-­‐	  Mehul	  Agrawal	  Co-­‐founder	  and	  Managing	  Director	  Relevance of onlineplatform for FurnitureIndustry
AGENDAE-commerce - Why e-tailing?Furniture e-tailing – Why Furniture as a category will do great online?Understanding Cust...
Before we start – What do you think ofonline?Online is for discount mongers – cheap cheap cheap!•  60%+ sales without disc...
E-­‐commerce	  –	  Why	  e-­‐tailing?	  
Indian retail market is largely unorganizedE-tailing is providing impetus to growth of organized segmentHowever,	  overall...
29	  36	  46	  60	  80	  137	  190	  273	  376	  3%	  3%	  4%	  5%	  7%	  10%	  15%	  22%	  30%	  0	  100	  200	  300	  40...
Consumers are also spending more timeonline to aid their purchase decisions71%	  64%	  29%	  24%	  15%	  9%	  6%	  3%	  19...
Diversified access ensures that next growthwave comes from smaller cities and towns80%	  60%	  40%	  2007	   2012	   2016	...
Bottomline: Indian e-commerce will witnessa huge growth ~$70 bn by 20200.3	   0.4	   0.6	  1.6	  9	  2009	   2010	   2011	...
Online	  Home	  &	  Furniture	  Retail	  –	  Why?	  	  
Furniture	  Jewellery	  Home	  Furnishing	  Kitchen	  Health	  Products	  Apparels	  Fashion	  Shoes	  Cosme5cs	  Books	  ...
Early signs indicate a promising yetuntapped opportunity362%	  119%	  100%	  98%	  90%	  76%	  75%	  13%	  3%	  3%	  2%	  ...
Internationally, furniture has already emergedas next big trend in online shopping	  •  Home	  products	  are	  50%+	  sal...
Case in point –11	  Million	  members	  across	  26	  countries	  33%	  33%	  sales	  via	  Mobile	  device	  Purchase	  R...
Online search volumes are also rising rapidlyExpected to follow trajectory of established categories2007	   2008	   2009	 ...
Even for e-tailers, Home and Furnitureprovide a great business caseHigher	  Margins	  and	  Lot	  of	  Private	  label	  5...
And there are significant advantages overthe traditional physical model tooNetwork reachOperational hoursRange of products...
Lastly, you can do so much more online…Assortment + Depth•  Why make a choice? Go wide and go deepBe closer to customers• ...
Understanding	  Customers	  –	  Who	  are	  they	  and	  what’s	  in	  it	  for	  them?	  
51%	  0%	  10%	  30%	  26%	  14%	  9%	  5%	  7%	  49%	  0%	  11%	  26%	  23%	  14%	  9%	  6%	  10%	  Total	  Customer	  Le...
60% sales comes from top 10 citiesSouth is the largest region with a ~40% share29%	  7%	  25%	  37%	  2%	  %	  OF	  SALES	...
2,095	  1,549	  1,634	  1,825	  2,165	  2,278	  2,323	  2,412	  2,391	  2,748	  2,988	  1,675	  2,443	  2,591	  2,940	  3,...
Repeat	  Rate	  %	  customers	  making	  next	  purchase	  20%	  10%	  12%	  16%	  21%	  24%	  24%	  26%	  25%	  15%	  11%...
Critical to address consumer sentimentsacross the board to enable online purchaseCan	  I	  trust	  the	  website?	  	  Wil...
Can	  I	  trust	  the	  website?	  Will	  I	  receive	  the	  products	  safely?	  Will	  I	  receive	  the	  products	  C...
What	  exactly	  will	  I	  get?	  How	  do	  I	  experience	  the	  product	  –	  Touch	  &	  Feel?	  How	  will	  the	  ...
Is	  there	  a	  sufficient	  variety	  across	  categories?	  Are	  the	  products	  different	  or	  unique?	  Is	  the	  o...
How	  do	  I	  raise	  my	  queries/concerns?	  When	  can	  I	  make	  my	  purchases?	  What	  kind	  of	  payment	  opC...
ImplicaCons	  –	  What	  do	  brands/vendors	  need	  to	  do?	  	  
•  Focus on online•  Exclusive range•  Invest into systems and processes•  On time delivery•  Be flexible – allow returnsA...
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eTailing India Jaipur Conclave- 2013 Mehul Agrawal- Furniture e-tailing – Why Furniture as a category will do great online?,Understanding Customers - Who are they and what’s in it for them?Implications – What do brands/vendors need to do?Implicatio

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Mehul Agrawal is a co-founder at FabFurnish.com, who heads the operations and logistics departments with great zeal and enthusiasm. Under his strong leadership and great aptitude, FabFurnish.com has emerged as a strong brand in a short span of time.
