With the recent announcements by Flipkart and Amazon regarding furniture, the attention is firmly back on the category and this time with a rather interesting development. This is sure to move the industry forward in the country.
Established Online furniture players such as FabFurnish and Urban Ladder are tying up with local furniture stores and carpenters to create hyperlocal operations that will challenge the growing nemesis of webrooming, which is causing excessive losses in sales.
What is webrooming?
Webrooming is the total opposite of showrooming. In showrooming customers try out products in local stores and then buy the products online, which may be cheaper. Webrooming on the other hand is when customers review products online and then buy from their local shops. This is causing a major problem for the online furniture companies. Customers are preferring their local carpenter to produce the goods, after window shopping online for the latest aesthetically pleasing design ideas and styles, for products such as cupboards and wardrobes.
Determining factors for customers choosing local include:
- Quality of wood
- Availability of Colour
- The customised finish
Polishing Hyperlocal model
To overcome the problem of webrooming, online furniture stores feel that the hyperlocal strategy will work, as they will tie-up with local furniture stores to complete the orders who will in turn earn a commission. FabFurnish is planning to restructure logistically and after Diwali they aim to associate with at least fifty local furniture companies in Tier 1 cities such as Bengaluru, Delhi and Mumbai.
“We are looking at product discovery on our platform, as this model cuts losses in margins and reduces damages during shipping,” said Ankita Dabas, cofounder at FabFurnish.
New players joining the party
With the furniture market hotting up, new players such as Foyr and Capricoast are also joining the party, to take on the likes of Pepperfry, FabFurnish and Urban Ladder. They aim to follow the hyperlocal model also, by creating customised designs that can be built and executed by many local brands, while expending greater time and energy on technology and digital marketing.
Foyr has an omni-channel model in place and is currently supplying to Hyderabad, Pune and Bengaluru. Capricoast is backed by Accel and has recently launched home décor marketplace, Zansaar. The company aims to expand from the current 19 to 65 cities by mid 2016 and so the hyperlocal route is clearly the way to go.
The hyperlocal model is said to bring many advantages for the furniture stores including installing of the products, coping with returned goods and also saving costs on building an extensive in-house team of designers, manufacturers and off course logistics.
Still the question remains. By outsourcing the final product to local brands, will the online furniture stores be able to keep a check on quality control?
“This essentially becomes a commission-based model where margins are relatively lower and quality control depends entirely on the partners. However, furniture being a low frequency, high-ticket and not standardised category, customers prefer a touch and feel experience,” said Pragya Singh, vice-president at consulting firm Technopak Advisors.