PEPPERFRY BUILDING GROWTH
Pepperfry, an online retailer, seeks new revenues amidst competition by exploring the value chain to create unique customer value for future growth. Success measured by conversion rate, revenues, brand sustainability, and product margin.
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Presented by the University of Glasgow: Mara Hilmy, Sarah Henkind, Wes Treiber, Vijay Bidnurmath PEPPERFRY BUILDING GROWTH
EXECUTIVE SUMMARY Current problem Pepperfry is searching for new revenues while fighting off competitors to maintain market share. Solving this problem By exploring the value chain we believe we can create unique value to customers that will fuel future growth. Defining Success We will measure success by evaluating conversion rate, revenues, brand sustainability, and gross product margin.
AGENDA Introduction Key Issues Analysis Alternatives Recommendations Implementation Justifications and Questions
DEFINING PEPPERFRY Pepperfry is an online retailer focused on delivering quality products quickly to the image conscious home owner.
WHO IS OUR CUSTOMER Focused Customer Unfocused Customer The younger generation of Indians who have new disposable incomes Roughly 350 million internet users Less trusting of online shopping but still have growing needs to furnish homes They see them selves as early adapter and tech savvy
Vertical COMPETITION Pepperfry IKEA Durian Home Town Godrej Interio RentMojo Rentickle Offline Online Big Bazaar MORE Megastore Flipkart Amazon India Horizontal
ALTERNATIVE 1 Pros Push manufacturing in-house: Longer reduction in costs More control in quality control Inventory Helps build brand recognition Cons Moving away from selling outside brands and focus our manufacturing efforts on in house brands Increase in fixed costs Large initial investment Lost of trusted suppliers Focus would be on popular furniture and d cor brands
ALTERNATIVE 2 Pros Average 250% increase in profit from online sales More control over value chain Less likely to have Cons Stop external deliveries: Push to have control of our own fleet and move away from external shipping online sales to customers. Increase in fixed costs Large initial investment Moves away from core competencies
ALTERNATIVE 3 Pros Builds company trust Solidifies customer loyalty Opportunity for further personalized service Cons Build after sales service: Create a network of follow up and installment service of local Pepperfry Certified carpenters. Cost of acquiring carpenters Assessing quality of carpenters Requires more personnel controls Utilize their in house assembly and service to build a better understanding of customer needs.
ANALYSIS OF ALTERNATIVES Alternative1 Alternative2 Alternative3 Conversion Rate Increase Revenue Brand Sustainability Gross Margin %
RECOMMENDATIONS 30 new drivers and trucks Select 20 best suppliers 30 new carpenters Command and Control Strategy
MANUFACTURING Extend loan of 5.5mil INR to 20 best suppliers to be exclusive to Pepperfry Improves vertical control of product quality and variety
INBOUND LOGISTICS Extend into new market in the North East, 4th largest city in India Renting a Improve warehouse Kolkata, to keep cost down procurement and delivery costs
OUTBOUND LOGISTICS Buying 30 trucks and hiring 30 drivers Find and 30 new carpenters to assist with final assembly of the product Flexibility and agility for delivery
SALES AND MARKETING Continue organize growth through existing channels House brand will sell with improved margins Focus on content marketing online and offline
AFTER SALES AND SERVICE Create an extension of Pepperfry s online and mobile application Hire a new team of carpenter to support after sales activities Would create trust, loyalty, and ensure repeat customers Initially only focused on 3 new cities
BREAK-EVEN PROJECTION 12,000.00 10,000.00 8,000.00 6,000.00 4,000.00 2,000.00 - 2018 2019 2020 2021 Revenue Costs
TIMELINE Year 1 Year 2 Start post sale service Year 3 Roll out new drivers In house manufacturing ready for delivery Review and evaluate process Look to extend roll out to other cities
HOW WE DEFINE SUCCESS Increase conversion rate Convert online view and clicks into sales quicker Locate new sales channels and leverage service to increase purchase amount Increase revenues Brand Grow while maintaining current customer base sustainability Increase gross margin on merchandise Focus on home furnishings and d cor
Presented by the University of Glasgow: Mara Hilmy, Sarah Henkind, Wes Treiber, Vijay Bidnurmath THANK YOU, QUESTIONS
BACK-UP FIGURES Inhouse Manufacturing Total Suppliers 20.00 Total Loan 100,000.00 Total Costs 2,000,000.00 Inhouse Delevery (Pep-Kart) New Nodal (Kolkata) 50,000.00 New Trucks + Driver 1,800,000.00 Caprpenter Network 450,000.00 Total Costs 2,300,000.00 After Sales Internet Application 100,000.00 Carpenters 100,000.00 Total Costs 200,000.00
ECOMMERCE REALITY CHECK Currently E-commerce accounts for roughly 10% of the overall retail market Most generous estimates see this number peaking at 20% over the next 10 years The larger the sale price the less likely an individual will buy online Large catalogs create analysis paralysis