Mehul is a Silver Medalist from the prestigious Indian Institute of Management –Calcutta. His professional experience prior to FabFurnish.com includes Investment banking at Morgan Stanley and management consulting at The Boston Consulting Group. His multitude of experience across industries – telecom, banking, retail, consumer goods, airline engineering, and across geographies – London,New York, Sydney and India, coupled with a strong vision to become an entrepreneur, led him to FabFurnish.com where he has displayed incredible expertise across the diverse portfolios which he manages.

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  • Mehul- 70 bn by 2020 looks great !! Agree with you on growth of Furniture as a category- very underserved and ripe of quality intervention. We work with Hypericty, Jabong and Dotzot and growth has been good.

    One question though- furniture means installation- how to you manage that in 100 cities?
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eTailing India Jaipur Conclave- 2013 Mehul Agrawal- Furniture e-tailing – Why Furniture as a category will do great online?,Understanding Customers - Who are they and what’s in it for them?Implications – What do brands/vendors need to do?Implicatio

  1. 1. -­‐  Mehul  Agrawal  Co-­‐founder  and  Managing  Director  Relevance of onlineplatform for FurnitureIndustry
  2. 2. AGENDAE-commerce - Why e-tailing?Furniture e-tailing – Why Furniture as a category will do great online?Understanding Customers - Who are they and what’s in it for them?Implications – What do brands/vendors need to do?
  3. 3. Before we start – What do you think ofonline?Online is for discount mongers – cheap cheap cheap!•  60%+ sales without discounts•  Repeat purchases are significant – shows genuine interestOnline is for urban population – hi-tech youngsters!•  40% sales outside top 10 cities; expected to rise to 60%Only low value products sell online•  Maximum basket size – 2.5 Lacs; 70-80% revenues from orders above Rs. 3,000Online has excessive returns – loss making proposition•  <5% returns when managed properly, and doubles the conversions online
  4. 4. E-­‐commerce  –  Why  e-­‐tailing?  
  5. 5. Indian retail market is largely unorganizedE-tailing is providing impetus to growth of organized segmentHowever,  overall  share  of  e-­‐commerce  in  India  will  s5ll  be  miniscule  (~1%)  compared  to  US  (~9%)  and  China  (7-­‐8%)  3%  5%  12%  20%  2005   2010   2015   2020  0%  10%  20%  30%  Organized  as  a  %  of  Total  Retail  13-­‐15%  25-­‐30%  60%+  Overall  Retail   Organized  Segment   e-­‐Commerce  CAGR  OF  RETAIL  CAGR  >90%  market  sCll  unorganized  today  E-­‐commerce  is  expected  to  grow  5  Cmes  faster  than  overall  retail  Source:  Broker  Research  
  6. 6. 29  36  46  60  80  137  190  273  376  3%  3%  4%  5%  7%  10%  15%  22%  30%  0  100  200  300  400  2007   2008   2009   2010   2011   2012   2013   2014   2015  0%  25%  50%  Unique  Users  (million)   Penetra5on  (%)  Increasing penetration of internet is fuelinge-tailing growth4  5  7  8  11  13  21  28  45  2007   2008   2009   2010   2011   2012   2013   2014   2015  0  25  50  Users  transac5ng  online  (million)  Exponen5al  growth  of  users  that  will  be  transac5ng  online  By  2015,  30%  of  Indian  populaCon  will  be  using  internet  10%  of  Internet  users  are  already  transacCng  online  Source:  Avendus  Es<mates  
  7. 7. Consumers are also spending more timeonline to aid their purchase decisions71%  64%  29%  24%  15%  9%  6%  3%  19%  10%  0%   20%   40%   60%   80%  Family  Friends  Online  product  reviews  Product  web  sites  Search  engines  Discussion  forums  Social  media  sites  Influen5al  bloggers  TV  News  sources  SOURCES  OF  RECOMMENDATIONS  FOR  PURCHASE  30  45  2011   2015  0  25  50  75  100  125  150  DAILY  AVERAGE  TIME  SPENT  ONLINE  Minutes  spent  online  (India)   USA  9%  13%  18%  33%  19%  8%  <5   5-­‐10   10-­‐15   15-­‐20   20-­‐30   >30  0%  15%  30%  45%  %  of  Purchase  Sessions  LENGTH  OF  A  PURCHASE  SESSION  (MINUTES)  Online  sources  are  aiding  purchase  decision  of  Indian  consumers…  …who  conCnue  to  spend  more  Cme  online,  sCll  behind  global  peers  though  Source:  Avendus  Es<mates   Source:  B2C  e-­‐Commerce  report  
  8. 8. Diversified access ensures that next growthwave comes from smaller cities and towns80%  60%  40%  2007   2012   2016  0%  25%  50%  75%  100%  %  of  total  customers  Online  players  are  gaining  increasing  business  from  smaller  ciCes  and  towns…  …as  the  pla_orm  provides  an  instant  vast  reach  compared  to  offline  organized  players  Source:  Avendus  Es<mates  IllustraCve  depicCon  of  reach  of  organized  players  Broadband  reach  and  3G  penetraCon  are  key  drivers  %  of  revenues  coming  from  top  10  ciCes  
  9. 9. Bottomline: Indian e-commerce will witnessa huge growth ~$70 bn by 20200.3   0.4   0.6  1.6  9  2009   2010   2011   2012   2016   2020  0  5  10  15  20  INDIAN  E-­‐COMMERCE  MARKET  SIZE  ($  BN)  Total  Market  Size  55-­‐60%  CAGR  expected  5ll  2020  Source:  Industry  reports,  Analyst  es<mates  70  
  10. 10. Online  Home  &  Furniture  Retail  –  Why?    
