A Strong sustainable future ahead of Pepperfry Presented to Mr Murty amp Mr Shah By Smurfit Consulting 1 Your challenge 2 To achieve IPO of INR132 billion in 2022 Our recommendations 3 Grow GMV through House Brands Sales ID: 769275
Download Presentation The PPT/PDF document "A Strong, sustainable future ahead of" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
A Strong, sustainable future ahead ofPepperfry Presented to Mr. Murty & Mr. Shah By Smurfit Consulting 1
Your challenge 2 To achieve IPO of INR132 billion in 2022
Our recommendations 3 Grow GMV through House Brands Sales
Agenda 4
AnalysisGeoff O’Brien 5
The Indian Furniture Market Key message Pepperfry must capture the growing online market 6
Competitors – Online Indian Furniture Pepperfry IKEA Indian Offline Online Horizontal Brand Resources Reach Technology Good Medium Bad Pepperfry must lead the online furniture marketplace 7
Pepperfry Capabilities and Resources Key message Must grow demand on house brands 8 Brand Recognition of Pepperfry – 75% organic traffic Excellent Distribution system – 2% breakage, 92% 1 st time delivery, NPS 60 Supplier system is deep with strong relationships Marketplace is leading furniture portal in India House Brand gives greater profitability and is 50% of GMV Credible investors raised USD$195m
Pepperfry Financial Analysis Pepperfry must grow demand to achieve profitability and IPO. 9
RecommendationMonika Ghita 10
Your aim is to achieve INR 50m GMV by 2020. 11 At present this target is not achievable until 2021; Pepperfry will not become profitable until 2027.
Create a Home Buyer Ecosystem 2. Pepperfry Rental PlatformCreate a new market – new customer acquisitionAchieve more GMVParticipate in the shared economy trend3. Grow GMV through House Brands Sales Partner with bank of Mumbai to provide customer financingGrow sales though highly profitable home brand salesExpand studios to promote home brand sales (Franchise 90% - 10% Own) Strategies Considered The best option for growth is through option 3 - house brands 12 House Search Finance Sourcing Legal Advice Home Design Furniture Purchase
Alternative strategies Home Buyer Ecosystem Pepperfry Rental Platform Grow House Brand Sales Consistent with Mission, Vision & values Consistent with Core Capabilities Size of the Opportunity Cost of Implementation Ease of Feasibility Good Medium Bad Leverage core competencies – quality furniture and distribution network 13
Recommendation:Grow GMV through House Brands Sales Grow GMV and become profitable in order to IPO in 2022 14 Provide financing to customers Customer loyalty credit card offering Digital marketing TV advertising Experience studios Franchise 20 out of 27 own studios Establish 26 additional franchise studios by 2020 Introduce augmented reality googles in studios
Through this strategy you will achieve profitability and IPO valuation of INR 132billion in 2022. 15
implementationDavid Madigan 16
1. Implementation: Customer Financing 17 Bank Partner Bank of Mumbai (BoM) Embed customer financing tool on marketplace paid by BoM Commission agreement with BoM paying Pepperfry Balance sheet sits with BoM Typical asset financing rates are 8-10% with net interest margin of 8-10% Create loyalty credit card which is Pepperfry branded with BoM Deal construct Partnership discussion timeline 1 month head of terms agreement 6 months negotiation 12 months rollout
2. Implementation: Driving House Brand Sales 18 Marketing Channels Product Placement Priority on Marketplace TV advertising focused on House Brands Increase Content marketing for better SEO by: Blogging (featured posts) Video posts Social media posts (#Pepperfry) Sponsor Cricket Team Increasing franchise commission to 12% on House Brands from 10% In owned stores prominent product placement Physical Stores
3. Implementation: Franchise Studio Expansion 19 70 Total studios by 2020 Owned Studios Franchised Studios 7 63 Replicate McDonalds franchise model of 90:10 franchise / owner Lower capital expenditure versus owned stores Develop case studies for entrepreneurs Leverage local knowledge advantage Hire head of franchises (costing $140k) Hire 6 employees responsible for each franchise studio (10 studios per employee) Leverage Augmented Reality technology in stores via Microsoft Hololens to drive customer experience
IPO Timeframe IPO involves 4 key steps to achieve INR 132bn 2019 2020 2021 2022 20 Appoint Investment Bank to be the main bookrunner Develop IPO prospectus Begin IPO Roadshow IPO at a valuation of INR 132 bn
IPO Timeframe PAT Multiple of 20x on 2021 generates a valuation of INR 132 bn 21
Risks and Contingencies RisksHigher Loss Experience in furniture sales Difficulties finding franchiseesFranchise model doesn’t work Contingencies Tighten requirements on customers (proof of income, extra collateral) Sponsor franchise night courses in local colleges and illustrate benefits via case studies Make sure it is economical and manage quality of people 22
A Strong, sustainable future ahead of Pepperfry By Smurfit Consulting 23