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The renting business is tantalizingly attractive and expected to scale to $45-48 billion
according to reports by industry lobby Assocham and consultancy Ernst & Young . Millennials
[1] However, while the sector is growing at about 36% year-on-year Within that, the rental
market forms only a small pie and experts believe that a sizeable rentals market in India [2]
With sharing economy being on the rise across sectors, the country has seen over 13
startups coming into the space in 2015 alone. The names include Pepperfry, Wheelstreet,
Etashee, Rentickle ,Rentsetgo.
We plan to hit the same field with Rent-a-furniture. It is a marketplace that offers furniture,
furnishings and other home verticals that house hunters can book at affordable rentals. It
works on an asset-light model, and makes anything from 40-50% of the rental fee as
commission on every booking. We use subscription and brick and mortar shops both to
showcase and pitch our products to the consumers with a unique subscription model, cost
effective furbish strategy, free tranportation and strong technical support.
One of our colleague’s roommate has started his own business of car in 2 nd hand
market. He buys 2nd hand cars and has his own workshop and provide a new look to
the cars by painting and changing few parts and sell it at a good profit margin. From
this idea we build upon the idea of Rent a furniture.
Today a 25-30-year-old is still not sure of what city they want to settle down in, yet
they want to have access to everything even though it may not be in line with their
income. They don’t want to wait for three years to buy it.
There is a lot of demand. Times are changing and our customers don’t think of rental
as a taboo anymore. They are not renting because they don’t have money. It’s just a
smarter way to live
There is already an existing market for it but with the long delivery process and poor
support service quality, there is still huge potential for the market.
Competition
How are customers meeting their present needs?
Today customers believe in fancy and luxurious lifestyle and not in hoarding. Customers are
meeting their needs from existing companies in this segment such as Pepperfry, Furlenco,
Rentomojo, CityFurnish.
1. Who are the direct, indirect competitors and possible substitutes? What are their
strengths and weaknesses?
By dividing into the rental furniture business, we have to compete with other like
Pepperfry, Furlenco, Rentomojo, CityFurnish, and other businesses.
Furlenco is a top player in this field. Its average ticket size is Rs. 3,000. The company
is also looking to breakeven by March 2018.In terms of sales, Pepperfry manages an
approximate order value of Rs.18,000 and claims to possess a user base of around 4
million. Under its rental service section, it will offer 1,200 units out of its 14,000
SKUs. It will also offer free delivery and assembly service to patrons. Rentmojo offers
both individual products and affordable packages. It’s present in Mumbai,
Bangalore, Pune, Delhi NCR, Hyderabad and Chennai. Cityfurnish works with third-
party providers through a marketplace model. It’s caters to Delhi, NCR, Pune,
Bangalore and Mumbai.
Furniture rentals is not a big market but it helps create volume. This is a channel for
customer acquisition and enables conversion over a period of time. The market size
of rental furniture is expected to be $1.1 billion in 2018 with a growth rate of 36%
year-on-year basis. Companies are still figuring out how to optimise the (rentals)
space.
Competitor Matrix
Refer to excel for more details.
Assumption: Considering our customer has rented furniture’s for atleast 18 months
We are crossing the breakeven and becoming profitable in the 3rd 6 months subscription
model.
Inferences: This cost analysis shows that renting furniture’s via our subscription model is
more profitable as compared to purchasing furniture’s
Subscription Model
Subscription model was the ideal way in our business and therefore it was chosen
unanimously however what kind of subscription that we are going to charge was not
clear, therefore sticking to our Point of Difference that is “affordable furniture for all” we
decided to keep a customer friendly model.
There are 4 types of Subscription that we offer and they are,
Monthly
Quarterly
Bi-Annual
Annual
These customer friendly subscription would entice our prospective customer to try our
brand and we are looking forward to make them into a loyalty towards us by our service.
How does it work?
After our pricing analysis we decided to price our product at 70% price of the new
product that is available in market
Break Even point was set for three years because the average lifetime of a furniture
as a part of furnishing and decoration is four years, if in case the product still adds
value to our company it is an added advantage
Monthly subscription is slightly expensive in the long run when compared to
Quarterly plan and Quarterly is slightly expensive than Bi Annual and so on.
There are various offers for the customer in their subsequent plans
Combo Packs
There are 4 combo pack that we offer for a better deal to the customer and they can
choose to customize the products individually as well
Sandal
Ebony
Agar
Black African
These packages consist of various combination of home furnishing items and the customers
can choose from the packages that we offer and we also offer combo pack wherein the
customer can choose more than one pack as per their requirement with discounted rate.
