Urban Ladder to go offline & convert sellers into contract manufacturers

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Changes are more prominent than ever in online retail these days. Flipkart now owns eBay and is looking to grab Snapdeal. Amazon is hiking its seller fees, online grocers BigBasket and Grofers may merge, Myntra went offline and now online furniture etailer Urban Ladder is looking to become a single brand retailer. It has already applied to the Department of Industrial Policy and Promotions (DIPP) to make this change possible.

That’s not all; the ecommerce company is expecting approval from the Foreign Investment Promotion Board (FIPB) this quarter. And, it would like to extend its presence offline too.

Concentrating on a single brand

As a single brand online retailer, Urban Ladder will transform its current business with online sellers into a business with contract manufacturers. The etailer has over 40 online sellers on board.

The COO and co-founder of the company, Rajiv Srivatsa said, “We are hoping to get the FIPB approval this quarter. Post the approval, sellers will become manufacturers i.e. contract manufacturers.”

According to Srivatsa, these contract manufacturers will receive orders through Urban Ladder. They will then produce what has been ordered, label the product and supply it to Urban Ladder.

He shared, “Overall it is not about saving costs, but more about centralised buying and quality practices and processes. That will indirectly save costs for us. The entire idea of getting into single brand is that we will get to work with a smaller base of vendors and ultimately better returns.”

Investment plans

From its investors, SAIF Partners, Steadview Capital, Kallari Capital and Sequoia Capital has raised a total of $92 million. In January, it coaxed these investors for funding of Rs.200 crore. It received half the amount the following month.

Urban Ladder plans to go offline by the end of the year. It aims to launch 10 offline retail stores in 3-4 cities in the country. Its first store is likely to open in Bangalore this June. To make these plans a reality, the online furniture etailer needs funds. It is looking to gather $20-30 million in the coming funding round which is expected by the end of the fiscal year.

Aiming for profits

Through these new changes, the etailer plans to make its business a profitable one. However, the home décor industry has seeing low sales due to the slowdown in real estate business. In 2015, the revenue earned from new home buyers interested in home interiors and modular kitchens was only 10%. Now it has reached 25%. Urban Ladder is also making major losses. It has recorded losses of Rs.181 crores for the financial year in 2016. The cause behind this was lavish spending on advertising and employees. However, the ecommerce company has new targets in mind. These should hopefully reduce its spending and start filling the etailer’s pockets.

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