Bangalore-based Urban Ladder Home Decor Solutions Pvt Ltd, the company behind the curated marketplace for furniture Urban Ladder, has just netted Rs 120 crore ($20 million) in Series B round of funding from Hong Kong-based Steadview Capital, with participation from SAIF Partners and Kalaari Capital. Founded in 2012 by Ashish Goel (CEO) and Rajiv Srivatsa (COO), Urban Ladder is already present in eight major cities in India, and is now planning to expand into 25 more in the next few months. It is also expanding its product portfolio and launching new features in the coming weeks. Techcircle.in spoke with Srivatsa to know more about the company's growth and future plans.
Here are edited excerpts:
You have just closed a $20 million round to take the total capital raised so far to more than $26 million. Why do you need this much money?
We have been growing fast since launch a couple of years ago. We now feel that it is the right time to push for more scale in terms of adding new products, features and cities. We are working on a series of new products in order to provide a good customer experience and make it easy for them to buy furniture through our platform. All these things require massive capital. We also need money for manufacturing products.
Which cities are you looking to expand to?
As of now, we are present in eight cities including Bangalore, Mumbai, Delhi/NCR, Chennai, Pune, Hyderabad, Ahmedabad and Gandhinagar. We are now adding 25 more cities, from a population and earning perspective. They include Kolkata, Chandigarh, Jaipur, Coimbatore and Kochi, among others. We will set up services and delivery centres across all these cities in a few months.
Steadview Capital is a new investor in town. How did you rope in it as an investor?
We do approach investors on a regular basis and our first conversation happened long back. Steadview is basically a tech-oriented fund looking to invest in fast-growing startups. They were impressed with our growth and we saw a lot of synergies between us. Steadview led this round with more $10 million.
Online furniture market is still dominated by offline payers, though there are online players like Pepperfry and Fabfurnish. How do you look at competition from both offline and online?
Two years ago, the online furniture market in India was zero. However, this scenario is slowly changing. Customers are not really happy with offline players and they know that buying online is cheaper and easy, and this is what Indian consumers are looking for.
Honestly, it is not about Pepperfy or Fabfurnish. I don't see any competition coming from these players, at least for the next couple of years. I think that all the furniture e-commerce players in India are in a growth mode.
What kind of innovations are you bringing in to your platform to stand out from your peers and acquire more customers?
We have been working on a series of features for the past few months, and some of them will be launched in a few weeks. Indeed, our innovations are a combination of offline and online, customer experience and trust.
We recently introduced trial rooms whereby we take the products to house of a potential customer. As of now, we do it only for sofas because it is the biggest segment for us. What we do is we take three samples of sofas to the potential customer's house where he/she can feel the form, wood, etc. This can be done digitally by other players, but we feel doing something offline is something innovative.
We are also working on a bunch of apps and augmented reality features to provide a virtual experience to our customers. This will help them see how a wardrobe or a sofa will look like at his home. We are also launching a trial room equivalent for wardrobes, wherein the delivery boy takes couple of wardrobe samples and take the measurements and stuff a customer wants. The delivery boy will use our app to show what sizes and internal configuration a customer wants - all from within the app.
Another important feature is around payments. We have partnered with personal loans provider Bajaj Finserv to provide instant loans online to our customers. All the customer needs is just upload a couple of documents. Once the loan is approved, the order will be processed. Currently, this feature is available only for products worth Rs 15,000 or more.
We also have introduced a new feature where the customers can rate, review and tell their stories on their experience. They can also upload photos of their products.
Besides, we have been using Facebook marketing to drive sales. As a result, almost 90 per cent of our sales come through the social networking platform.
Are you looking to open offline stories so as to compete with physical stores?
No, we have no plans to open offline stores at all. I don't think offline stores will work in the furniture segment since the cost of setting up and running a store is crazy high. Customers are actually moving away from offline. So, I don't see any economic reason or consumer reason to open offline stores.
You are a curated marketplace. How many brands have you partnered with so far?
We are a curated marketplace for unbranded products, and we don't list branded ones on our site.
We have just 300 products listed, and we don't believe in listing infinite categories. Customers need clarity, and it is not the number of products they are looking for.
That said, we might partner with some popular brands which we think people want access to, in future.
How many orders do you get a day and what is the average order value? How much revenue did you generate in the last fiscal?
We cannot share the exact figures. We do 100-200 transactions per day, and the average ticket size would be closer to Rs 20,000. In terms of revenues, we have been seeing 4-5x growth year-on-year, and we hope to continue it for the next few years.
Have you achieved break-even? If not, when are you looking to achieve it?
Achieving break-even or profitability is not our primary goal. In fact, we can be profitable any time we want, but then we will have to stop the current growth rate. In fact, we are making money after marketing, but the capital is being invested back into the business.
Moreover, I don't think it is the right time to look at profitability because the market is still nascent. We are not looking at break-even or profitability for the next three years.
Till when will the current investment last? When will you look for fresh funding?
I don't think we need funds at least for the next 12-18 months, as we have enough cashflow.
(Edited by Joby Puthuparampil Johnson)