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[What The Financials] With $18.75 Mn in Revenues, Pepperfry Pulls the Chair From Underneath Urban Ladder

[What The Financials] With $18.75 Mn in Revenues, Pepperfry Pulls the Chair From Underneath Urban Ladder

$18 Bn Of Unorganised Indian Online Furniture Market - Pepperfry and Urban Ladder Fights For A Slice

One of the crucial factors for a consumer products company to succeed is the ability to optimise and allocate expenses. But Indian ecommerce startups face a major challenge in managing and optimising logistics and warehousing expenses. A comparison of the line items in the RoC filings of the top two online furniture ecommerce in India — Pepperfry and Urban Ladder — clearly elucidates the fact.

Pepperfry (TrendSutra Platform Services PVT LTD) in FY16-17 spent 6% of its total expenditure on logistics while Urban Ladder (Urban Ladder Home Décor Solutions Pvt Ltd) spent 11%. The variance is more obvious when we compare the two companies’ respective revenues for FY16-17. Pepperfry was able to increase its revenue by ~30%, while Urban Ladder yielded the same revenue as the previous financial year.

But with global deep-pocketed rivals like IKEA entering India to tap into this growing online furniture market, and local giants like Godrej, Home Centre as well as horizontal players such as Amazon India, Snapdeal, and Flipkart doing the same, are Urban Ladder and Pepperfry in a position to fight among themselves?

In a bid to answer all these unanswered questions, the Inc42 DataLabs team delved into the financials of both the companies. Here is a brief comparative analysis of the two top players in the existing online furniture retail market in India.


Revenues: Pepperfry Vs Urban Ladder

In FY16-17, the revenues reported by Pepperfry in its ROC (Registrar of Companies) filing were INR 127.5 Cr ( $18.75 Mn) while Urban Ladder reported INR 55.2 Cr ($8.12 Mn). Looking at the revenue trend for both the companies, we can see Pepperfry had a CAGR of 160% while Urban Ladder’s CAGR was 80%.

Between FY13-14 and FY16-17, Pepperfry showed tremendous growth in its revenue. This was mostly because of the launch of Studio Pepperfry, a line of concept stores and furniture design studios, in December 2014. The move incentivised their customer acquisition by providing the missing ingredient of ”touch and feel” to its customers.

Although Urban Ladder tried the same approach in July 2017, it has not been able to catch up with Pepperfry, having lost the first mover advantage in the space. Urban Ladder’s stores are only present in Bengaluru and Pune while Pepperfry has stores across 16 cities in India, thereby being able to offer a more omnichannel experience to its customers.

Urban Ladder’s revenue growth in FY16-17 was hindered by its inability to manage expenses properly and to make its presence felt across channels. In fact, it showed a drop of INR 0.8 Cr in its revenue in FY16-17 as compared to the previous year.


A look at the rivals’ revenue split by sources gives a better idea of the business models of the two startups. Over 90% of Pepperfry’s revenue in FY16-17 was from sales of services, while for Urban Ladder it was 76%. Urban Ladder’s furniture rental income contributed only 1% to the total revenue; Pepperfry doesn’t offer rentals.



It looks like both the startups have been able to cap their expenses for FY16-17. Pepperfry showed a dip in its expenses by 1% and Urban Ladder reduced its expenses by 9%. This is an indication that the startups are looking to attain profitability in the near future.

While the slowdown in spend is clearly a good sign of profitability, the ratio of the different types of expenses shows how effectively they’re being managed. Take a look at the breakup:


  • The cost of logistics and support for Urban Ladder is 11%, much higher than that of Pepperfry’s 6%. If we look at the logistics expenses as a ratio of income, it’s a massive 45% for Urban Ladder compared to merely 12% for Pepperfry. Clearly, Pepperfry has been able to effectively address the major challenge in the online furniture business — logistics.
  • The year-on-year advertising spend has come down for both the startups — in FY16-17 Pepperfry’s advertisement expenses stood at 57% of its total spend. Urban Ladder spent just 28% of its total expenditure on advertising. While Pepperfry may have spent more on ads, this certainly gave higher visibility to Pepperfry as is evident from its revenue growth.
  • Urban Ladder spent 28% of its total expenditure on employee benefit and compensation, which amounted to ~INR 60 Cr ($8.8 Mn) for FY16-17. Pepperfry spent just 11% of its expenses on employees in FY16-17, ~INR 27 Cr or less than half of Urban Ladder’s spend. Considering similar employee strength, this could imply that either Urban Ladder is very concerned about its employees or that its employees are overpaid as compared to their Pepperfry counterparts.


Overall, if we take a combined view of revenues and expenses for FY16-17, Urban Ladder has been able to reduce its loss by 12%, capping it at INR 160 Cr ($23.53 Mn). In the same period, Pepperfry reported a loss of INR 129 Cr ($19 Mn), recovering 17% from the loss it reported in FY15-16.

Although Urban Ladder has been able to cap its expenses in FY16-17 compared to previous financial years, it still has to get a handle on its expense allocations and optimisation.

Financial Metrics

  • Creditor Days: In FY16-17, the number of creditor days for Pepperfry was 61 while for Urban Ladder, it was 138. Creditor days estimates the average time it takes a business to settle its debts with trade suppliers.
  • Net Working Capital (NWC) per sale: Working capital provides a company with the funds it needs to meet operational costs and short-term debt obligations, such as bank loans or a line of credit set to mature within the next 12 months. While the NWC per sale for Pepperfry and Urban Ladder are quite high, both the startups have been able to bring it down subsequently. For Pepperfry, in FY16-17 the number stood at 119% and for Urban Ladder, it was 263%. This essentially means for INR 1 earned by the company, Pepperfry spends INR 1.19 and Urban Ladder spends INR 2.63 on its operations and liabilities.

Turning The Tables

For the longest time, the general perception among consumers and in the industry was that furniture buying is completely dependent on touch and feel and this cannot be replicated in the online retail model owing to challenges like logistics and damage. However, online furniture startups have changed this mindset by adopting an omnichannel approach and converting even “touch and feel” buyers into online shoppers. Innovative startups are also using furniture studios and kiosks to bring in the behavioral changes amongst traditional buyers.

As we can observe from Inc42 DataLabs’ analysis so far, Pepperfry has been able to create an omnichannel presence for itself in the furniture market in India and Urban Ladder is following in its footsteps. Although the comparative analysis also suggests that Pepperfry’s success is chipping away at Urban Ladder’s market capitalisation, in reality, the market is so vastly unorganised that these two players are only catering to 2% of the entire online furniture market. Of India’s total $18 Bn furniture market, 85-90% is unorganised. Although the entry of global players like IKEA is always a threat for the homegrown industry, the sector has enough space for multiple competitors to operate.

[This is a part of the What The Financials (WTF) series launched by Inc42 Datalabs. We would be exploring the financial health of Startups and discuss its key metrics of growth, to read more articles click here.]