STUDY OF CATEGORY AND MERCHANDISING …14.139.111.26/jspui/bitstream/1/204/1/Study of category...

STUDY OF CATEGORY AND MERCHANDISING

MANAGEMENT FOR E-COMMERCE

(PEPPERFRY)

By

Kritika Singh

MUM13MM21

Under the Guidance of

Ms. Lip Choudhury

Submitted in Partial Fulfilment of the Requirements for the Degree of

Master of Fashion Management

Department of Fashion Management Studies

National Institute of Fashion Technology

Mumbai

(2013- 2015)

GRADUATION PROJECT: PEPPERFRY 05/13/2015

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EXECUTIVE SUMMARY

Pepperfry is India‘s No. 1 Online Furniture, Home and Living

Marketplace with over a whopping million customers. It showcases a

curated range of furniture from the online portfolio of Pepperfry, and

serves as a design inspiration.

Pepperfry is based on three business models which are Marketplace, On

Demand and Warehouse. Pepperfry enables Merchants from across the

country to sell their items on the site after agreeing on commercial

terms. It manages the entire process for the merchant. This includes

pre-sale merchant listings, enabling photo-shoots, packaging to post-

sale shipping and providing customer service of the ordered items. This

approach helps introduce the benefits to even those merchants who

might not be Internet savvy and therefore ensures that a wide variety of

products can be made available to on-line customers. Pepperfry trains

suppliers to make knock-down, foldable products, similar to IKEA

furnishings. The company also provides carpenters to assemble the

items once delivered.

Its unique and proprietary large-item shipment network ensures quick

and damage-free doorstep delivery of bulky furniture. Pepperfry has 11

fulfilment centres in Mumbai, Bhiwandi, Jodhpur, Pune, Delhi,

Bengaluru, Kolkata, Vadodara, Hyderabad, Chennai and Cochin to

enable smooth and speedy delivery of products. In April 2013, Pepperfry

launched its mobile site that can be surfed on any web browser or

mobile device.


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The website has more than 600 global and national brands with more

than 70 national brands in the furniture segment alone. Pepperfry

features national brands like Godrej Interio, Nilkamal, Spacewood,

@Home, Durian, Hometown, Furniture Kraft, Evok, etc. and global

furniture brands like GEBE, Eurosteel Office Furniture, Defianz,

HeveaPac, etc. on its website.

For Pepperfry the main target market is 28-35 years of age group.

People who are newly married professionals would be our target

customers because they have better buying power and mass demand.

Studying processes involved in Category Management enabled me to

understand Vendor sourcing, vendor registration, product assortment

and categorising, product listings and uploading, imaging, pricing, stock

upload, couponing, and Quality Check.

Managing bulk order for brand RAHA helped me understand product

procurement, shipments, quality check and assembly, managing returns

and customer engagement.

Merchandising in Pepperfry deals with display of products in such a way

that stimulates interest and entices customers to make a purchase. The

process involves thorough check and correction of page layouts, images

in different perspectives, proper product categorisation, and product

description with detailed dimension image.

In conclusion Pepperfry gave me the opportunity to understand various

processes that makes the site to function and cater to the target

customer effectively.


IV

INDUSTRY ON AN UPTURN

In 2013, Asia-Pacific emerged as the strongest business-to consumer (B2C) e-

commerce region in the world with sales of around 567.3 billion USD, a growth of

45% over 2012, ranking ahead of Europe (482.3 billion USD) and North America

(452.4billion USD). The top three were followed by Latin America, and the Middle

East and North Africa (MENA) region, according to E-commerce Europe. Globally,

B2C e-commerce sales increased by24% over 2012. This reflects the huge

untapped potential ofe-commerce by retail companies, both in their country of

originand across borders.

E-commerce or electronic commerce, deals with the buying andselling of goods and

services, or the transmitting of funds or data,over an electronic platform, mainly the

internet. These businesstransactions are categorised into either business-to-

business(B2B), business-to-consumer (B2C), consumer-to-consumer(C2C),

consumer-to-business (C2B) or the recently evolvedbusiness-to-business-to-

consumer (B2B2C). E-commerceprocesses are conducted using applications, such

as email, fax,online catalogues and shopping carts, electronic data interchange(EDI),


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file transfer protocol and web services and e-newsletters tosubscribers. E-Travel is

the most popular form of e-commerce,followed by E-tail which essentially means

selling of retail goodson the internet conducted by the B2C category.

According to E-commerce

Europe, country-wise, the

US, UK andChina together

account for 57% of the

world‘s total B2Ce-

commerce sales in 2013,

with China having total

sales of 328.4billion USD.

As against this, India had

sales of only 10.7

billionUSD, 3.3% of that of

China in 2013 with fifth position in Asia Pacific.This is despite the fact that India

enjoys high demographicdividends just like China. India‘s internet penetration with

totale-households at 46 million against China‘s 207 million is one ofthe reasons

behind India‘s poor B2C sales growth.

According to Forrester Research, an independent technology and market research

firm, only 16% of India‘s total population was online in 2013 and of the online users

only 14% or 28 million were online buyers. India, therefore, was still in a nascent or

immature stage of evolution of online retail spending. China was in ascending stage

at 50%, whereas Japan (69%), Australia (57%) and South Korea (70%) were in

mature stage.

India‘s growth potential since

the e-commerce industry is fast

rising, changes can be seen

over a year. The sector in India

has grown by 34% (CAGR)

since 2009 to touch 16.4 billion

USD in 20142. The sector is


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expected to be in the range of 22 billion USD in 2015.

An analysis of the demographic profile of internet users further testifies that e-

commerce will rise rapidly in India in coming years. Around 75% of Indian internet

users are in the age group of 15 to 34 years. This category shops more than the

remaining population. Peer pressure, rising aspirations with career growth, fashion

and trends encourage this segment to shop more than any other category and India,

therefore, clearly enjoys a demographic dividend that favours the growth of e-

commerce. In coming years, as internet presence increases in rural areas, rural India

will yield more e-commerce business.

