How Urban Ladder-Amazon tie-up helps both e-tailers
Furniture e-tailing startup Urban Ladder Home Decor Solutions Pvt. Ltd has moved away from a standalone model by joining hands with e-commerce firm Amazon India to boost sales.
Urban Ladder will list 300 furniture and mattress options across categories on the Amazon India site in the first phase of the tie-up. All products will be delivered and installed by Urban Ladder's teams across 10 cities in India. Urban Ladder will not have any differential pricing for products listed on Amazon.in. In the second phase, it will list 400 products more.
"Amazon has a (bigger) reach in terms of customers. From a brand outreach perspective, we would make the benefit of the brand being seen on a place like Amazon, and with that hopefully some additional revenue also," Rajiv Srivatsa, co-founder of Urban Ladder, told TechCircle.
Srivatsa ruled out any merger talks, as of now, between Urban Ladder and Amazon.
The online furniture segment in India has seen a lot of action in recent years with Urban Ladder and rivals such as Pepperfry raising a substantial amount in funding from private investors. Urban Ladder has secured close to $76 million to date, according to VCCEdge, the data research platform of VCCircle. Pepperfry, which is operated by TrendSutra Platform Services Pvt. Ltd, has so far raised $128 million and is the most-funded player in the segment.
In another significant development in the sector, Kishore Biyani-led Future Group bought online furniture store FabFurnish.com from Rocket Internet in April. Future Group also owns an offline home and furnishing business under the brand HomeTown, and the deal was part of its omni-channel strategy.
Also in April, homegrown e-commerce firm Flipkart said it aimed to become the largest online furniture store in the country by the end of the year, The Economic Times reported at the time.
Amazon's tie-up with Urban Ladder will not only help the local unit of the Jeff Bezos-led US e-commerce giant to intensify competition with Flipkart, but could also help it comply with new government rules, announced in March, for online marketplaces. The rules prohibited e-commerce marketplaces from offering discounts and capped total sales originating from a group company or one vendor at 25%.
Amazon has already started working toward complying with the new rules. Amazon India's largest merchant, Cloudtail, has almost stopped selling mobile phones to adhere to the rules, according to a report by The Economic Times this month. Mobile phones are among the largest-selling products on both Flipkart and Amazon.
Sharanya R Ranga, partner at law firm Advaya Legal, said e-commerce marketplaces will have to put in efforts to ensure they do not cross the 25% threshold. "It is about getting more hits to the site, yet trying to stay within the regulatory guidelines," she said. "It is not really circumventing, but it is just trying to do whatever is allowed."
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