Pepperfry, one of the popular ecommerce giant, is seeing forward to extend its offline studio even as it plans an approach to slash prices while scattering its wings. The Norwest Venture Partners and Goldman Sachs-backed company has joined with Franchise India to extend its offline studios via a franchise representation this year.
“Studios are operating for us as a replica and consequently we want to extend in this way. Smaller capital need and the thought of giving power to entrepreneurs is what guided us to current model,” COO of Pepperfry, Ashish Shah claimed. The Mumbai-based company presently has 18 studios and is seeing forward to extend to 46 studios in 15 different metropolises by the end of financial year 2017–2018 via the franchise replica. Whilst the franchisees will operate and own the studios, Pepperfry will teach the employees and make sure the completion of order right from the booking phase onwards.
In addition, the franchisee studios will permit users to pay and book for an order right from the studio—a feature that is unavailable in the studios owned by the company currently. The franchise studios will function on a revenue model based in commission with limits spanning 8-13% each order.
An important driver for this proposal has been the strategy of the company to slash prices even as it preserves the speed of offline development, a move that witnessed it invest $6 Million in 2016. “We invest Rs 70 Lakh in capex each studio even as we earn Rs 6-7 Lakhs of operating cost behind each studio,” claimed Shah. The franchise model will assist the firm slash prices by over Rs 20 Crore for financial year of 2017–2018.
Pepperfry is not the only company to expand its offline model. Its rival Urban Ladder is also using an analogous policy to extend its offline presence via a mass of experience centers. Pepperfry states the offline studios make a contribution of up to 22-25% of the overall sales of the company and is focusing the channel to make a contribution of up to 35% by end of the financial year 2017–2018 through this model.