By 2020, e-Tail in India is

expected to account for 3% of

total retail. Further, orders per

million are expected to more than

double from five million in 2013 to

12 million by 2016, which will

mean more opportunities for both

consumers and e-Tail companies.

While the share of online

shopping in total retail has

increased at a fast pace in the last

few years, it is still miniscule

compared to the figure in China,

where the share is 8-10%.


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KEY DEVELOPMENTS IN 2014

The last year has seen several developments that have given a fillip to the e-

commerce industry.

Mobile to be the most influential aspect of e-commerce

With mobile apps being developed by most e-commerce websites, smartphones are

increasingly replacing PCs for online shopping. In 2013, only 10% of the mobile

users used smartphones, and only 5% of the e-commerce transactions were made

through a mobile device. This figure has more than doubled, and more than 13% of

all e-commerce transactions today happen via mobile3. According to some industry

players, over 50% of the orders are being placed through mobile apps, which is not

only leading to substantial customer acquisition but also building customer loyalty for

various brands. However, most mobile transactions so far are for entertainment,

such as booking movie tickets and music downloads. This trend will change soon

with more and more merchandise being ordered online.

More business coming from smaller towns

E-commerce is increasingly attracting customers from Tier 2 and 3 cities, where

people have limited access to brands but have high aspirations. According to e-

commerce companies, these cities have seen a 30% to 50% rise in transactions.

Enhanced shopping experience

Besides general online shopping, customers are also shopping online for weddings

and festivals, thanks to wider range of products being offered and aggressive

advertisements. The free and quick shipment and wider choice of products, along

with the ease of shopping online as compared to in-store shopping, is also helping e-

commerce gather momentum.Further, e-commerce companies are doing rapid

business due to sales. New concepts such sales on weekends, holidays and

festivals are attracting a lot of new customers and building customer loyalty among

existing customers. Television and social media, particularly Facebook, are playing a

proactive role in promoting e-Tailing through aggressive advertisements. This has

helped several e-commerce companies build substantial brand image.


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Exclusive partnerships with leading brands

Over the year or so, there has been a trend of exclusive tie-ups between e-Tailers

and established boutiques, designers, and high-end lifestyle and fashion brands. For

instance, in 2014, Jabong added international fashion brands such as Dorothy

Perkins, River Island, Blue saint and Miss Selfridge, along with local fashion brands

through Jabong Boutiques. Similarly, Myntra benefited from exclusive tie-ups with

brands such as Harvard Lifestyle, Desigual and WROGN from ViratKohli.

Expanding the product basket

There is a recent trend of relatively newer products such as grocery, hygiene, and

healthcare products being purchased online. Similarly, lingerie and Indian jewellery

has also been in great demand among customers outside India. Export comprises

95% of cross-border e-commerce, with the US, UK, Australia, Canada and Germany

being the major markets.


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OBJECTIVES

1. Carrying out processes involved in Category Management for Pepperfry

2. Analysing processes involved in Bulk Order Management

3. Analysing and streamlining merchandising process at Pepperfry

4. Study of Customer Engagement in E-Commerce (Pepperfry)

5. Understanding Vendor Registration process for Pepperfry


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1. BRAND HISTORY

Pepperfry is India‘s No. 1 Online Furniture, Home and Living Marketplace with over a

whopping million customers! Pepperfry.com opened for business on 3rd January

2012 to give customers a wide selection of amazingly priced Furniture and Home

merchandize with a consistently great shopping experience.

Its managed marketplace model is an ideal platform for small and medium

businesses who wish to sell their merchandize to millions of discerning customers.

We currently work with over a thousand merchant partners to showcase their design

skills, craftsmanship and service orientation to customers across India and the world.

Today we are India‘s No. 1 online Furniture, Home Decor and Living destination,

offering more than 45000 products across categories like Furniture, Home Décor,

Lamps & Lighting, Bath & Body, Kitchen, Home Appliances, Housekeeping and Pet

Supplies. Pepperfry won the Red Herring Top 100 Asia Award in 2012.

Our mantra is to be the one stop shop for customers seeking to spice up their home;

our customers love their home.

Why Pepperfry

Pepper is honest and a spice that is proudly Indian. The organisation embraces

Indian talent, craftsmanship and business acumen. This reflects in our merchandize

selection and our habit of going the extra mile for our customers.

Fry stands for fun. The organisation wants the Pepperfry journey to be enjoyable for

all our employees, our community, our merchants and our business partners.


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Facts about Pepperfry


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Investors

Norwest Venture Partners (NVP) is a global, multi-stage venture

and growth equity investment firm that has partnered with

entrepreneurs to build great businesses for more than 50 years.

The firm manages approximately $5 billion in capital and has

funded more than 550 companies since inception. Headquartered

in Palo Alto, Calif., NVP has subsidiaries in Mumbai and Bengaluru, India, and

Herzelia, Israel. NVP makes early to late-stage venture and growth equity

investments across a wide range of sectors including: technology, information

services, business services, financial services, consumer products/services and

healthcare. For more information visit: www.nvp.com. Follow NVP on Twitter

@NorwestVP

Bertelsmann is an international media

company whose core divisions encompass

television (RTL Group), book publishing

(Penguin Random House), magazine publishing (Gruner + Jahr), services (Arvato),

and printing (Be Printers) in some 50 countries. In 2013, the company‘s businesses,

with their more than 110,000 employees, generated revenues of €16.4 billion.

Bertelsmann stands for a combination of creativity and entrepreneurship that

empowers the creation of first-rate media, communications, and service offerings to

inspire people around the world and to provide innovative solutions for customers.


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2. STUDIO PEPPERFRY

Studio Pepperfry is a one-of-its-kind concept store from Pepperfry.com, India's

leading online Furniture and Home marketplace. It showcases a curated range of

furniture from the online portfolio of Pepperfry, and serves as a design inspiration.