Marketing
The channel we are opting for to deliver our product is, direct. We have provided some
options to the customer to buy our product:
1. Order-it-online: We will deliver it directly from our warehouse (1 st floor) to the
customer
2. Drop-by-and-take (the furniture along with you): The customer can come to our shop
and choose the furniture and take it along with him
3. Choose-and-deliver: The customer can come to the store, order the furniture and get
it delivered
Delivery time:
“Furwish” has opted for an efficient delivery management system, due to which the
delivery time promised to the customer would be within 48 hours (POD 72 hours for
competitors). As soon as we receive the order we start working on the product:
Customer Support:
Customer satisfaction is our priority. We ensure that we maintain relationship with
customers through the following methods:
We have a feedback option on our website, where a customer can provide their
feedback either positive or negative. Their grievances will be addressed as soon as
possible.
We will be maintaining a toll free number and an email-id
(furwishrentals@gmail.com) to which customers can call or mail anytime (24*7).
Customers who have been with us for long will have an advantage over others.
Furwish provides free maintenance half yearly (cleaning and repair works) and also
refund for broken furniture within warranty period.
Advertising:
2. Search Engine Marketing and Optimization – This method allows companies name
and website to appear on a list of search engine results. This increases Furwish’s
chances of being the company an individual chooses to work with when selecting a
company that offers furniture’s on rent.
3. Opt-In Email List - An opt-in email list allows customers to come and sign up to
receive email campaigns and correspondence. This will allows Furwish to connect
with new customers or clients.
2. Posters - Most supermarkets, public spaces and malls offer free bulletin board space
for announcements and advertisements. This is a hit or miss method, but Furwish
will try to make the poster’s reasonably visible and have removable tabs that the
customers can present for a discount.
Location Analysis
How was the location chosen?
We decided to narrow down on a location to set up our brick & motor shop and the factors
that affected decision making were
Considered all the major cities in India
Population of each city were forecasted
Target population of each city was taken into consideration
Why was the location chosen?
There was a plethora of reason that we had taken into account before deciding the location
Purchasing power of the people in the region
Cultural preferences of people in the region towards our product/service
Future prospects of the region
Financial Analysis
Our 3 year
Actual Price BP Monthly Quarter Half Year Annual
2333.33 233.333333 777.777777 1333.33333 2333.33333
Bed 10000 7000 3 3 8 3 3
3033.33 303.333333 1011.11111 1733.33333 3033.33333
Dining Table 13000 9100 3 3 1 3 3
466.666666
Chair (2) 6000 4200 1400 140 7 800 1400
583.333 58.3333333 194.444444 333.333333 583.333333
Side Table 2500 1750 3 3 4 3 3
1166.66 116.666666 388.888888 666.666666 1166.66666
Cupboard 5000 3500 7 7 9 7 7
Dressing 2333.33 233.333333 777.777777 1333.33333 2333.33333
Table 10000 7000 3 3 8 3 3
233.333333
Shoe Rack 3000 2100 700 70 3 400 700
1166.66666
Sofa 15000 10500 3500 350 7 2000 3500
933.333 93.3333333 311.111111 533.333333 933.333333
Centre Table 4000 2800 3 3 1 3 3
2333.33 233.333333 777.777777 1333.33333 2333.33333
Sofa cum bed 10000 7000 3 3 8 3 3
Individual
pack
Subscription
373.333333 1244.44444 2133.33333 3733.33333
Sandal 3 4 3 3
2566.66666
Ebony 770 7 4400 7700
396.666666 1322.22222 2266.66666 3966.66666
Agar 7 2 7 7
291.666666 972.222222 1666.66666 2916.66666
Mahagony 7 2 7 7
Combo Pack
Subscription
Financial Plan
Assumptio
n Year 1 Year 2 Year 3 Year 4 Year 5
Investmen 700000 350000
t 0 0 0 0 0
Revenue
Beginning
Members 0 500 800 1200 1700
Attrition 0.05 0 25 40 60 85
Ending Members 500 800 1200 1700 2300
New Members 500 300 400 500 600
Application
fee(per new 100000 100000
member) 2000 0 600000 800000 0 1200000
Annual Fees (per 125000 200000 300000 425000
avg member) 2500 0 0 0 0 5750000
350000 210000 280000 350000
Security Deposit 7000 0 0 0 0 4200000
Interest
Income( In %) 8 280000 168000 224000 280000 336000
121600 131600
Total 709500 716000 0 0 1512000
Net
Income 489070 373760 518840 729080
Before Tax 0 0 0 0 9547600
122267 129710 182270
Tax 25% 5 934400 0 0 2386900
Surcharge 0% 0 0 0 0 0
Income 366802 280320 389130 546810
After Tax 5 0 0 0 7160700
Income
after -
Investmen 333197 - 389130 546810
t 5 696800 0 0 7160700
Switching Cost
1 hour wastage
Poor technical support per day
India has successfully established its information technology (IT) and IT enabled
services sector, which currently accounts for about 67 percent of the world’s US$124-
130 billion IT market. Overall, the IT sector generates over 10 million jobs in India.
