too by 50-60%.

We recently caught up with Kashyap Vadapalli, Chief Marketing Officer & Business Head, Pepperfry to understand how the brand navigated the few months of lockdown and adapted to the new world order, and the factors that helped them come out of this adverse situation relatively unscathed.

Excerpts:

Q) While the first half of the year was challenging, things have slowly started looking up. How have things been for brand Pepperfry?
While the first half was challenging for individuals and businesses alike, we’ve witnessed a swift recovery in our business and a favorable consumer sentiment in the second half. In order to cater to the evolving scenario, we innovated and executed with great agility to cater to discerning consumers by launching new features, new pricing strategy and UI/UX changes among others.

This overhaul along with the consumer’s growing inclination towards creating a home environment that is conducive to the evolved home has helped in a steady bounce back. We clocked 40% of pre-lockdown sales in May, 70% in June, 85% in July to a complete recovery at 100% of pre-lockdown volumes, in August. The remarkable interest towards the category has helped is surpassing our pre-COVID sales volumes by 50-60% in October.

As the pandemic accelerated the shift in consumer behavior from offline to online, the online furniture category saw ~50% increase in interest, in comparison to last year. The increasing behavior shift has resulted in Pepperfry’s online business soaring to 120% of pre-lockdown levels by August/September. Furthermore, our first-time-buyers (FTB) business grew at a faster rate than repeat buyers in Tier-2 cities. Overall, Our FTB business contribution increased ~500bps for Tier-2 cities and beyond.

As the leader in the category, which is known for its distinguished offerings, we introduced the ‘Buy on Phone’ program to smoothen this transition of offline to online for our consumers. The program allows customers or potentials to interact with Pepperfry’s sales consultants and seek guidance around the furniture buying process via phone and video chat.

Q) With more and more people working from home, the demand for home improvement products understandably went up. What kind of growth have you seen and how are you further strengthening your offering in the segment while also innovating to make people's work from home regimes a little better?
As the lockdown progressed, most companies and educational organizations instituted a work from home policy, even extending it for several months until safety concerns are minimized. This new awareness of the work-from-home and study-from-home format, as a somewhat permanent lifestyle, has motivated consumers to view furniture as a required, long-term investment that will support and smoothen this transition.

Undoubtedly, this has led to an unprecedented rise in demand for home-office furniture. Pepperfry’s home-office category, specifically study tables and ergonomic office chairs grew by 250% and 400% respectively in August 2020, in comparison to pre-lockdown levels. Currently, this category contributes about ~25% to the overall sales volume, a segment which earlier accounted for about 10% of total sales, prior to the lockdown.

Furthermore, consumers are actively investing behind products that are lightweight and kinetic as well as flexible furniture that is easily movable, reconfigured and provide the flexibility to adapt to the situation.

Apart from work, consumers are generally spending the bulk of their day at home. This has led to a consciousness and a need for a home-environment that not only enhances work productivity but also one that supports leisure and family-oriented activities. Therefore, the demand for hero products such as beds, mattresses, dining tables, wardrobes as well as furnishings such as wall décor, lights & lamps have seen a rise in demand. Compact and space-saving products like bean bags have also grown reasonably well compared to pre-COVID numbers. Through such small additions and changes, consumers are definitely seeing value in making their homes more aesthetic and conducive to mental and physical well-being.

In order to continue catering to the diversified home-office needs of our discerning customers, we have collaborated with B2B furniture players to address this strong demand.

Q) How did you make sure that the pandemic did not have a huge impact on the brand?
The announcement of the lockdown led to a temporary suspension of business operations - delivery and assembly of products, operations at Studios, et al.However, we made a conscious decision of keeping our website active, allowing customers to easily surf, view, research and purchase products. This led to an increase in engagement rate by 40-50% in the time spent by consumers on the site and page depth i.e. the number of pages a consumer visits when they are in a particular session.