At the Studio, one can experience the cutting edge designs, various types of

furniture pieces with differing wood finishes, and get an idea of the overall quality of

the furniture from Pepperfry. Here, iPad-wielding interior design consultants assist in

browsing through the entire range of 11,000 Pepperfry furniture items online --

making it an interactive session -- and provide a design expertise for the same.

These designers additionally offer free in-store design consultancy on furniture

products ensemble, to design homes that are aspirational and reflect the latest and

the best in home décor and design.


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A unique concept from Pepperfry, Studio Pepperfry demystifies the furniture buying

process and makes it a delightful experience.


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3. BUSINESS MODEL

Pepperfry operates on a ―Managed Marketplace‖ model, which is an ideal platform

for small and medium business artisans and merchants, who wish to sell their

merchandize to millions of discerning customers. Currently, the website has over a

1000 merchant partners, who can showcase their design skills, craftsmanship and

service orientation to customers across India and the world. For many merchants, it

has become the primary source of their income.

It is one of the few company in the Home and furniture vertical in India to ship

products overseas. Customers from 12 countries (USA, Russia, Greece, and France

etc.) have bought stuff for their homes on Pepperfry.

Pepperfry enables Merchants from across the country to sell their items on the site

after agreeing on commercial terms. Pepperfry manages the entire process for the

merchant. This includes pre-sale merchant listings, enabling photo-shoots,

packaging to post-sale shipping and providing customer service of the ordered items.

This approach helps introduce the benefits to even those merchants who might not

be Internet savvy and therefore ensures that a wide variety of products can be made

available to on-line customers. Pepperfry trains suppliers to make knock-down,


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foldable products, similar to IKEA furnishings. The company also provides

carpenters to assemble the items once delivered.

Pepperfry recently rolled out a 30 Days No-Questions-Asked 100% Money Back

Guarantee for customers across categories.

Types of Business Model followed by Pepperfry:

1. Marketplace Model

An online marketplace (or online marketplace) is a type of site where product or

service information is provided by multiple third parties, whereas transactions are

processed by the marketplace operator. Online marketplaces are the primary type of

multichannel e-commerce.

In an online marketplace, consumer transactions are processed by Pepperfry and

then delivered and fulfilled by the participating retailers or wholesalers (often called

drop shipping). Other capabilities might include auctioning (forward or reverse),

catalogues, ordering, wanted advertisement, trading exchange functionality and

capabilities like RFQ, RFI or RFP.

In general, because marketplaces aggregate products from a wide array of

providers, selection is usually wider, availability is higher, and prices are more

competitive than in vendor-specific online retail stores.

2. On Demand Model

In this type of business model, products are listed on the website. As soon as order

is placed, vendor gets intimation and after which products are manufactured and

directly delivered to customers.

3. Warehouse Model

Products are either bought by Pepperfry or are with Sell or Return policy. Purchased

items are then stored in warehouses. Pepperfry owns warehouses in Bhiwandi,

Jodhpur, Bangalore, Gurgaon and Kolkata. Products are purchased according to the

past sales data and current market demand.


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4. GEOGRAPHICAL PRESENCE

Pepperfry has successfully established the Last Mile Delivery in 127 towns directly

and plans to extend the geographical reach across the country by reaching 400

towns directly through its own last mile delivery infrastructure by the end of next

year. Till date, the company has shipped furniture to 2,700 towns across the country,

and today it sells a piece of furniture every minute.

5. SUPPLY CHAIN AND LOGISTICS

Pepperfry‘s unique and proprietary large-item shipment network ensures quick and

damage-free doorstep delivery of bulky furniture. Pepperfry has 11 fulfilment centres

in Mumbai, Bhiwandi, Jodhpur, Pune, Delhi, Bengaluru, Kolkata, Vadodara,

Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products.

6. MOBILE SITE

In April 2013, Pepperfry launched its mobile site that can be surfed on any web

browser or mobile device. The experience gives its customers the convenience of

shopping through mobile with facilities like customizable cart before checkout,

creation of wish-lists – all of which can be shared with friends & families through

Twitter, Facebook & Pinterest.

7. MARKETING AND INITIATIVES

Pepperfry tied-up with Satchi&Satchi to release its first television commercial with

―Happy Furniture to You‖ as its unique brand proposition. The Mumbai-based agency

conceptualized a themed film and two supporting films that highlight Pepperfry‘s

value propositions of ―Free Delivery and Assembly‖ and ―100% Satisfaction or

Money Back Assurance‖ for consumers. A successful 360 degree campaign, the

marketing mix featured a sustained radio campaign, on-ground activation and key

outdoor promotions across top cities. The campaign also came alive on digital and

social platforms like Google, YouTube and Facebook.


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8. PRODUCTS AND BRANDS

The website has more than 600 global and national brands with more than 70

national brands in the furniture segment alone. Pepperfry features national brands

like Godrej Interio, Nilkamal, Spacewood, @Home, Durian, Hometown, Furniture

Kraft, Evok, etc. and global furniture brands like GEBE, Eurosteel Office Furniture,

Defianz, HeveaPac, etc. on its website.

In other home categories, Pepperfry has leading national brands like Philips, Portico,

Raymond, Prestige, Tupperware, and global brands including Whirlpool, Joseph

Joseph, Kitchen Craft, Philips, Corelle, Morphy Richards etc.

9. AWARDS

Pepperfry was the recipient of the '2012 Red Herring Asia Top 100' award which

honours the most promising private technology ventures from Asia.

They also won the 'Pure-Play e-Retailer of the Year' at the Indian e-Retail Congress

2014 that recognises outstanding performance and innovation in retail.

10. LOCATIONS

The company is based in Mumbai and now has warehouse operations in Mumbai,

Delhi, Bengaluru, Jodhpur, Pune, Gurgaon and Kolkata.


