Mebelkart is betting interior design unit will become bigger than furniture e-com
Online furniture and home dÃ©cor marketplace Mebelkart is shifting its focus from the retail business to the interior designing space.
"Entering the interior design space is our natural progression," Rahul Agrawal, CEO, Mebelkart told VCCircle.
"Currently, our retail and interior design sales ratio is 90:10, but soon retail business will account for 20 per cent of the total revenue and the remaining 80 per cent will come from the interior design business," Agrawal said.
The startup is collaborating with 27,000 interior designers across different cities to put its plan into action. "We are in talks with one of the the biggest real estate players besides housing portals such as Housing.com," said Agrawal. The startup, run by Mebelkart Technologies Pvt Ltd, is looking at the hospitality sector, and especially, restaurants and bars projects. "We are already doing a hotel project worth Rs 10 crore."
With 3.5 lakh furniture products listed on its site, Mebelkart claims to be the country's largest furniture e-tailer in terms of product selection. Founded in November 2012 by Rahul Agrawal, Nikhil Saraf, and Ranjeet Vimal, Mebelkart claims to have 2,500 sellers on its platform and delivers to 20,000 pincodes that translates to 200 cities. Agrawal, an IIT-Kanpur alumnus, has earlier worked with Ola Cabs, Picsean Media and Young Engineers while Saraf is a BITS Pilani graduate. IIT-Bombay alumnus Vimal had earlier launched DreamStarts.in, a job search engine for Indian startups, and search engine optimisation consulting service GeekOnNet.com. Saraf had earlier worked with Picsean Media and Travelocity.
In August 2015, local search platform AskMe.com, owned by Getit Infomedia Pvt Ltd, acquired 75 per cent stake in MebelKart.com for $20 million.
Interior design business strategy Consumers typically associate interior designers with a highly expensive job, but Mebelkart is offering interior designing solutions for a ticket size of Rs 6,00,000. "We want to give better value to the customer by reducing the cost and make designs more affordable," said Agrawal.
The interior designer gets six per cent of entire project value; and 10 per cent is given to the interior designers who come with their own projects. Mebelkart gets to keep 30-35 per cent of the project cost as its earning.
"We have a combination of product platter and designs. We showcase some designs to the customers on our website, and then pass the customisation inquiry to the interior design team," explained Agrawal. The design team then evaluates the request, and passes the final design to the company. Once the quotation is confirmed by the customer, Mebelkart supplies the materials, and the designer oversees the entire project.
With the online furniture retail business getting crowded, Mebelkart also needed to spread its bets. And interior designing, with its high margins, was a related field. And the startup's deep connections with suppliers of raw materials also helped.
As Agrawal said, the key is sourcing materials at the right price. "Until you have good control over supplies, you cannot succeed in the interior designing market," he said.
Mebelkart collaborated with celebrity interior designer Twinkle Khanna for a digital campaign. The company posted eight sets of videos on YouTube and Twitter â€“ where Khanna can be found giving home decor recommendations and tips. "The campaign became really popular and brought us 4.5 lakh Twitter impressions," he said.
Bangalore, Mumbai, Hyderabad, Chennai, Pune, and Delhi are some of the cities from where the company is seeing growth for its interior designing solutions.
The company has also launched an augmented reality virtual device, called Vastavik, that lets customers see the design in 3D and understand how the home will look once constructed. The device has helped boost the conversion rate.
Retail business Mebelkart claims to see about 30,000 site visitors a day on its platform. The average ticket size in the furniture business is Rs 10,000.
The managed marketplace bets on localisation to compete with well-established players such as Urban Ladder and Pepperfry. On logging onto the Mebelkart website, a customer has to provide the location details. Based on that the website displays all the furniture inventory in the vicinity.
The localisation strategy has helped Mebelkart keep its delivery schedule to 7-10 days -- a lot faster than any of its competitors, it claimed. This also helps keep costs under control.
"Secondly, if you look at Pepperfry or Urban Ladder, about 20 per cent of the total cost is due to logistics," he said. "So if a Rs 10,000 table is shipped from Delhi to Bangalore, Rs 2,000 is the shipping cost, and chances of damage are higher for them," explained Agrawal. He claimed that Mebelkart products worked out to be 27 per cent cheaper than Pepperfry and Urban Ladder furniture because its return and damage costs are relatively lower.
The company said it is launching next-day delivery in the retail business soon. It has also set up a warehouse in Jodhpur, and plans to establish similar hubs in Nagpur and Mumbai. It already has a hub in Bangalore.
Revenue Mebelkart claims it is currently clocking gross merchandise value (GMV) of Rs 8-10 crore a month that translates into an annualised GMV run rate of around Rs 96-120 crore. The firm hopes to scale this up almost 10 times by May this year.
The company, which is 130-people-strong currently, plans to hire nearly 250 people in the next three months to support its expansion plans. The hiring will be in the areas of technology, design, fulfillment, call centre, sales and business development, catalogue teams, and content.
Given the fact that Mebelkart will now operate in two categories -- furniture e-tailing and interior design, the AskMe-backed company would not just see competition from furniture marketplaces such as Urban Ladder by Urban Ladder Home Decor Solutions Pvt Ltd and Pepperfry from TrendSutra Platform Services Pvt Ltd, but also from a bunch of startups that have come up in the interior design space. In addition, Mebelkart will have to fight with Fabfurnish and Livspace in both the categories.
Last year in September, Rocket Internet-backed FabFurnish.com, run by Bluerock E-Services Pvt Ltd, hinted at venturing into interior design space. It said that it will soon add services such as designer-on-call and 3D visualisation features; and hence, roped in interior designer Aprajita Suri Davar and Tanuj Ahuja as senior creative directors. And, Livspace, which secured $8 million from existing investors Helion Ventures, Bessemer Venture Partners and Jungle Ventures in August 2015, also enables home-owners to discover and select pre-created looks for rooms, kitchen and storage areas. The selections are then created by designers on the basis of material, colour, style and so on.
In September 2015, online furniture and home design services marketplace HomeLane.com acquired Doowup, a yet-to-be launched home dÃ©cor visualisation platform, for an undisclosed amount.
The Indian end-to-end home design industry is large but fragmented, and is estimated to touch $5 billion in five years. In September 2015, Bangalore-based Immersion Online Services Pvt Ltd, that runs interior design startup Furdo, raised $400,000 (Rs 2.64 crore) in an angel round from Bhavdeep Reddy, CEO of Indus Homes Private Ltd, a real estate developer.
And, mobile market place for home dÃ©cor and interior design services Houzify, run by Metamarket Pvt Ltd, raised an undisclosed amount from former Infosys CFO TV Mohandas Pai and InMobi founder and CEO Naveen Tewari.