Dragon Consulting Presentation to Pepperfrys Board May 2018 Bayeta Mulato Hugo Volz Julio Tendeiro Vasco Amoros 1 Agenda This meeting will cover the following topics Challenge ID: 782316
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Slide1
Pepperfry
Designing a profitable leadership
Dragon Consulting
Presentation to Pepperfry’s BoardMay, 2018
Bayeta
Mulato
Hugo Volz
Julio
Tendeiro
Vasco
Amoros
Slide21. Agenda
This meeting will cover the following topics
ChallengeAnalysis of the situationAlternatives & strategy
ImplementationImplementation planFinancialsRisksSummary2Dragon Consulting
Slide31. Challenge
Pepperfry is growing exponentially
3
Dragon Consulting
Slide41. Challenge
Pepperfry is growing exponentially… but is not yet profitable
4
Dragon Consulting
Slide5How can
Pepperfry maintain market leadership and reach profitability in the next 12 to 18 months?
5
Dragon ConsultingDragon Consulting
Slide61. Challenge
How can Pepperfry maintain leadership & reach profitability in 12-18 months
6
Dragon Consulting
Slide7Analysis
7
Dragon Consulting
Dragon Consulting
Slide82. Analysis
Building an empire
8
Dragon ConsultingLocal company 2012Exponential growthPocket friendlyBusiness aggregator
Slide92. Analysis
Building an empire
9
Dragon ConsultingLocal company 2012Exponential growthPocket friendlyBusiness aggregatorHome & Decor
Lifestyle
Furniture
Fashion
Slide102. Analysis
Building an empire
10
Dragon ConsultingLocal company 2012Exponential growthPocket friendlyBusiness aggregatorHome & Decor
Lifestyle
Furniture
Fashion
Slide112. Analysis
Building an empire
11
Dragon ConsultingLocal company 2012Exponential growthPocket friendlyBusiness aggregatorHome & Decor
Lifestyle
Furniture
Fashion
Furniture 80% of the revenue stream
Home 20% revenue but 70% of transactional value
Changed industry
Process + Systems = Transparency
Slide122. Analysis
Building an empire
12
Dragon ConsultingLocal company 2012Exponential growthPocket friendlyBusiness aggregatorHome & Decor
Lifestyle
Furniture
Fashion
Furniture 80% of the revenue stream
Home 20% revenue but 70% of transactional value
Changed industry
Process + Systems = Transparency
Slide132. Analysis
Industry Scope
13
Dragon ConsultingIndustry is highly fragmentedSmall and local carpentersCatalog without seeing the actual product
Slide142. Analysis
Industry Scope
14
Dragon ConsultingIndustry is highly fragmentedSmall and local carpentersCatalog without seeing the actual productSkepticism about moving away from QualityDelivery Assembly
Slide152. Analysis
Industry Scope
15
Dragon ConsultingIndustry is highly fragmentedSmall and local carpentersCatalog without seeing the actual productSkepticism about moving away from QualityDelivery Assembly
Industry Growth
$25 Bn 2016
$35 Bn 2020
Online $ 700 Mil
Slide162. Analysis
Industry Scope
16
Dragon ConsultingIndustry is highly fragmentedSmall and local carpentersCatalog without seeing the actual productSkepticism about moving away from QualityDelivery Assembly
Industry Growth
$25 Bn 2016
$35 Bn 2020
Online $ 700 Mil
Slide172. Analysis
Deep in the Market
17
Dragon ConsultingIndia has a user base between 450 to 480 Million90 to 100 Million shopped onlineTarget range 25 to 30 Million consumers
Slide182. Analysis
Deep in the Market
18
Dragon ConsultingIndia has a user base between 450 to 480 Million90 to 100 Million shopped onlineTarget range 25 to 30 Million consumersTech; savvy; upward mobile; young professionals;Cost conscious but looking at differentiation
Slide192. Analysis
Deep in the Market
19
Dragon ConsultingIndia has a user base between 450 to 480 Million90 to 100 Million shopped onlineTarget range 25 to 30 Million consumersTech; savvy; upward mobile; young professionals;Cost conscious but looking at differentiationTier 1 (Metro)Tier 2 and 3 (Mini Metro)Rural or small cities (Non-Metro)
Slide202. Analysis
It’s a two sided Market
20
Dragon ConsultingSuppliersPepperfry
Consumers
Slide212. Analysis
It’s a two sided Market
21
Dragon ConsultingSuppliersPepperfry
Consumers
Supplier Ecosystem
Strong Sales team interacting extensively with suppliers
Slide222. Analysis
It’s a two sided Market
22
Dragon ConsultingSmall suppliers with no inventory/made to order Consultancy supportBank LoansRM supportMachine InvestmentSetup and Forecast