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11. COMPETITION

There are many players who have already made their entry into this niche segment

and are doing unexpectedly well. Some such players are:

1. Urbanladder: Launched in 2012 and a venture of Bangalore-based Descasa Decor

Online Pvt Ltd, Urbanladder is currently delivering to Bangalore, Mumbai and Delhi /

NCR region (Gurgaon, Noida). The online store has made a strong foothold in the

segment and have recently raised $1 million in series A funding and is looking to

close a Series B round in coming months.

2. Fabfurnish: A rocket internet backed venture and the most visited online home

store in India, fabfurnishwas launched in January 2012. It is currently known for its

designer furniture, furnishings, décor items and kitchenware.

3. Zansaar: A Bangalore based start-up and a brand owned by Singapore-based

Salar Online Pvt Ltd has forayed into online home decor space in 2012. Backed by

Accel Partners and Tiger Global, it has recentlyraised $6 million funding from them

with an aim to bring in exclusive range in categories such as Home decor, Kitchen

Tools, World Foods, and Cushion Covers.

4. Roomstory: An online multi-brand home store, Roomstory is offering products

across three classifications, Bed & Bath, Décor & Furnishings and Kitchen & Dining.

It was launched in 2011 with an aim to become a one stop destination for all home

decor products. The company is currently looking for funding of around $1 million.

5. The Home Label: An online marketplace by Sussanne Roshan, Home Label is

backed by The Label Corp., the first retail brand in the online marketplace to

introduce a unique tastemaker styled model. Under this business model, the

celebrity Creative Directors bring along an assortment of exclusive and trendy

products.

6. Bedbathmore: An online portal, bedbathmore deals in home decor, bed, bath and

other furnishings. It also has its own warehousing facility in Mumbai. It is a part of

Creative group, one of the India‘s largest exporters of home furnishing and apparels

to US and Europe. Bedbathmore also raised an undisclosed amount recently in


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Series a funding from Blume ventures with plans to establish private labels and

expanding the technology team.

7. Mebelkart: A Bangalore based start-up, Mebelkart provides a range of products

including Bean bags, Seating, Home furniture, Kids furniture and Décor. It claims to

be ‗the biggest dealer in Beanbags and Office chairs‘. Also, it has tie-ups with some

of the major furniture companies like Durian,Zuari, MoBEL, Rhome and Wood Dekor.

The other major online retailers with Home decor categories include Jabong, Yebhi,

Homeshop18 and Snapdeal.Although, the online retail is grabbing the attention,

there are players in the offline segment too like Godrej interio, D‘Decor, Zuari,

Durian, @home, etc. which are there from years and are still among the best choices

for the consumers.


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12. PRODUCT OFFERINGS AND BRANDS






In other home categories, Pepperfry has leading national brands like Philips, Portico,

Raymond, Prestige, Tupperware, and global brands including Whirlpool, Joseph

Joseph, Kitchen Craft, Philips, Corelle, Morphy Richards etc.


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13. SEGMENTATION

Market segmentation is a marketing strategy which involves dividing a broad target

market into subsets of consumers, businesses, or countries who have, or are

perceived to have, common needs, interests, and priorities, and then designing and

implementing strategies to target them.

18-28

1. Young people

2. Enthusiastic

3. Trendy

4. Fashionable

5. Sense of aesthetics

6. Good understanding of E-SHOPPING

7. Buying power is low

28-35

1. Newly married working people

2. Independent

3. experimental

4. Buying power is good

5. Willing to spend on products like home décor

6. Mostly lives in a nuclear family

7. High demand of portable products

35-45

1. Working professionals

2. High demand of home décor related products

3. Very particular about the design and aesthetics of the product

4. Buying power is very high as compare to other segments

45 and above

1. Industry professionals

2. Buying power is good

3. Experienced

4. Particular with designs


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5. Not experimental

6. Demand is very limited

14. TARGETING AND POSITIONING

A target market is a group of customers towards which a business has decided to

aim its marketing efforts and ultimately its merchandise. A well-defined target market

is the first element to a marketing strategy.

For Pepperfry the main target market is 28-35 years of age group. People who are

newly married professionals would be our target customers because they have

better buying power and mass demand.

The brand is dedicated into making peoples life interesting by their wide range of

designs and colors, using so many vibrant colors to energize the design is what

make us different from others, brand offers good range of home décor products at

high competitive price point


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PROJECTS UNDERTAKEN

1. Study of processes involved in Category Management for

Pepperfry

Category management is a retailing and purchasing concept in which the range of

products purchased by a business organization or sold by a retailer is broken down

into discrete groups of similar or related products; these groups are known as

product categories (examples of grocery categories might be: tinned fish, washing

detergent, toothpastes). It is a systematic, disciplined approach to managing a

product category as a strategic business unit. The phrase "category management"

was coined by Brian F. Harris.

The industry standard model for category management in retail is the 8-step

process, or 8-step cycle developed by the Partnering Group. The eight steps are

shown in the diagram on the right; they are :

1. Define the category (i.e. what products are included/excluded)

2. Define the role of the category within the retailer

3. Assess the current performance

4. Set objectives and targets for the category

5. Devise an overall Strategy

6. Devise specific tactics

7. Implementation

8. The eighth step is one of review which takes us back to step 1

The 8-step process, whilst being very comprehensive and thorough has been

criticized for being rather too unwieldy and time-consuming in today's fast-moving

sales environment; in one survey only 9% of supplier companies stated they used

the full 8-step process. The current industry trend is for supplier companies to use

the standard process as a basis to develop their own more streamlined processes,

tailored to their own particular products.


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Market research Company Nielsen has a similar process based on only 5 steps:

reviewing the category, targeting consumers, planning merchandising, implementing

strategy, evaluating results.

