Ashish Goel and Rajiv Srivatsa (both 35), who launched Bangalore-based Urban Ladder are almost apologetic about calling themselves the leaders in India’s online furniture market. For one, their company is ahead of their nearest rivals by only 10 to 15 percent by revenue. Second, they see plenty of opportunity for themselves and their competition, as more of India’s $15 billion (estimate by online furniture retailers), largely unorganised furniture market moves online.
Online furniture retailers in India were proliferating when Urban Ladder launched in July 2012. After the initial months, it launched a pan-India operation to compete with players such as Pepperfry (set up in January 2012), FabFurnish (March 2012) and HouseFull (August 2006). Soon enough, Goel and Srivatsa realised that although Pepperfry and FabFurnish were not much older than Urban Ladder they had far higher revenues.
Urban Ladder had solid designs and a growing market, but customers complained of damaged products, delayed delivery and poor customer service. Poor infrastructure meant delivering and servicing items such as sofas and desks from its sourcing hub in Jodhpur, Rajasthan, was difficult for a small team.
Instead of trying to catch up with its competitors, the team scaled down and focussed on three cities—Mumbai, Delhi and Bangalore—for 12 months. Marketing was also limited to targeted bursts on Facebook, rather than more expansive Google ad spends. While competitors offered wide product ranges, particularly in home décor, Urban Ladder stuck to a smaller offering and kept inventory light, using buying behaviour data to determine stock keeping units (SKU) and cross-promote products.
For instance, the tech team headed by COO Srivatsa—an IIT-Madras alumni who had worked with Infosys, Cognizant and Yahoo—uses analytics to understand which bedside tables sell better with which beds, and then employs targeted advertising.
CEO Goel, an IIT-Bombay alumni who has worked with McKinsey, works on the goods. He helped figure out, for example, how to improve packaging so that desk corners aren’t damaged during transportation. Not only are products packed with at least five layers of foam sheets, there are special packaging teams in all its 10 warehouses.
Urban Ladder raised $1 million from Kalaari Capital in August 2012 and $5 million from SAIF Partners and Kalaari Capital in November 2013. In July 2014, it raised $21 million from Steadview Capital.
Deepak Gaur, MD, SAIF Partners, says, “A strong focus provided initial momentum and a loyal customer base. The company has continued to scale up with a cautious, efficient use of capital.”
Gaur has been impressed with the pair’s attention to customer feedback. Urban Ladder delivers products themselves—they are now present in 11 cities—and makes it a point not to use third party logistics, because they feel this damages customer service, says Goel.
The startup claims it delivers 125 orders a day, with an average ticket size of Rs 20,000. This would add up to about Rs 90 crore for the year, although they did not disclose exact revenues. An investment banker who tracks the sector confirmed the company is a market leader. Its attractiveness to investors stems from its decision to not diversify (unlike Pepperfry, which also retails home decor); which means their margins are also higher, says the banker.
Correction: PLEASE NOTE: "The revenue figures shown in the graph (page 2) are estimates as claimed by Urban Ladder relating to the revenues from Furniture Sales (not including home decor) for the year Financial Year 2014.
(This story appears in the 08 August, 2014 issue of Forbes India. To visit our Archives, click here.)