- Furlenco is growing at a CAGR of 130% YoY and is all set to cross the $300 million mark in net subscription revenue by 2023, from the current $25 million
- In a market where brands are having a tough time cracking millennials' minds and making them stay for long, Furlenco gets 85% of its revenue from the age group
- Furlenco presented these millennials with an offer that they could not refuse,
Ashwin Venkatraman tells us how they did it
Online furniture rental platform, Furlenco that likes to call itself the ‘Netflix of rental furniture and decor market,’ has had a smooth ride this year. The brand is growing at a CAGR of 130% YoY and is all set to cross the $300 million mark in net subscription revenue by 2023, from the current $25 million. Currently present in Delhi, Bengaluru, Gurugram, Chennai, Mumbai, Noida, Hyderabad, and Pune, Furlenco will now expand its business to seven more cities by 2023.
In a market where brands are having a tough time cracking millennials' minds and making them stay for long, Furlenco gets 85% of its revenue from the age group. Hence, the brand has shifted 100% of its marketing monnies to digital media, which is 10-15% of its annual revenue. This year, the platform has increased its marketing budget by 50%.
We spoke to Ashwin Venkatraman, Chief Operating Officer, Furlenco to find out the mantra behind this smooth sailing, what made them shift their focus completely on millennials, the road ahead and of course, their content journey so far.
Excerpts:
Q. How has been Furlenco's journey so far in India?
Started in 2012 by Ajith Mohan Karimpana, Furlenco is a furniture company with a difference, catering to the lifestyle aspirations of contemporary urban Indians in an unmatched way. It is an online-only platform known for award-winning designs created by in-house experts. The company has pioneered the furniture subscription concept in a way that is unprecedented anywhere in the world. In fact, Furlenco's disruptive proposition is so appealing that it has become one of the few Indian companies to be cloned by start-ups in the United States.
The journey of Furlenco has been nothing short of fantastic and the business has grown at a CAGR of 130% year-on-year.
Q. What do you think sets Furlenco apart in the category?
Furlenco’s offerings are novel to the segment that we operate in. We have not competed for a share of an existing market but rather carved one for our own by offering furniture and home décor on subscription basis. Our aim is to encourage young Indians to subscribe to a holistic lifestyle experience for their homes at affordable rates instead of buying bulky furniture, expensive appliances and other décor elements.
Our biggest differentiator has been the innovative and premium furniture designs created in-house by our experts. We don’t just offer our subscribers the typical bed, sofa and table etc., but innovative and utility products that serve the aspirations of the urban millennial in India. Apart from this, delivery within 72 hours, Swap & upgrade your furniture at will, free deep cleaning service every year and the option to relocate the subscribed furniture free-of-cost, are some of the features that have given us outstanding results and market positioning.
Q. How much funding has the company received till now?
Furlenco has raised ~$40 million in equity funding till date.
Q. What are the challenges faced by the company?
I think one of the biggest challenges has been with regards to changing the mindset of conventional furniture-buying Indians. They have a deep emotional bond with their belongings, especially furniture.
Q. What made Furlenco increase its focus on millennials?
India has one of the largest urban millennial populations in the world, and they are now coming to their prime spending age. Couple that with the rapid economic growth we are going to see, expansion in earnings & growing aspirations - you have the most important TG anywhere in the world, right here in India. Indian millennials have also proven that we are among the first to adopt brave new business models and technologies.
Hence, we decided to focus on the dynamic millennials who work across cities and offered them a proposition that had more appeal and viability compared to the conventional practice of furniture buying. In fact, millennials currently comprise 85% of Furlenco’s overall revenue. Our data also indicates that more than 1 million millennials had a look at Furlenco’s offerings online last year. It is our deep understanding of customers and their lifestyle requirements that has been the reason behind our growth in this segment.
Q. What has Furlenco's marketing strategy been so far?
Over the years, we have invested a lot of time and effort in understanding our TG. What we have going in our favour is that, today’s urban millennials value being practical, as much as they believe in living in the moment. Owning expensive goods doesn’t define them. Being smart and living the best life possible adds to their ‘cred’.
Furlenco’s furniture subscription model fits in perfectly with this. It offers practical benefits such as pocket friendly prices, free relocation, free maintenance, the option to switch and more. In turn, this helps consumers increase their own flexibility to spend time and money on experiences in the present.
Our marketing efforts always focus on both these aspects - down the funnel and with customers. We also understand that their needs are varied which is why we follow a digital first approach when we reach out to them.
In the past, we have also used syndicated content to convey our philosophy - that of being able to spend on experiences to live a better life - right now, in the present. This was a conscious choice to join the TG’s conversations instead of only trying to pull them to our own. Millennials can be ruthless when it comes to prioritising what they want to spend their time on. We adapt to that.
Q. Since its inception, Furlenco has chosen to use content marketing. (Pocket Aces, TVF, Dear Zindagi) Can you tell us what influenced your decision to take that route?
Audiences have moved from traditional mediums to digital media. And in their world, content is king. So such collaborations are a logical step for brands to take. But, we don’t do them in isolation. Content marketing/syndications were employed at the top of the funnel to reach a wider range of people and create the category relevance.
The second point that influenced this decision was the format. Storytelling is integral to this medium and that was a perfect fit for what we wanted to communicate. ‘Experiences over things’ is best explained in a slice of life sketch than anywhere else.
The third aspect was the engagement around the content. These sketches, collaborations and refreshing ideas (in case of Dear Zindagi) fuel conversations because of how relatable they are. All of us have at some point referred to a piece of content in everyday conversation. What brand wouldn’t love that?
Q. What is the marketing budget set aside this year? What is your media mix? Which medium gets the lion share - digital or traditional?
We earmark about 10-15% of our annual revenue as a marketing budget, and we are absolutely 100% digital. Our consumers have shifted most of their content consumption online and focusing on digital allows us to tell engaging stories, create the right connect and measure our effectiveness at a very detailed level.
Hyper targeting and measurability means that we can constantly test messages and ensure we say the right things, to the right people at the right time and on the right channel. Our efforts are currently heavy on YouTube with a healthy proportion of efforts on Facebook and Instagram. And more avenues are constantly tested in the mix.
Q. How has your marketing budget evolved over the years? By what percentage?
We have grown our marketing budget to keep pace with our growth ambitions and in line with our geographic expansion plans. As our revenue grows, we are able to re-invest even more in to our brand building and marketing campaigns.
In 2019, we increased our marketing budget by nearly 50% compared to 2018.
Q. What are your expansion plans?
We are planning to expand our geographical coverage to 15 cities compared to the 8 cities at present and serve a million customers across India. By the year 2023, we are targeting a net subscription revenue to grow from INR 175 Cr to 2000 Cr.
Q. Where do you see Furlenco in the next few years?
Our vision is to make furniture subscription as a way of life, and we are very much at the beginning of that journey. Over the next 4-5 years, we want to take furlenco to even more customers and provide a wider variety of furniture & home decor options, and be known as one of the most customer centric brands in the country.
Today our average tenure length, at an overall level, is about two years - we want to see how take that up to three or four years. We have customers who have stayed with us for over five years and we want to make sure they never leave and will continue this relationship lifelong.