Following are the processes involved in Category Management:

Vendor Sourcing and Management

Vendor management is a discipline that enables organizations to control costs, drive

service excellence and mitigate risks to gain increased value from their vendors

throughout the deal life cycle. Pepperfry Sourcing team approaches brands like Me n

Moms, Pebbleyard, Godrej, etc. Interested vendors/ Brands themselves can directly

approach the organisation online through the website (pepperfry.com). Business

Models are explained to the vendor and margins are set. Usually agreed upon

margin is 45%.

Vendor Registration














This approach helps introduce the benefits of two even those merchants who might

not be Internet savvy and therefore ensures that a wide variety of products can be

made available to on-line customers. Pepperfry trains suppliers to make knock-

down, foldable products, similar to IKEA furnishings. The company also provides



XXVII



Assortment Planning

Many businesses suffer from ―over assortment‖. In ―bricks and mortar‖ the

assortment is naturally limited by space and by inventory investment. In the ole

Catalogue business the assortment is limited by paper, printing, and postage cost –

another form of space. And, inventory investment. These traditional limits on

assortments don‘t exist in the same way online. In fact, it‘s fairly easy to put an

image online and begin to sell the product.

Assortment planning from a customer selection standpoint is more crucial for the

―specialty‖ retailer. But, basic merchandising, where the retailer focuses or limits their

assortment on behalf of the customer (and the brand) often isn‘t a priority. The poor

shopper has to scroll down pages and pages of styles if they choose to spend the

time. Inventory investment and cash flow, is another reason to limit the assortment –

too much. And, customer satisfaction can be lost by carrying too many styles if one

can‘t keep the sizes/colours in stock for the customer – too little. ―Sku rationalization‖

or ―culling‖ is the ―science‖ of assortment reduction. The ―art‖ of developing your

assortment is crucial also. Brand positioning among other things must be

considered.

This is not ―as‖ true for ―commodity‖ websites. But, ―commodity‖ websites still have

some shoppers entering via the home page versus the product pages. (There is a

Google Analytics report which shows this flow and ―drop offs‖ very well.) And, most

companies still need to manage inventory investment and cash flow along with stock

outs and the customer experience.

Six factors are taken into account in planning the size and content of assortment:

1. Brand strategy

2. Business model

3. Current market trends

4. Sales and margin history


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5. Channel(s) of distribution requirements

6. Organization‘s financial plans (sales, margin, and inventory)

It is crucial to see what has sold well both last season and the same season last year

for your organization. In addition to sales, final margin must also be considered

including all discounting! As always, if something sold well but the margins were very

low it‘s not worth repeating in the same way. Taking a look at the categories and

styles that have sold well in the past is often the starting point for assortment

planning but I have certainly seen too much weight given to this activity. Even in a

traditional business model newness is important! When looking at this history it is

good to begin selecting items that can be ―carryover‖ items prior to developing or

buying ―new styles‖.

Categorising and Listing

Products are segregated according to categories as follows: Furniture, Home Décor,

Furnishings, Lamps & Lighting, Kitchen & Dining, Appliances, Bath, Housekeeping

and Pet Supplies.


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Further Furniture is divided into Sofas, Seating, Beds, Bedrooms, Dining, Cases &

Cabinets, Tables, Bar Furniture, Kids Furniture and Collections.

Listing is made in includes product name,images with different perspectives, Retail

price, Our Price, You Pay price, Coupon percentage, available product quantity,

Serviceable pin code, item description and Set option.


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Imaging

However impressive the rest of your e-commerce business is, if you‘ve not paid any

attention to the visual aspect of your site then your sales are guaranteed to suffer.

Just as a high street shop with badly thought out displays and no visual promotions

is likely to lose custom, so an online retail site with clumsy or unattractive page

displays will deter users. Following are ways of effective measures taken for proper

imaging for the website.

1. Manage different brands

Pepperfry sell products for a number of different brands. We know that organising

the display of multiple brands can be a headache – which is why we‘ve developed

our brand adjacency technology to give retailers a helping hand. This clever

functionality can help you keep products from one brand together, whilst separating

brands that you think are best kept apart. This allows customers to find what they are

looking for quickly and easily, and prevents your site from looking disorganised and

unappealing.


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2. Sequence products effectively

Carefully sequenced products can benefit both the user and the retailer. Our balance

factor technology allows you to organise your site‘s product display in line with

specially selected site metrics. Grouping products together with other similar items

will keep your customers satisfied, and has the added bonus that you, the retailer,

can target consumers more efficiently.

3. Customise your homepage

The homepage is often the customer‘s first point of call, and as such can be key to

whether or not a sale is made.

4. Implement promotional banners

High street shops use promotional banners to entice customers and get them excited

by a particular brand or offer. E-commerce sites can also use promotional banners to

their advantage. Therefore Pepperfry implement banners that are triggered by user

behaviour, focussing, for example, on product category. This ensures that customers

are exposed to relevant deals for them, increasing chances of conversion.

Pricing

Vendors provide with their manufacturing cost for the product to the category

Associate in pepperfry. To that VAT of 12.5% is added after which agreed upon profit

margin is added which is usually 45%. Maintaining higher spread, Coupons are

applied to the ―You Pay‖ amount.


XXXII

Product upload

Listings are made for all products and uploaded in bulk through Bridge. Bridge is

software used for online assistance to Pepperfry. Once SKUs for all the products are

generated, images are uploaded for every indivisual SKU. Images should be from

different perspectives and with dimensions mentioned.

Stock Update and Couponing

Post product upload and SKU generation. Stocks are added which are provided by

the vendor to Pepperfry team. Stock upload is very important without which items

won‘t go live on website.

Inventory management is the process of ordering, storing and utilization of the raw

materials needed during manufacturing and the process of monitoring and controlling

the final product that is ready for sale. This inventory is one of the company‘s major

assets and represents an investment that will not reap returns until the goods are

finally sold. For this reason, inventory management is a serious concern for any


XXXIII

business, whether it is small scale or large or whether it is an online store or a bricks-

and-mortar setup.