  11. 11. Furniture  Jewellery  Home  Furnishing  Kitchen  Health  Products  Apparels  Fashion  Shoes  Cosme5cs  Books  Electronics  Computers  Appliances  Nascent  Categories  Mature  Categories  Furniture Retail is on its course of being thenext big category for e-commerceSource:  Global  Webindex  
  12. 12. Early signs indicate a promising yetuntapped opportunity362%  119%  100%  98%  90%  76%  75%  13%  3%  3%  2%  2%  10%  15%  0%  100%  200%  300%  400%  0%  5%  10%  15%  20%  GROWTH  ACROSS  CATEGORIES  IN  E-­‐COMMERCE  YoY  Growth  %   Reach  %  Source:  Report  –  State  of  e-­‐Commerce  in  India  
  13. 13. Internationally, furniture has already emergedas next big trend in online shopping  •  Home  products  are  50%+  sales  •  Turnover:  $150M  (2012E)  •  Turnover:  $200M  (2012E)    •  100%  YoY  growth;  75%  repeat  rate  •  1B+  online  visitors  (Alexa  Rank:  294;  Zappos:  737)  •  25%  growth  in  online  sales  •  Turnover:  $600M  (2012)   •  Turnover:  $150M  (2012E)  Home  goods  market  in  U.S.  is  $500bn  and  6%  of  it  is  online    Source:  Press  release,  news  ar<cles  
  14. 14. Case in point –11  Million  members  across  26  countries  33%  33%  sales  via  Mobile  device  Purchase  Repeat  66%  Repeat  purchases  by  members  50%  sales  are  home  products  In  18  Months  15000  products  online  15%  exclusive    90%  not  available  on  other  major  websites  66%  Source:  Press  release,  news  ar<cles  
  15. 15. Online search volumes are also rising rapidlyExpected to follow trajectory of established categories2007   2008   2009   2010   2011   2012   2013  0  25  50  75  100  ONLINE  SEARCH  FOR  ITEMS  IN  GOOGLE  Shoes   Furniture   Wall  Clocks   Bed  Sheets  2006   2007   2008   2009   2010   2011   2012   2013  0  25  50  75  100  Furniture  2007   2008   2009   2010   2011   2012   2013  0  25  50  75  100  Bed  Sheets  Source:  Google  Trends  
  16. 16. Even for e-tailers, Home and Furnitureprovide a great business caseHigher  Margins  and  Lot  of  Private  label  50%  lower  returns  than  industry  standards  for  other  categories  Purchase  Repeat  2-­‐3x  basket  size  –  both  number  of  items  &  Ccket  size  Nascent  but  already  seeing  repeats  at  15-­‐25%  Flurry  of  e-­‐commerce  ventures  dealing  in  Home  &  Furniture  over  last  year…  …as  it  provides  a  great  business  opportunity  compared  to  other  categories  
  17. 17. And there are significant advantages overthe traditional physical model tooNetwork reachOperational hoursRange of productsProduct launchesProduct pricingBasket sizeFloor negotiationsRetail InvestmentSales forceWarehousing costAfter salesDelivery timelinesProduct assemblyScale  &  Presence  Sales  Investments  Service  levels  Physical   Online   Physical   Online  E-­‐com  catching  up  through  local  presence  
  18. 18. Lastly, you can do so much more online…Assortment + Depth•  Why make a choice? Go wide and go deepBe closer to customers•  Get instant and accurate feedback on what customers want and what they perceiveLeverage market intelligence•  Data/Analytics/Behaviour/Patterns everything is at disposalRun pilots/exclusivity campaigns•  ‘Will it work’? Push customers online by maintaining exclusive rangesTrigger impulse buying?