This has led to the growth of several IT hubs across the country such as Bangalore,
Delhi National Capital Region (NCR), Pune, and Hyderabad. While Bangalore is still
regarded as the Silicon Valley of India, Delhi NCR is fast emerging as India’s foremost
IT destination.
The atmosphere of political uncertainty that looms over the city so often and the sky-
high cost of operations and Bangalore begins to lose its charm.
Everyone who has been to Bangalore has suffered at the hand of its infamous traffic.
When a commute of a mere 8 kms. takes upwards of an hour.
IT has been brewing in cities like Hyderabad, Chennai, Pune, and the National Capital
Region (NCR), especially Gurgaon and Noida, the last few years have revealed an
interesting trend – the rise of the tier-two cities as preferred IT destinations.
Consequently, several companies have set up their delivery centers and liaison offices in
Noida, Delhi, and Gurugram in order to take advantage of the high quality infrastructure,
manpower, real estate, and supportive government policies.
Regional connectivity
Delhi NCR is an extremely well connected region. It has one of the busiest international
airports in the world – Indira Gandhi International Airport, and boasts of an excellent
network of railways, roadways, and metro rail. Additionally, Delhi is well connected to its
satellite cities – Gurugram and Noida via the Delhi Gurugram expressway and the DND
flyover, respectively. The enhanced inter-state connectivity enables easy accessibility to a
diverse labour pool and market from its neighboring states.
Skilled workforce
The presence of premier educational institutions such as the Indian Institute of Technology
(IIT), Delhi; Jawaharlal Nehru University (JNU), Delhi Technological University (DTU), and
University of Delhi (DU), among others, has ensured a steady supply of skilled workforce,
essential for the growth of the IT industry.
Delhi NCR is a favoured startup destination because it provides firms with easy access to
foreign investors, government agencies, and early stages funding that are vital for any new
venture’s success. There are several startup incubators and accelerators in the region
associated with the government, educational institutions, and venture capitalists. At present,
it is home to almost 23 percent of India’s startups, which include Grofers, Paytm, and
Snapdeal.
Delhi NCR – Growing prospects
Regardless of the structural challenges posed to the IT sector in India, Delhi NCR offers a
dynamic and highly-functioning ecosystem that sees investors, government policymakers,
skilled professionals and entrepreneurs, and startup incubators and accelerators. These
positives coupled with its expanded territory and excellent connectivity and infrastructure
ensures its steady growth towards becoming India’s top IT hub.
Data Analysis : -
Richest Cities Of India (w.r.t GDP )
Inferences : - As per the data from various sources Delhi (NCR) has maximum population.
Also for Delhi the cost of living is high and purchasing power is low as compared to other
cities which makes a viable place for our startup because people will prefer to rent rather than
buy.
Delhi having a low rent index as compared to Mumbai & Bangalore. Also Delhi is the 2nd
ranked city in terms of GDP in the country.
So, due to the above benefits for ease of business, accessibility and growth opportunity we
have chosen Delhi to be the place for our start-up.
Location in Delhi : - Kirti Nagar
Kirti Nagar is Asia’s largest furniture market. Home decoration cannot be completed
without a trip to Kirti Nagar. The furniture market here has become a must-visit
pilgrimage for people wanting to liven up their homes or offices.
With the widest range of timber work Kirti Nagar's furniture market is the largest of
its kind in Asia. Be it the dressing table, sofas and consoles or antique furniture or
even imported furniture, the market is one-stop destination for all your needs.
In Kirti Nagar market one can find all kinds of furniture and timber. Variety, quality
and affordability are the key parameters through which the customers judge to buy a
furniture and the market is fulfilling the needs since last 3 decades.
