Pepperfry: Omnichannel Supply Chain

Group 03
Pritha Barua – PGP10163
Sandeep Agarwal – PGP10169
Sheersha KK – PGP10048
Anjaly T A – PGP10190
Kanika Bhagat – PGP10149
Kasina Tejaswini – PGP10151
 investing in offline stores and
constructing a warehouse in Bengaluru to
have better transport facilities at lower
cost in the southern part of India

The protogonists of our case are mr Ambareesh Murty, co-founder and chief executive (left); and Ashish Shah, co-founder
and chief operating officer, Pepperfry
Both are ex-eBay executives, got connected to Niren Shah, NVP’s India MD. For the pitch, they went with just a PowerPoint
presentation. Niren called them ‘men with a plan’. It was their first attempt for the start-up.

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 Company
Pepperfry is an online furniture marketplace based in Mumbai. The company was founded in 2011 and has operations
in India across 28 cities . Founded by Ambreesh Murty and Ashish Shah, former eBay (India) executives

Pepperfry offers more than a million products ranging from furniture and home furnishings to
appliances.such as furniture, lighting, kitchen appliances
In December 2014 , the company launched its first "Studio Pepperfry" concept store
The company offer free shipping on all orders
For convenience of shopping and returns, a 30 Days 100 percent Money Back Guarantee for customers was
introduced in 2014
they are planning to invest in offline stores and are planning to construct a warehouse in Bengaluru to have better
transport facilities at lower cost in the southern part of India

More than 7mn More than 4.5 mn

website visits every More than 10,000
registered users and sellers on board
month subscribers
 Industry overview
 The Online Household Furniture Sales industry had grown
rapidly since 2010
 The technological advancements such as the availability of
high-speed internet networks such as 4G and spiked absorption
of smart gadgets were boosting the e-retail sector in India
 These advancements further provide ease to the customers to
buy furniture through online channels as consumers increasingly
turn to the internet for convenience and often discounted pricing
 According to Statista’s Digital Market Outlook, worldwide online
furniture and homewares sales were expected to be close to $200
billion in 2018.
 Some of the challenges and inconveniences
experienced by the online furniture retailer in India
Challenges were
● Personalization
● Consultation Service
● Advance Payment
● Delivery time
● Customer expectation of luxury
● Low Trust on Online Retailers
● Competitors
Problem Statements

● What is an OmniChannel supply ● Amidst high competition and high

chain? What is it’s Benefits? transportation charges, How
Pepperfry became the industry
leader by incorporating
Omnichannel Supply chain?

● Which Vehicle routing should be followed ● What more possiblities can Ashish
by Pepperfry to send the goods from the Shah and Ambreesh Murthy explore
planned warehouse to the distribution in Omnichannel?
centres in the southern part of India?

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 Omni Channel Supply chain of Pepperfry

● Omnichannel supply chains are multichannel ● Category team of 80 people who meet sellers, check
supply chains in respect to serving consumers
across different channels and curate products that are displayed on the platform.

● omnichannel solutions provide one-touch ● The products that are procured from sellers, are taken
integration across all channels to provide a superior to studios for photoshoots, thereafter catalogued and
customer service experience
placed on their website
● To adapt omni-channel supply chains, they have to
● The tech team has to start its work much before an
remove operating silos that exist between different
sales channels order is placed. It starts with ensuring the catalogue
● To gain efficiencies by combining different information is thorough.
logistics processes across sales platforms
○ ● The new collections are released between January and
merging warehouse space or fulfillment
operations so that they serve both in-store and June, every year, 60 percent of their sales take place in
e-commerce business units.
the second half of the year.
● Along with this, to be relevant in the online domain,
Pepperfry has an inventory churn of three months.
Benefits
Better Customer Experience
• Consumer is empowered to interact with a company in a way that feels natural to
them

Increase in sales and traffic

• Studies shows that omnichannel customers spend more money than single-channel
customers

Boosted Customer Loyalty

• With an engaging brand story, you can stop pushing discount coupons, mid-sale
campaigns

Better Data Collection

• Retailers who are able to track their customers over different channels can serve
their consumers better with more personalized experience.
 Pepperfry incorporating Omni-channel

Benefiting from economies of scale

Enabling consumer to order from any channel or device at any time, anywhere

Customers switch between these media for any part of purchase journey

Commenced origin-to-hub shipment - significantly reduced costs per unit

Lowest shipping costs in the industry

1 facility centre - 22 distribution centres across the country

Own network of more than 400 trucks covering 500+ cities

First studio in 2014 below their office - within 6 months they opened 6 more

Company realized studios provided a great form of marketing and a lot of sales

In 2017 pioneered the omnichannel by opening 16 more studios in major metro cities

Studios served as offline experience centers for the customers

(design inspiration through touch and feel)

Presently 40 studios - attributes 25% of its purchases due to the studios

Studios to online customers - integrating Virtual Reality experience on the website

 Distribution Centers
Pepperfry has over 22 distribution centres present in most capital cities, and it also works across 500 cities

The distribution centres are between 5,000 sq ft to 15,000 sq ft in area.

If a person in Pune orders a product from the Mumbai sourcing centre, the product is moved to a distribution centre and then
shipped to the consumer.

The southern region contributes to over 40% of the online marketplace’s business.

Ashish Shah and Ambreesh Murthy are thinking of opening a warehouse of Pepperfry in Bengaluru to improve delivery rates and
expand its presence in southern states.

It is planned to construct over 360,000 square feet in the Hoskote area of Bangalore with a capacity of 30,000 units of furniture

This new warehouse will help it to elevate its consumer experiences through reduced transit times while growing the business
through reduced overhead costs.
Vehicle routing - Pepperfry

➢ Nearest Neighbour:

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➢ Nearest Insertion:

Cost incurred - 227.7+141.5+552.4+737.8+538.3+514+810 = 3512.7

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➢ Savings Method

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 Final route
Banglore Kochi Coimbatore Goa Hyderabad Vizag Chennai Banglore

1 2 3 4 5 6 7 8

Cost Incurred - 365.4+141.5+602.35+538.3+514+615+284.7 = 3061.25

So, among these routing algorithms for Pepperfry the savings method has low cost incurred

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Recommendations
● To reduce the vehicle transportation cost from warehouses to other distribution
centres in the southern region of India, the following vehicle route is preferred
Bangalore - Kochi - Coimbatore - Goa - Hyderabad - Vizag - Chennai - Bangalore

● As, offline stores contribute around 40% of total sales online it’s better that Pepperfry
invest more Studios (Offline stores) to reach the most people in Tier 1, Tier 2 and Tier
3 cities
● Maintain continuous studio growth plan to improve sales
● To have competitive advantage and to reduce transportation costs Other e-retail
companies should follow the Omni Channel process as well

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Thankyou

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