  19. 19. Understanding  Customers  –  Who  are  they  and  what’s  in  it  for  them?  
  20. 20. 51%  0%  10%  30%  26%  14%  9%  5%  7%  49%  0%  11%  26%  23%  14%  9%  6%  10%  Total  Customer  Less  than  20  20-­‐25  25-­‐30  30-­‐35  35-­‐40  40-­‐45  45-­‐50  More  than  50  Female   Male  25-35 years is the key age group for HomeHowever, gender split remains equalGiven  only  20%  online  shoppers  are  women,  the  category  has  a  significantly  higher  penetra5on  among  women  Source:  Industry  es<mates  
  21. 21. 60% sales comes from top 10 citiesSouth is the largest region with a ~40% share29%  7%  25%  37%  2%  %  OF  SALES  FROM  DIFFERENT  REGIONS  North   East   West   South   North-­‐East  35%  of  all  sales  come  from  Metros;    60%  comes  from    top  10  ciCes  South  provides  the  largest  pla_orm  for  online  sales  contribuCng  ~40%  of  sales  35%  25%  40%  Metros   Next  6  Ci5es   Rest  of  India  %  OF  SALES  FROM  DIFFERENT  CITIES  %  of  total  sales  Source:  Industry  es<mates  
  22. 22. 2,095  1,549  1,634  1,825  2,165  2,278  2,323  2,412  2,391  2,748  2,988  1,675  2,443  2,591  2,940  3,482  3,247  3,418  Total  Customer  Less  than  20  20-­‐25  25-­‐30  30-­‐35  35-­‐40  40-­‐45  45-­‐50  More  than  50  Female   Male  Basket  Size  Men have a significantly higher basket sizethan women across age groupsSource:  Industry  es<mates  
  23. 23. Repeat  Rate  %  customers  making  next  purchase  20%  10%  12%  16%  21%  24%  24%  26%  25%  15%  11%  9%  12%  15%  17%  19%  20%  23%  Total  Customer  Less  than  20  20-­‐25  25-­‐30  30-­‐35  35-­‐40  40-­‐45  45-­‐50  More  than  50  Female  Male   Male  However, women depict greater loyalty andhave higher repeat ratesSource:  Industry  es<mates  
  24. 24. Critical to address consumer sentimentsacross the board to enable online purchaseCan  I  trust  the  website?    Will  I  receive  the  products  safely?  Will  the  products  get  delivered  5mely?  How  do  I  raise  my  queries/concerns?  What  5me  of  the  day  can  I  make  the  purchase?    What  kind  of  payment  op5ons  are  available?  Is  the  variety  of  products  sufficient?  Are  the  products  different/unique?  Is  the  overall  deal  aorac5ve?  What  exactly  will  I  get?  How  can  I  experience  the  products?  How  will  the  products  get  assembled?    Trust  and  Safety  Added  convenience  Value  proposiCon  DemysCfying  products  1  2   3  4  
  25. 25. Can  I  trust  the  website?  Will  I  receive  the  products  safely?  Will  I  receive  the  products  Cmely?  Guaranteed  Delivery  in  8-­‐13  days  Addressing consumer sentiments:Trust and Safety1  
  26. 26. What  exactly  will  I  get?  How  do  I  experience  the  product  –  Touch  &  Feel?  How  will  the  products  get  assembled?  Addressing consumer sentiments:Demystifying products2  
  27. 27. Is  there  a  sufficient  variety  across  categories?  Are  the  products  different  or  unique?  Is  the  overall  deal  asracCve?  Foldable    Wall  Shelves  350  200  75  50  50  50  Living  Room  Furniture  Bed  Room  Furniture  Dinning  Furniture  Outdoor  Furniture  Bar  Furniture  Workspace  Furniture  0   250   500  #  of  SKUs  Addressing consumer sentiments:Value proposition3  LOVE  Wall  Shelves  
  28. 28. How  do  I  raise  my  queries/concerns?  When  can  I  make  my  purchases?  What  kind  of  payment  opCons  are  available?  0%  50%  100%  11  AM  -­‐  9  PM   9  PM  -­‐  11  AM  %  OF  SALES  BY  HOUR  33%  Addressing consumer sentiments:Added convenience4  
  29. 29. ImplicaCons  –  What  do  brands/vendors  need  to  do?    
  30. 30. •  Focus on online•  Exclusive range•  Invest into systems and processes•  On time delivery•  Be flexible – allow returnsA genuine focus is all it needs
  31. 31. Thank You

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