Suppliers
Pepperfry
Consumers
Supplier Ecosystem
Strong Sales team interacting extensively with suppliers
Slide232. Analysis
It’s a two sided Market
23
Dragon ConsultingSmall suppliers with no inventory/made to order Consultancy supportBank LoansRM supportMachine InvestmentSetup and Forecast
Suppliers
Pepperfry
Consumers
Supplier Ecosystem
Strong Sales team interacting extensively with suppliers
Commission charge on order value
45 to 55 % on own channel
20% direct from supplier to consumer
Slide242. Analysis
It’s a two sided Market
24
Dragon ConsultingSuppliers
Pepperfry
Tech; savvy; upward mobile; young professionals;
Cost conscious but looking at differentiation
Consumers
Slide252. Analysis
It’s a two sided Market
25
Dragon ConsultingIndia has a user base between 450 to 480 Million90 to 100 Million shopped onlineTarget range 25 to 30 Million consumersSuppliers
Pepperfry
Tech; savvy; upward mobile; young professionals;
Cost conscious but looking at differentiation
Consumers
Slide262. Analysis
It’s a two sided Market
26
Dragon ConsultingIndia has a user base between 450 to 480 Million90 to 100 Million shopped onlineTarget range 25 to 30 Million consumersSuppliers
Pepperfry
Tech; savvy; upward mobile; young professionals;
Cost conscious but looking at differentiation
Tier 1 (Metro)
Tier 2 and 3 (Mini Metro)
Rural or small cities (Non-Metro)
Consumers
Slide272. Analysis
How the recent trends influenced the market
27
Dragon ConsultingHorizontal
Market Share
Revenues
FlipKart
Amazon
Slide282. Analysis
How the recent trends influenced the market
28
Dragon ConsultingHorizontal
Market Share
Revenues
FlipKart
Amazon
Online
Market Share
Revenues
Urban Ladder
LivSpace
Slide292. Analysis
How the recent trends influenced the market
29
Dragon ConsultingHorizontal
Market Share
Revenues
FlipKart
Amazon
Online
Market Share
Revenues
Urban Ladder
LivSpace
Offline
Market Share
Revenues
Home Center
Godreg
Interio
Slide302. Analysis
The furniture world has changed
30
Dragon Consulting
Slide312. Analysis
The furniture world has changed
31
Dragon Consulting
Slide322. Analysis
The furniture world has changed
32
Dragon Consulting
Slide332. Analysis
In Summary
33
Dragon ConsultingStrong and local brandOperational excellencyInnovation leaderCredibility
Slide342. Analysis
In Summary
34
Dragon ConsultingStrong and local brandOperational excellencyInnovation leaderCredibility
Slide352. Analysis
In Summary
35
Dragon ConsultingStrong and local brandOperational excellencyInnovation leaderCredibility
Old Customer Base
Supplier Dependency
Some categories are low margin generators
Slide362. Analysis
In Summary
36
Dragon ConsultingStrong and local brandOperational excellencyInnovation leaderCredibility
Old Customer Base
Supplier Dependency
Some categories are low margin generators
Brick and Mortar (off-line)
Rental / Shared Economy
PepCart
/ Logistics
Immersive Technologies (AR)
Slide372. Analysis
In Summary
37
Dragon ConsultingStrong and local brandOperational excellencyInnovation leaderCredibility
Old Customer Base
Supplier Dependency
Some categories are low margin generators
Brick and Mortar (off-line)
Rental / Shared Economy
PepCart
/ Logistics
Immersive Technologies (AR)
Competitions is growing
Low Cost Competition
Off-Line trends
Slide382. Analysis
Before we move forward ….
38
Dragon Consulting$100 Sales
Slide392. Analysis
Before we move forward ….
39
Dragon Consulting$100 Sales
Slide402. Analysis
Before we move forward ….
40
Dragon Consulting$100 Sales
Slide41Alternatives
41
Dragon Consulting
Dragon Consulting
Slide423. Alternatives & strategy
How can Pepperfry maintain leadership & reach profitability in 12-18 months
42
Dragon Consulting
Slide433. Alternatives & strategy
How can Pepperfry maintain leadership & reach profitability in 12-18 months
43
Dragon ConsultingHow to grow?
Slide443. Alternatives & strategy
How can Pepperfry maintain leadership & reach profitability in 12-18 months
44
Dragon ConsultingHow to grow?
How to grow profitably?
Slide453. Alternatives & strategy
How can Pepperfry maintain leadership & reach profitability in 12-18 months
45
Dragon ConsultingHow to grow?
How to grow profitably?
How to stay
ahead?