As we resumed operations with the easing of the regulations, we faced a few challenges regarding logistics and delivery. However, on the back of our robust big-box logistics and supply chain model, we were one of the first e-commerce businesses dealing with non-essential categories to re-initiate large item deliveries within the country and clear the backlog promptly after the announcement of unlock.

Additionally, considering how furniture is a big-ticket category, which requires doorstep delivery and assembly, we ensured that all our functions were executed with absolute safety precautions in place. At our warehouses and Studios, we adopted preventive measures like daily tracking of employee health as well as monitoring the temperature of visitors, ensuring complete training on hygiene, use of sanitizers at regular intervals and disinfecting the complete space and product post-delivery.

From marketing perspective, we quickly adopted a communication strategy that helped us in maintaining relevancy among consumers. We halted all sales and discount related messaging and turned towards addressing the current challenges through tips like how to maintain furniture, DIY décor ideas, safe ways to rearrange your furniture and so on. We witnessed an increase in consumer engagement, through these themes.Additionally, in line with our brand personality of being pioneering, intelligent and conscious we looked at content that helped the audience get up to date with the latest in lifestyle choices with a focus on home through a series of expert interactions. We used interesting formats such as quizzes and trivia to keep the curiosity alive and to achieve high engagement levels.

Q) Did you cut down on your marketing budget during the pandemic? What does your budget allocation look like for the rest of the year and the upcoming fiscal?
During lockdown, taking cognizance of the increasing amount of time consumers were spending on digital and social media platforms, we diverted our marketing spends towards these mediums.

However, during the festive season, we adopted a more diversified approach. Typically, our marketing spends are divided by a 70:30 ratio wherein the larger share of the budget is allocated to digital. But for this festive season, we decided to divide the budget equally between traditional and digital mediums.

Q) As a marketer, what are your key focus areas going to be, going ahead?
The focus in marketing would be maintaining high scores and leadership in brand metrics like TOM (top of mind) and preference. It would be to continue increasing the conversion rates on the site by driving quality traffic. Additionally, using AI/ML to sharp target audiences to improve ROI along with conversions, would continue to be important. We will also be looking to underline the differentiated and curated catalog on Pepperfry to the discerning customer, which will help us gain share in the premium segment of the market.

Q) What were your key learnings from the past few months?
Key learnings from the past few months include – to always be active from a brand messaging perspective. While consumers may not be buying actively, maintaining communications will help when the demand builds back. Be empathetic to the consumers concerns, do not indulge in hard-sell, try and empower the consumer with knowledge and information in tough times and they will turn to you when the times are good.

Q) Are people now coming back to Studio Pepperfry? Do you have plans of further expanding your retail presence and going deeper into the country?
During the initial days of the unlock phase, we leveraged our social media platforms to communicate the preventive measures undertaken at the Studios. This helped us in building trust and confidence among customers. We are witnessing a great revival in footfalls, with the Studios already contributing to c.30% of the overall business (which was at 38% pre-COVID).

Given that these Studios act as key consumer touchpoints for the brand and considering how these have bounced back swiftly post the lockdown, we will continue with our aim to build the largest omni-channel network in the country.

Currently, we have 60 experiential centres in 20 cities across the country, out of these 18 are owned and operated by franchisees and the remnant are owned and operated by Pepperfry. Given the growing interest of consumers from Tier 2 and Tier 3 cities, we are planning to expand our Studio presence in these markets with the help of our unique and highly successful FOFO (franchise-owned & franchise-operated) model. We aim to open at least 20 more FOFO Studios in Tier 2 and 3 cities by March 2021.

Q) Where will the next phase of growth for Pepperfry come from?
There is a huge headroom for growth in the conventional urban markets, where penetration of online furniture is still in the low single digits. Additionally we see a lot of Tier II and Tier III markets taking to online furniture shopping as they find designs and styles on Pepperfry that they do not find in their markets. I see this phenomenon contributing to the next phase of growth for us.