In an interview to ET Online, Agarwal shares his views on the future of the online market, the challenges it faces and the potential opportunities. Edited excerpts:
Economic Times (ET): Why are offline furniture selling channels not adequate in today’s world?
Piyush Agarwal (PA): The world is moving towards online, and this has been fuelled further by the pandemic. In India, we have seen a robust hybrid model emerging, where both online and offline spaces are getting their fair share of business. Talking specifically about the furniture industry, online does have an advantage of offering a vast range of catalogue to customers. We have more than one lakh listings of furniture and home categories on Pepperfry.com.
This kind of variety can’t be offered in a traditional offline store due to the associated cost of inventory and storage space requirements. In Pepperfry studios, we have tried to give the experience of offline shopping to customers without limiting the varieties being offered. It is a unique model that has been immensely successful for us. We continue to build our business in both online and offline spaces.
We create a healthy balance between online and offline modes of sales. Around 45% of sales is attributed to over 200 physical stores across India.
ET: How is Pepperfry reducing overhead costs? What are the plans to make India’s homegrown businesses and exporters more competitive?PA: Pepperfry works on an asset-light model and with very little capital being blocked in inventory or capex. This helps greatly in maintaining a healthy cash flow. Supply chain cost forms the bulk of the overhead cost of the company. In the last one year, we have taken several steps to reduce this cost significantly. These steps include network remapping to minimise product movement, use of right vehicle sizes, load consolidation and full vehicle utilisation, having optimal number of supply chain centers, automating some of the repetitive costs to reduce labour costs, refunds, and returns.
ET: How do you monitor the routing of containers? What are the challenges that the company faces when transporting bulky items and how does it address the return logistics challenge?
PA: To monitor the routing of containers, we use a transportation management system (TMS) that provides real-time visibility into the movement of its products. The TMS allows us to track the location of our products, the estimated time of arrival, and any delays in the shipment. When it comes to transporting bulky items, we face several challenges such as handling, packaging, and logistics. One of the primary challenges is to ensure the safe and secure transportation of the products without any damage or breakage during transit.
Additionally, due to the large size and weight of the products, they require specialised handling equipment and vehicles for transportation. To address these challenges, we have a team of over 1,000 people. They are continuously trained to handle bulky fragile products. We use specialised packaging materials and techniques to protect the products during transit.
Return logistics is another major challenge for us, especially for bulky items. The company has a well-defined return policy that allows customers to return products within a specified period. However, managing the return of bulky items can be difficult due to their size and weight. Pepperfry has a dedicated team to manage the return logistics process. The fact that we directly manage most of the parts of our supply chain helps us in driving a lot of efficiency in these processes while also maintaining healthy levels of customer satisfaction.
ET: What AI or tech systems does Pepperfry use to streamline operations. What more does the company intend to do on this front?
PA: Pepperfry uses several AI and tech systems to streamline its operations and provide a better customer experience. Some of the key systems used by Pepperfry are:
Recommendation engine: It suggests personalised products to customers based on their browsing and purchase history. The engine uses machine learning algorithms to analyse customer data and provide relevant recommendations.
Chatbots: These provide instant customer support and assistance. The chatbots use natural language processing (NLP) to understand customer queries and provide accurate responses.
Image recognition technology: It allows customers to search for products using images. The technology analyses the image and provides a list of products that are similar to the image.
Virtual reality (VR): Pepperfry introduced VR technology to allow customers to visualise how a product will look in their home.
In addition to these systems, Pepperfry intends to continue investing in AI and tech to further streamline its operations. The company plans to explore the use of predictive analytics to forecast demand and optimise inventory management. Moreover, Pepperfry aims to use AI-powered chatbots to provide more personalised customer support and improve the overall shopping experience. The company is also looking at incorporating blockchain technology to enhance the security of its supply chain and improve transparency.
ET: What is Pepperfry’s ‘damage rate’? How does it plan to bring it further down?
PA: Pepperfry’s damage rate is currently at around 1.2% which is relatively low considering the nature of the products we transport. To further bring down our damage rate, we have implemented several measures. To begin with, Pepperfry has invested in specialised packaging materials and techniques to protect products during transit.
Furthermore, Pepperfry has introduced a quality control process at its warehouses to ensure that products are properly inspected and packaged before they are shipped. The company also trains its people on best handling practices to ensure that products are handled with care during transit and delivery.
Finally, Pepperfry has implemented a feedback system where customers can report any damages or issues with their products. The company uses this feedback to identify areas for improvement and make necessary changes to its processes.
Pepperfry plans to invest in AI and tech solutions to further reduce its damage rate. For instance, the company is exploring the use of sensors and IoT technology to monitor the condition of products during transit and identify potential issues before they become bigger problems. Additionally, Pepperfry is looking at using machine learning algorithms to predict which products are more likely to get damaged during transit and take preemptive measures to prevent this from happening.
ET: How has Pepperfry ensured that MSMEs and artisans are added to the domestic furniture and home goods market?
PA: We have taken several initiatives to on-board MSMEs and artisans onto its platform and promote their products in the domestic furniture and home goods market. One of the key initiatives provides a platform for small businesses and artisans to showcase their products. Studio Pepperfry offers a range of services including photography, merchandising, and marketing to help MSMEs and artisans present their products in the best possible way. This has helped many small businesses and artisans to scale up their operations and reach a wider audience.
Pepperfry has also partnered with several government initiatives to promote the welfare of MSMEs and artisans. For instance, the company has partnered with the Make in India campaign to promote indigenous manufacturing and boost the domestic furniture industry. Moreover, Pepperfry has partnered with the National Skill Development Corporation (NSDC) to train and upskill artisans, thereby creating more employment opportunities and contributing to the growth of the industry.
In addition to these initiatives, Pepperfry has also introduced a sustainable living section on its platform, which features products made from eco-friendly materials and promotes sustainable living. This section features many products made by MSMEs and artisans who specialise in sustainable materials and techniques.
Overall, Pepperfry has played an active role in promoting MSMEs and artisans. These initiatives have helped many small businesses and artisans to grow their business and contribute to the growth of the industry.