Woods and timber can be easily available cheaply in Kirti Nagar. Easily available of
local carpenters and small time workers.
Kirti Nagar should not be confused with the usual, congested markets of Old Delhi or
other flea markets that are found elsewhere. It is a well built, spacious market area
true to the nature of the commodity it deals in. Located just by the side of a main road,
the shops here are spread in the interiors dotting many smaller roads.
With a product range suitable for everything - home, office, kids, designer, imported to up
street stylish - the market records a turnover of around Rs 1,500 crore annually. The year-on-
year (YoY) growth is estimated somewhere between 30 and 40 per cent.
Accessibility : -
It isn’t difficult to locate. The Kirti Nagar Metro Station on the blue line which links it with
Noida as well and is the closest to the market but it is still a bit far off from there and hence
one may need to hire a rickshaw in order to reach the place. It is a very famous market and
everyone is likely to be aware of it .
It is also only 31 Kms from Gurgaon by road .Gurgaon current population is expected to be
16 lakhs and is estimated to be 30 lakhs by 2031. It’s a place where maximum no. of private
job employees live due to increase in jobs demands of IT and ITES sectors, which makes it a
viable opportunity for our business as well. Well-educated urban professionals work here for
the firms such as Google, HSBC, Nokia, Intel, Canon. Etc.
Exit Strategy –
1 .IPO: This is the traditionally preferred route. Furwish will have the right to offer it’s shares
for sale under an IPO and then exit but IPO is not a good option for us due to following
reasons -
2. Merger : There are many online/offline furniture rental business in the country. So, getting
merged with other furniture rental company to form a separate entity will have following
benefits for Furwish : -
3. Get Acquired: Bootstrap approach, self-sustain modest growth in a local region and sell
company plus core team for 10-20 crores after 5 years .
Founder Overall
Annual Outside Internal Profit /
Income (In Growth Equity Investment year(In
Rs.) Rate (%) Goal Investment (In Rs.) Rs.)
Grow + Self
Year 1 3668025 Sustain 0% 7000000 -3331975
Grow + Self
Year 2 2803200 -23.58% Sustain 0% 3500000 -696800
Grow + Self
Year 3 3891300 38.82% Sustain 0% 0 3891300
Grow + Self
Year 4 5468100 40.52% Sustain 0% 0 5468100
Grow + Self
Year 5 7160700 30.95% Sustain 0% 0 7160700
Exit Price
1 10 Crores
Exit Price
2 20 Crores
References : -
1) https://economictimes.indiatimes.com/small-biz/startups/why-more-and-more-
consumers-now-prefer-to-share-rather-than-buy/articleshow/59778507.cms
2) https://economictimes.indiatimes.com/small-biz/startups/pepperfry-eyes-volume-
from-newly-launched-furniture-rentals/articleshow/60759260.cms
3) https://www.researchnester.com/reports/india-furniture-market-analysis-
opportunity- outlook-2023/331
4) http://indianonlineseller.com/2017/09/pepperfry-ready-to-ramp-up-sales-through-
new-service-rental-furniture/
5) https://lbb.in/delhi/kirti-nagar-furniture-market-shops/
6) https://so.city/delhi/article/an-affordable-hub-in-west-delhi-make-your-way-to-the-
kirti-nagar-furniture-market.
7) https://economictimes.indiatimes.com/north/kirti-nagar-a-popular-hub-for-
furniture-shopping/articleshow/13262848.cms
8) https://timesofindia.indiatimes.com/city/gurgaon/Gurgaons-population-to-rise-to-
30-lakh-by-2021/articleshow/35800381.cms
9) https://thediplomat.com/2016/07/companies-are-moving-away-from-bangalore-
indias-largest-it-hub/
10) https://www.indiatoday.in/opinion/max-martin/story/saturated-bangalore-is-losing-
its-charm-135688-2011-06-16
11) https://www.india-briefing.com/news/delhi-ncr-an-emerging-it-hub-in-india-
13888.html/
12) http://www.industrialproductspurchase.com/admin/current_issues_pdf/151757283
5-Article--India%E2%80%99s%20best-functioning%20ecosystem
%20%E2%80%94%20The%20Delhi-NCR%20region.pdf
13) https://www.numbeo.com/cost-of-living/country_result.jsp?country=India
14) https://www.worldatlas.com/articles/metro-cities-in-india.html
15) http://businessworld.in/article/Richest-Cities-Of-India/28-06-2017-121011/