PROFITABILITY

EFFICIENCY

SIMPLIFY
STREAMLINE COST-SAVINGS
PEPPERFRY.COM:
TURNING THE TABLES
ON DISRUPTION
ODETTE CONSULTING: Brandon Lalonde, Jacob McCourt, Jordan
Neposlan, Sahi Veeraraghavan
PRESENTING TO: PEPPERFRY.COM EXECUTIVE TEAM
 THE CHALLENGE

How can the company increase

profitability and what would that
profitability look like over the next
five years?
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
SWOT Analysis of Pepperfry.com
Strengths Weaknesses
•-Large product variety -Low profitability
•-Geographic spread-98% of orders are -Very complex business structure-a
shipped in less than 48 hours; hub and lot of business units
spoke model
-Highly reliant on the co-founders of
•-Physical retail driving high average sales the business

SWOT
Analysis
Opportunities Threats
•-Expand by opening up physical -IKEA entering the market
stores in other major cities -Highly fragmented business (a lot of
•-Promote private label house brands suppliers)
•-Expand operations in Malaysia and
China
PEST Analysis of Pepperfry.com

P E S T
-Varying cultures in - Use of
each city in India
Less regulations technology
-Average Furniture
compared to rental = 22-29 years among
Rupee value teenagers is low
North American -Average Family
tied to United in rural areas
companies = States dollar
keeps their Furniture
for 30 years
Ease of foreign - Only 20% of
- TV advertising and
investment influencer marketing
the country is
is very popular online
Porter’s Five Forces Analysis of
Pepperfry.com
•Consumers can •High capital
meet their bar for entry
needs offline or
online
Threat of New
Buyer Entrants
Bargaining Competitive LOW-MEDIUM
Power Rivalry
HIGH HIGH

Supplier Threat of
Bargaining Substitution
Power • Large number of
competitors (i.e. LOW-MEDIUM
LOW
•Assists business Walmart and •Some unique
with logistics IKEA) items but high
and other competition
support
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
Key Issues
Current Issues Future Risks

New Revenue Competitors will explore

Channels are lacking untapped markets for growth

Do not reach profitability goals and

Decreasing Profitability the business is liquidated and/or sold

Competitors may expand into the

Degree of Competition market and cause limited growth

If the company does not innovate with

Need for Innovation new products or programs, they
remain stagnant

Main Take-away: The firm must find new revenue channels to

remain profitable. Competitor entry risk must be mitigated.
Key Issues
Future Risks Risk Avoidance Plan

Competitors will explore Explore new revenue streams

untapped markets for growth but avoid more complexity

Do not reach profitability goals

and the business is liquidated Simplify business operations
and/or sold

Competitors may expand into

Solidify profitability plan and
the market and cause limited
growth then expand

If the company does not

Continue to monitor and
innovate with new products or
programs, they remain stagnant look for new opportunities
Main Take-away: The firm must mitigate risks by simplifying the
business and monitoring profitable growth opportunities.
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
Alternatives

Alternative #1: Simplify and expand private label

house brands strategy

Alternative #2: Simplify and geographically

expand physical store location

Alternative #3: Simplify and explore the furniture

rental market
 Alternatives
Decision Criteria Simplify + Expand Simplify + Expand Simplify + Explore
House Brands Strategy Physical Stores Furniture Rental
Geographically Market
Risk 8 6 4

Complexity 6 6 4

Profitability 8 5 7

Unique and 7 6 8
Innovative
1-3 TOTALS 29 23 23
4-6
7-10
Data was collected via an independent poll by Odette Consulting
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
 Making a Decision
Decision Criteria Simplify + Expand Simplify + Expand Simplify + Explore
House Brands Strategy Physical Stores Furniture Rental
Geographically Market
Risk 8 6 4

Complexity 6 6 4

Profitability 8 5 7

Unique and 7 6 8
Innovative
1-3 TOTALS 29 23 23
4-6
7-10
Data was collected via an independent poll by Odette Consulting
Recommendation

Simplify •Create simpler

Operations operations
and Expand
House Brands
•Increase
Strategy profitability
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
Assumptions
Tax
Revenue Depreciation
Growth will and
plateau at Amortization are
25% not taken into
account

Projected
Decrease
in COGS

We have
moved out of
the utility
industry
Financial Overview
2012/1 2013/1
INR Millions 3 4 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
₹ ₹ ₹ ₹
₹ ₹ ₹ ₹ ₹ ₹ 3,121.8 3,433.9 3,777.3 4,155.1
Revenue 341.00 439.00 992.00 2,001.00 2,580.00 2,838.00 0 8 8 2
₹ ₹ ₹ ₹
₹ ₹ ₹ ₹ ₹ ₹ 4,090.8 3,886.2 3,691.9 3,507.3
COGS 883.00 801.00 2,247.00 4,993.00 5,066.00 4,306.10 0 6 4 5
₹- ₹- ₹- ₹- ₹- ₹- ₹ - ₹ - ₹ ₹
Profit/(Loss) 542.00 362.00 1,255.00 2,992.00 2,486.00 1,468.10 969.00 452.28 85.44 647.77
Projected Revenue
Growth 10%
Projected Decrease in
COGS 15%
Financial Overview
2013/1
INR Millions 2012/13 4 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
Revenue 341.00 439.00 992.00 2,001.00 2,580.00 3,225.00 4,031.25 5,039.06 6,298.83 7,873.54
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
COGS 883.00 801.00 2,247.00 4,993.00 5,066.00 4,306.10 4,090.80 3,886.26 3,691.94 3,507.35
₹ - ₹- ₹- ₹- ₹- ₹- ₹ - ₹ ₹ ₹
Profit/(Loss) 542.00 362.00 1,255.00 2,992.00 2,486.00 1,081.10 59.55 1,152.81 2,606.89 4,366.19

Projected Revenue Growth 25%

Projected Decrease in COGS 15%
Agenda
Situational Analysis

Key Issues

Alternatives

Recommendation

Financial Overview

Implementation Plan
Implementation Plan
Simplify Return to Growth and
Profitability and Prepare for I.P.O.
Expand

•Rationalize SKU count •Continue to •Prepare for Initial

•Décor – reduce from rationalize SKU’s Public Offering
70,000 SKU’s to 5,000 •Create targeted
SKU’s marketing
•Utilities – Stop selling campaigns for
•House Brands under-
penetrated areas
•10 brands to 2 brands
•Seek
•Pepperfry (13-tier opportunities to
brand) – sold online sell second brand
and catalogue into adjacent
•Sold to other suppliers markets
•Implement quality •Evaluate success
assurance model of house brand
•Process improvement strategy
•Formulate
contingency
plans
•Explore furniture
rental or
expand
geographically
•Create mobile
app
 Project Timeline
2018 2019 2020 2021 2022

Work with category managers to

rationalize SKU's
Work on new house brands
Launch new house brands
Implement new sourcing strategy
Explore other opportunities for process
improvement
Develop new marketing campaigns
Develop new app
Evaluate SKU rationalization process
Launch mobile app
Launch digital COE for digitization
Launch new marketing campaigns
around major holidays
Prepare for IPO
IPO
Conclusion

Lack of new
revenue channels
Issue to increase
profitability

Simplify business
operations by
Recommendation expanding house
brand strategy
 THANK YOU

We now welcome any questions.