Since there is a significant investment in the inventory itself as well as in storage,

tracking and insurance of it, mismanaged inventories can cause substantial financial

concerns and problems for the business. The ideal inventory management system

should create a plan that ensures that there is neither an inventory surplus not a

shortage. Companies can use several methods for inventory management such as

just-in-time where the items are received as needed for production or materials

requirement planning, which bases inventory orders directly on forecasts of sales in

a particular period.

Quality Assurance

Merchandising in retail is like candy on Halloween; it‘s hard to think of one without

the other. In the current state of retail, and especially online retail, merchandising is

the cherry on top that converts shoppers into buyers.

With the seemingly endless numbers of competitors out there, an up-to-date

merchandising strategy is a must to convert and gain new customers. The vast

majority (97%) of website visits don‘t end in a purchase, which can be a major drag


XXXIV

for online retailers. There‘s a huge opportunity, though, as August 2014 saw an 11%

increase in sales, compared to August 2013. It‘s just a matter of attracting the right

consumers and getting them to complete their purchases. This is where

merchandising comes in to save the day.

Merchandising can come in many different forms, from inventory to pricing, and

beyond—but the end goal is always the same: to drive conversions. It can be tricky

to keep up with all the different ways online retailers can optimize their stores

through the magic of merchandising, so here is a list of the top five tips to help

retailers of all sizes.

1. Get mobile optimized

Almost half (40%) of consumers don‘t feel comfortable shopping online and it

doubles to 80% when we‘re talking about shopping on mobile. This may look dismal,

but it means that your web store not only needs to be mobile friendly, but also wow

shoppers on whichever screen they prefer.

2. The clearer, the better

Shoppers don‘t want to be confused. Do you know what happens when they‘re

confused? Yep, you guessed it, they vanish. Luckily, there are many things you can

do to cut down on those pesky abandoned carts. Here are a few:

Add interactive tools that aid customer purchase decisions. This can help retailers

see up to a 40% boost in conversions. This is especially important for ecommerce

because you can‘t be there like a salesperson can in a brick and mortar store. Add a

live chat feature to support shoppers and get them closer to checkout.

Improve your search function. Did you know that 11%-15% of consumers start

shopping by searching for a specific product in search bars? This number is on the

rise, so it‘s prime time to take advantage of this. Shoe retailer, FootSmart, made a

small change by adjusting search results to include top items sold and saw an

impressive 82% increase in conversions.

Provide shipping policies and estimations as early as possible in the checkout

process. Offering free shipping is a great way to increase average order value

because 93% of shoppers take actions to qualify for free shipping.


XXXV

3. Keep it short and sweet

The fewer steps to purchase, the better. When retailers ask for too much information

or otherwise complicate the process, shoppers drop out of the sales funnel. To help

this, you should decrease the number of steps it takes to complete a purchase and

provide a status bar up top to show that it won‘t take them long to checkout. You also

want to provide clear, descriptive, and to-the-point product descriptions to resolve

any confusion.

4. Be data driven

Analytics can help retailers make better merchandising decisions. More than half of

retail leaders (63%) already do it—so if you want to keep up and get ahead, you

should, too. Data is your friend because it can teach you what works and what

doesn‘t. Walmart is a great example of a retailer that used data to its advantage.

After crunching the numbers, Walmart learned that diapers and beer sales were

highly correlated. So you know what stores did? They put these two aisles side by

side and saw a sales increase for beer. Cheers to that!

5. Keep your enemies closer

You already know that competition is fierce in online retail, but what can you do

about it? The first step is to know exactly what‘s going on in your competitive

landscape at all times. How are your competitors pricing? What do they have in

stock? When do they run out of products that you carry? Tracking competitors and

their inventories can clear this up once and for all. Then retailers can fill in the gaps

in their inventory and effectively become a more successful competitor. The more

you know, the better your sales can be.


XXXVI

2. Understanding processes involved in Bulk Order Management

Bulk orders are brought in. Once the order is placed by the customer, Business

Development Team is responsible for handling the orders. Following are the steps

followed by the team.

Procurement of Products

Procurement is the acquisition of goods and services from an external source. It is

favourable that the goods and services are appropriate and that they are procured at

the best possible cost to meet the needs of the acquirer in terms of quality and

quantity, time, and location. Corporations and public bodies often define processes

intended to promote fair and open competition for their business while minimizing

exposure to fraud and collusion.

Shipments

It is made sure that all the products in an order are shipped in proper packaging from

vendor‘s or Pepperfry warehouse to the customer. Committed delivery time is to be

maintained for smooth running of the organisation.

Quality Check

Products are checked before getting it delivered to the customer, if it is getting

delivered from Pepperfry warehouse to customer. And in case, products are shipped

directly from Vendor‘s warehouse to the customer, in that case minimum of one

member from Business Development Team should be present at the time of delivery.

Product Assembly

Product assembly is provided by Pepperfry once they are delivered to the customer.

Therefore arranging for product assembly is crucial in case of Furniture.

Managing Returns

Furniture bought on Pepperfry.com is shipped for free. Products also comes with 30

Day Money Back Guarantee in case customer is not satisfied with their purchase.

Customer Engagement

Customer engagement (CE) is the engagement of customers with pepperfry about

the shipment, delivery, assembly, and returns.


XXXVII

3. To streamline merchandising process at Pepperfry

Merchandising refers to the variety of products available for sale and the display of

those products in such a way that it stimulates interest and entices customers to

make a purchase.‖ It‘s the second part of that definition: ―display of products in such

a way that stimulates interest and entices customers to make a purchase‖ that is at

the heart of online merchandising. Online merchants typically don‘t select or manage

the inventory, but they optimize the performance of the inventory in the online store

environment based on customer behaviour.


