By Arvind Kadam, Founder, Abesquare
Based in Bengaluru, ABEsquare is an e-Commerce platform specializing in customized wooden furniture and interiors
The Indian e-Commerce market is expected to cross the $100 billion mark in 2020. This is not a small numbers by any stretch of the imagination and everybody is after a piece of the pie. Many reasons are behind this exponential growth of the e-Commerce space ranging from the unexpectedly high penetration of internet and smartphone usage amongst the buying populace as well as continuous improvements in execution of services and fierce competition that ensures high levels of discounting. The question that now arises is how this pie now will be carved between those portals that offer a wide horizontal of goods and services and those that perform under very specific verticals. One of the largest growing in the vertical specific portals is the e-furniture or furnishings.
The Indian furniture market is currently at the level of $20 billion. Most of this however is unorganized however this is still expected to grow at a 25 percent CAGR from 2014-19. Within the 20 billion, 40-50 percent is furniture while the remaining makes up home decor items.
Online furniture and home interiors space is yet to witness massive customer adoption as seen in some other verticals like fashion, books and electronics. Most buyers feel that there is a need for a ‘touch and feel’ of furniture which cannot be achieved online. Certain players now offer free home trials within particular categories and open select showrooms to allow the customer a sense of physical feeling. Another problem facing players in the furniture e-Commerce space is that most aren’t as well established and streamlined towards the buyer as some big e-Commerce players are. This is a problem - however timely service, strong customer support, flexible payment options and the securing of a return customer can solve these problems. Problems also arise due to the delivery time taken by most websites as the product is made to order and because most of the production centers aren’t as well connected to major cities. Being a large ticket item, which requires an advance payment, also creates last minute hesitation that can affect the actual purchase though EMIs and easy finance options are available now. Another challenge is that people from different regions of India prefer different types of furniture, for example, buyers from Bangalore might like modern, contemporary designs for their furniture, while those from smaller cities and towns sometimes prefer wrought iron furniture that will be cheaper than premium quality wooden furniture – hence, the need for a wide variety of designs from the players who hope to make a mark in the field.
Indian furniture players are chasing different models for growth – the two basic formats followed are the marketplace model and the in-house model.
The market place model is one where the furniture players tie up with various suppliers – these suppliers are the ones who manufacture the products, ensure that their products meet the quality criteria, and finally sell their products on the e-Commerce platform provided by the furniture player. The market place operator processes transactions with the buyers of these products. This model enables rapid scalability, with less capital and at times even zero inventory.
The in-house model is one where the furniture players design and manufacture their own products. The end-to-end designing, manufacturing and constant checking for the quality of the products helps the player to completely own the value chain and create a brand identity. However, for many players following the in-house model, the turnaround time might be longer than for those following the market-place model.
Success in this sector will come to those who supply products of excellent quality, ensure ultimate customer satisfaction and can differentiate themselves from competitors by providing furniture customized to the needs of the consumer.