Slide463. Alternatives & strategy
1. How to grow
Products /
MarketsNew ProductsExisting productsNew MarketsExisting Markets46
Dragon Consulting
Slide473. Alternatives & strategy
1. How to grow
Products /
MarketsNew ProductsExisting productsNew MarketsExisting Markets47
Dragon Consulting
Current Omnichannel strategy
Slide483. Alternatives & strategy
1. How to grow
Products /
MarketsNew ProductsExisting productsNew MarketsExisting Markets48
Dragon Consulting
Expand current Omnichannel strategy
Slide493. Alternatives & strategy
1. How to grow
Products /
MarketsNew ProductsExisting productsNew MarketsExisting Markets49
Dragon Consulting
Expand current Omnichannel strategy
Develop PepCart logistics offering
Slide50Non-core -10% growth
Develop PepCart logistics offering
50
3. Alternatives & strategy1. How to growDragon Consulting
Core – 10x growth
Expand current Omnichannel strategy
2018
Double current Studios from 34 to 68
Create new experience team to train franchises
2019 to 2021
Grow threefold 68 to 204
Create new franchise experience pack for non-metro cities.
Hire from Indian Institute of Management to Improve omnichannel customer experience
2019 to 2021
Further expand to 680 total experience centers
Slide51Non-core -10% growth
Develop PepCart logistics offering
2018Pilot new logistics offering for offline retailers who want to go OmnichannelFollow
Fullfiment by WayFair and by Amazon model2019 to 2021Develop partnership with Indian Institutes of Technology to develop AI prediction system2019 to 2021Review, iterate and improve513. Alternatives & strategy1. How to grow
Dragon Consulting
Core – 10x growth
Expand current Omnichannel strategy
2018
Double current Studios from 34 to 68
Create new experience team to train franchises
2019 to 2021
Grow threefold 68 to 204
Create new franchise experience pack for non-metro cities.
Hire from Indian Institute of Management to Improve omnichannel customer experience
2019 to 2021
Further expand to 680 total experience centers
Slide52Develop décor category
Increase Customer Lifetime Value by 50% as per historical company dataLearn from the 10 experimental brands and focus on one major umbrella brandImprove loyalty and further drive retention
Improve omnichannel customer experienceFocus on AI category management
Human curators skills further augmented with AIAlso developed in partnership with IITsContinue current operational excellency523. Alternatives & strategy2. How to be profitableDragon Consulting
Non-core – Non-priority efforts
Decrease costs
Core – Priority efforts
Increase value
Slide53Current strength of the communication plan is the brand loyalty
Maintain 50-50 budget for communicationIncrease partnership with Bollywood and Cricket stars
Develop social media contests for word-of-mouth promotionFurther develop packaging offeringOffer 100 day guarantee
Long-term export offeringPepper Fry as an agent to promote Indian merchandise in the Western WorldPartnership with Crate and Barrel and AnthropologieWorldwide logistics offering out of India533. Alternatives & strategy3. How to stay ahead of the competitionDragon Consulting
Non-core
Add supplier value
Core
Communication
Slide543. Alternatives & strategy
How can Pepperfry maintain leadership & reach profitability in 12-18 months
54
Dragon ConsultingHow to grow?
How to grow profitably?
How to stay
ahead?
Expand Omnichannel
Grow PepCart
Increase value
Decrease cost
Communication
Add supplier value
Slide55Implementation
55
Dragon Consulting
Dragon Consulting
Slide564. Implementation - Plan
Title
Five-year plan
201820192020
2021
2022
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
56
Dragon Consulting
Expand Omnichannel
Grow PepCart
Increase value
Decrease cost
Communication
Add supplier value
Slide57Financials
57
Dragon Consulting
Dragon Consulting
Slide585. Financials
Assumptions
58
Dragon Consulting
Slide595. Financials
Assumptions
59
Dragon Consulting
Slide605. Financials
Assumptions
60
Dragon Consulting
Slide615. Financials
Assumptions
61
Dragon Consulting
Slide625. Financials
Assumptions
62
Dragon Consulting
Slide635. Financials
Assumptions
63
Dragon Consulting
Slide64Risks
64
Dragon Consulting
Dragon Consulting
Slide654. Implementation - Risks
This plan has one main risks… which can be mitigated
65
Dragon ConsultingHigh
Probability
Low
High
Impact
1
Risks
1
Mitigations
Supplier dependency might still prevail
Continue to add value to suppliers through innovation
Slide66Summary
66
Dragon Consulting
Dragon Consulting
Slide675. Summary
How can Pepperfry maintain leadership & reach profitability in 12-18 months
67
Dragon ConsultingHow to grow?
How to grow profitably?
How to stay
ahead?
Expand Omnichannel
Grow PepCart
Increase value
Decrease cost
Communication
Add supplier value
Slide68Question and Answers
68
Dragon Consulting
Dragon Consulting