XXXVIII

Merchandising Attribute

All the product should have the spec sheet along with it. All the products should have

the dimension image. The first image should be the isometric/front image. The

product description should be there. The dimensions should be given in detailed

form (Mattress size, Seating height). There should not be any duplicates. There are

five major categories in furniture category:

1. Contemporary

2. Colonial

3. Modern

4. Indian ethnic

5. Eclectic

4. Study of Customer Engagement in E-Commerce

Customer engagement (CE) is the engagement of customers with

one another, with a company or a brand. Customer engagement has been discussed

widely, numerous high-profile conferences, seminars and roundtables have either

had CE as a primary theme or included papers on the topic.

Customer engagement marketing places conversions into a longer term, more

strategic context, and is premised on the understanding that a simple focus on

maximising conversions can, in some circumstances, decrease the likelihood of

repeat conversions CE aims at long-term engagement, encouraging customer loyalty

and advocacy through word-of-mouth.

In store, or offline customer engagement is best leveraged by associates‘ extensive

brand and product knowledge, and the digital access that supports it. Equipped with


XXXIX

a tablet that also delivers store and sales training, educated on-floor associates

become brand ambassadors who can show consumers high-definition product

imagery and video to help cross-sell, up-sell, grow relationships and foster loyalty.

Online customer engagement is qualitatively different from offline engagement as the

nature of the customer‘s interactions with a brand, company and other customers

differ on the internet. Discussion forums or blogs, for example, are spaces where

people can communicate and socialise in ways that cannot be replicated by any

offline interactive medium. Customer Engagement marketing efforts that aim to

create, stimulate or influence customer behaviour differ from the offline, one-way,

marketing communications that marketers are familiar with. Although customer

advocacy, for example, has always been a goal for marketers, the rise of online user

generated content can take advocacy to another level.

The concept and practice of online customer engagement enables organisations to

respond to the fundamental changes in customer behaviour that the internet has

brought about, as well as to the increasing ineffectiveness of the traditional 'interrupt

and repeat', broadcast model of advertising. Due to the fragmentation and

specialisation of media and audiences, as well as the proliferation of community- and

user generated content, businesses are increasingly losing the power to dictate the

communications agenda. Simultaneously, lower switching costs, the geographical

widening of the market and the vast choice of content, services and products

available online have weakened customer loyalty. Enhancing customers' firm- and

market- related expertise has been shown to engage customers, strengthen their

loyalty, and emotionally tie them more closely to a firm.

Leveraging customer contributions is an important source of competitive advantage

– whether through advertising, user generated product reviews, customer service

FAQs, forums where consumers can socialise with one another or contribute to

product development.

Amazon re-branded into 'serving the world's largest engaged online community', the

World Federation of Advertisers (WFA) has created a 'Blueprint for Consumer-

Centric Holistic Measurement' and the Association of National Advertisers (ANA),

American Association of Advertising Agencies (AAAA) and the Advertising Research


XL

Foundation (ARF), have put together the 'Engagement Steering Committee' to work

on the customer engagement metric. Nielsen Media Research, IAG Research and

Simmons Research are also all in the process of developing a CE definition and

metric.

Online customer engagement refers to:A social phenomenon enabled by the wide

adoption of the internet in the late 1990s and taking off with the technical

developments in connection speed (broadband) in the decade that followed. Online

CE is qualitatively different from the engagement of consumer offline.

The behaviour of customers that engage in online communities revolving, directly or

indirectly, around product categories (cycling, sailing) and other consumption topics.

It details the process that leads to a customer‘s positive engagement with the

company or offering, as well as the behaviours associated with different degrees of

customer engagement.

Marketing practices that aim to create, stimulate or influence CE behaviour. Although

CE-marketing efforts must be consistent both online and offline, the internet is the

basis of CE-marketing.

Metrics that measure the effectiveness of the marketing practices which seek to

create, stimulate or influence CE behaviour.

Here are just 10 features that help to keep customers engaged on ecommerce

websites. If you've seen any innovative new features from ecommerce companies,

please let us know below.

1. Clustering

Adding a dose of reality to shopping online is often desirable. What I'm talking about

is adding some serendipity and the experience that comes from being in a shop.

Clustering of products that wouldn't necessarily sit together in navigation or in stores

is a way of adding a human touch to merchandising. And of course it's about cross-

selling, encouraging people to see outfits rather than pieces (when used in apparel).

M&S is probably the most high profile proponent of this approach, as its new website

focuses more on fashion than utility.


XLI

2. 'Content'

Content and commerce often collide, in fact there's an E-consultancy report on

where the two meet (Where Content and Commerce Collide). In this instance I'm

talking about additional content, as opposed to product descriptions, video etc. The

best term might be lifestyle content, or perhaps just content marketing.

There are many examples to hand - from big grocers using recipes on site in order to

sell the requisite ingredients, to apparel merchants hosting look books from

designers. Schuh goes from product video into product demo, where a merchandiser

talks to the consumer about the shoe and how to wear it.

The Watch Gallery has a magazine section on its site where it ties together reviews,

videos, editorial and more. This is an important section of the site for a retailer that

doesn't have a presence on the high street.

And, slightly better known, TopShop does a similar online mag titled 'Hitlist' that sits

under the 'Inspire me' call-to-action in the header. I've included a shot below.

3. Copy

Sell the benefits, not the features of products. Use category page copy for SEO

benefit. Inject some fun into proceedings where appropriate, but write for your

audience (who are people, remember).

Most importantly, as Peter Meinertzhagen points out, provide detailed and unique

copy. The example below from Bench is one of how not to write product copy.

4. The value proposition

If you're Tesco in the UK (only Tesco is), perhaps a value proposition on your

website isn't that important. But for most other ecommerce merchants, and indeed

for any company with a website, a value proposition is vital.

Design will give people an impression of your site and your products (after all, users

are reluctant to read unless they have to) but you should still make sure the website

states what you stand for.

