Pepperfry building growth Presented by the University of Glasgow: Mara Hilmy, Sarah Henkind, Wes Treiber, Vijay Bidnurmath

Executive Summary Current problem Solving this problem Pepperfry is searching for new revenues while fighting off competitors to maintain market share. Solving this problem By exploring the value chain we believe we can create unique value to customers that will fuel future growth. Defining Success We will measure success by evaluating conversion rate, revenues, brand sustainability, and gross product margin.

Agenda Introduction Key Issues Analysis Alternatives Recommendations Implementation Justifications and Questions

Defining Pepperfry Pepperfry is an online retailer focused on delivering quality products quickly to the image conscious home owner.

Who is our customer Focused Customer Unfocused Customer The younger generation of Indians who have new disposable incomes They see them selves as early adapter and tech savvy Unfocused Customer Roughly 350 million internet users Less trusting of online shopping but still have growing needs to furnish homes

Competition Vertical Pepperfry IKEA Durian Home Town Godrej Interio RentMojo Rentickle Offline Online Big Bazaar MORE Megastore Flipkart Amazon India Horizontal

Alternative 1 Pros Push manufacturing in-house: Cons Longer reduction in costs More control in quality control Inventory Helps build brand recognition Cons Increase in fixed costs Large initial investment Lost of trusted suppliers Push manufacturing in-house: Moving away from selling outside brands and focus our manufacturing efforts on in house brands Focus would be on popular furniture and décor brands

Alternative 2 Pros Stop external deliveries: Cons Average 250% increase in profit from online sales More control over value chain Less likely to have Cons Increase in fixed costs Large initial investment Moves away from core competencies Stop external deliveries: Push to have control of our own fleet and move away from external shipping online sales to customers.

Alternative 3 Pros Build after sales service: Cons Builds company trust Solidifies customer loyalty Opportunity for further personalized service Cons Cost of acquiring carpenters Assessing quality of carpenters Requires more personnel controls Build after sales service: Create a network of follow up and installment service of local “Pepperfry Certified” carpenters. Utilize their in house assembly and service to build a better understanding of customer needs.

Analysis of alternatives   Alternative1 Alternative2 Alternative3 Conversion Rate Increase Revenue Brand Sustainability Gross Margin %

Command and Control Strategy Recommendations Command and Control Strategy 30 new carpenters 30 new drivers and trucks Select 20 best suppliers

Improves vertical control of product quality and variety Manufacturing Extend loan of 5.5mil INR to 20 best suppliers to be exclusive to Pepperfry Improves vertical control of product quality and variety

Inbound Logistics Renting a warehouse Kolkata, to keep cost down Extend into new market in the North East, 4th largest city in India Improve procurement and delivery costs

Outbound logistics Buying 30 trucks and hiring 30 drivers Find and 30 new carpenters to assist with final assembly of the product Flexibility and agility for delivery

Sales and Marketing Continue organize growth through existing channels House brand will sell with improved margins Focus on content marketing online and offline

After sales and Service Create an extension of Pepperfry’s online and mobile application Hire a new team of carpenter to support after sales activities Initially only focused on 3 new cities Would create trust, loyalty, and ensure repeat customers

Break-even projection

Timeline Year 1 Year 2 Start post sale service Year 3 Roll out new drivers In house manufacturing ready for delivery Year 3 Review and evaluate process Look to extend roll out to other cities

How we define success Increase conversion rate Increase revenues Convert online view and clicks into sales quicker Increase conversion rate Locate new sales channels and leverage service to increase purchase amount Increase revenues Grow while maintaining current customer base Brand sustainability Focus on home furnishings and décor Increase gross margin on merchandise

Thank you, Questions Presented by the University of Glasgow: Mara Hilmy, Sarah Henkind, Wes Treiber, Vijay Bidnurmath

Back-up Figures Inhouse Manufacturing Total Suppliers 20.00 Total Loan 100,000.00 Total Costs 2,000,000.00 Inhouse Delevery (Pep-Kart) New Nodal (Kolkata) 50,000.00 New Trucks + Driver 1,800,000.00 Caprpenter Network 450,000.00 2,300,000.00 After Sales Internet Application Carpenters 200,000.00

Ecommerce reality check Currently E-commerce accounts for roughly 10% of the overall retail market Most generous estimates see this number peaking at 20% over the next 10 years The larger the sale price the less likely an individual will buy online Large catalogs create analysis paralysis