5. Product video

Some retailers have found video gives a boost to conversion - certainly the presence

of video would hint at a richer, more persuasive product page.


XLII

David Moth has previously rounded up retailers who are creative with product video.

ASOS gained the most praise for its array of quirky models, I even went to the

trouble of screen casting the dancer below.

As Darin Archer advocates, one can also go further with product video, exploring

post-purchase or targeting a particular segment of your audience.

6. Customer reviews (with a face)

Customer reviews are incredibly powerful, which is why they are used in many

different marketing channels.

On an ecommerce website they can take myriad forms - as a product filter (X

number of stars), on the store-finder page (to show the kind of service to expect on

arrival), against product listings and on product pages etc. They can be more

powerful when combined with the face of the reviewer.

The majority of shoppers are shown to consult these reviews before purchase, and

these reviews don't just encourage purchase (their primary purpose) they also have

SEO benefits, too - fresh content and non-duplication.

7. New categories and filters

While you don't want to disorient your audience by continually fiddling with filters and

navigation, there's a lot that can be done to enliven the browsing experience.

Even simply, looking at Matalan's homepage, categories for 'Holiday Shop' and 'Sale'

immediately jump out. Managing these spaces for different holidays and adding

filters that allow people to browse by reviews, colours, who they are shopping for etc.

- these can all be good tactics.

8. Site search

Look at the example from ToysRUs below. Autocomplete is used, showing me the

SKUs for each term and bolding the differences between them. This is ideal and

unambiguous for the shopper.


XLIII

Of course, accuracy of results is the most important thing. If a result is not surfaced,

the SKU may go unsold, and if the results don't inspire faith in the user, the feature

will quickly be ignored.

Setting up a custom report in analytics to show site search terms is a key part of any

ecommerce merchandiser‘s strategy - knowing what isn't being surfaced or what

needs to be stocked is important.

9. Social media

This is quite a broad area. It could include crowdsourced imagery (tools such as

Olapic allow for this), social sign-in for comments, simple embedded tweets, share

imperatives or even incentives against content, trending items and more.

The example from ASOS below is particularly effective. The 'as seen on me' feature

will encourage users to browse and even participate, doing ASOS's content creation

and giving up data in the process.

10. Live chat (including video)

Although the call to action for live chat isn't a big part of an ecommerce site, it stands

out nonetheless and is a valuable feature because of its range of uses. In fact, some

surveys show live chat as the customer service channel consumers are most

satisfied with.A customer may not be satisfied with a list of FAQs, whereas live chat

enables questions about products, ranges, fulfilment, stores, payment etc.

Here's a screen grab of Vee24's solution on the LandRover site. For such a

considered purchase, live chat makes a whole lot of sense - it doesn't take many

sales to recoup the outlay.

With a pre-recorded introductory video and the option to chat via text or via live

video, there's plenty here to reassure the customer, whether they want to engage

face-to-face, or simply fire off a question.


XLIV

5. Understanding Vendor Registration process for Pepperfry

Pepperfry follows the 'managed market place' model, roughly a middle path between

the marketplace models of eBay (essentially a facilitator between sellers and

buyers), and Myntra.com and Zovi.com, which manage the inventory and logistics of

retailing business. Through this model, the portal controls various aspects such as

quality, packaging logistics, listing, etc. Though the portal started selling many goods

online, it soon found its niche in retailing furniture, home furnishings and decor.

For its products, Pepperfry has set up a network of merchants and artisans in Jaipur,

Jodhpur, Delhi, etc.; it has also set up its own fulfilment centres or packaging centres

that check quality and package goods. On its site, the portal lists the products of its

merchants. Once an order is placed, the merchant is intimated. He then sends the

product to Pepperfry's fulfilment centres. The products are checked for quality,

packages and sent to courier companies for delivery.

While most products are delivered within three to four days, a few categories such as

furniture and jewellery might take a fortnight, in case merchants do not have the

required stock.

The portal gets about 1, 00,000 hits a day. It ships its products to 1,000 cities and

towns across the country. It also supplies products to countries, including Israel,

Australia and Germany.











XLV





This approach helps introduce the benefits of to even those merchants who might

not be Internet savvy and therefore ensures that a wide variety of products can be

made available to on-line customers. Pepperfry trains suppliers to make knock-

down, foldable products, similar to IKEA furnishings. The company also provides




Pepperfry Sourcing team approaches brands like MenMoms, Pebbleyard, Godrej,

etc. Interested vendors/ Brands themselves can directly approach the organisation

online through the website (pepperfry.com). Business Models are explained to the

vendor and margins are set. Usually agreed upon margin is 45%.

Types of Business Model followed by Pepperfry:

4. Marketplace Model

An online marketplace (or online marketplace) is a type of site where product or

service information is provided by multiple third parties, whereas transactions are

processed by the marketplace operator. Online marketplaces are the primary type of

multichannel e-commerce.

In an online marketplace, consumer transactions are processed by Pepperfry and

then delivered and fulfilled by the participating retailers or wholesalers (often called

drop shipping). Other capabilities might include auctioning (forward or reverse),

catalogues, ordering, wanted advertisement, trading exchange functionality and

capabilities like RFQ, RFI or RFP.

In general, because marketplaces aggregate products from a wide array of

providers, selection is usually wider, availability is higher, and prices are more

competitive than in vendor-specific online retail stores.


XLVI

5. On Demand Model

In this type of business model, products are listed on the website. As soon as order

is placed, vendor gets intimation and after which products are manufactured and

directly delivered to customers.

6. Warehouse Model

Products are either bought by Pepperfry or are with Sell or Return policy. Purchased

items are then stored in warehouses. Pepperfry owns warehouses in Bhiwandi,

Jodhpur, Bangalore, Gurgaon and Kolkata. Products are purchased according to the

past sales data and current market demand.


XLVII

CONCLUSION

Pepperfry is India‘s No. 1 Online Furniture, Home and Living Marketplace with over a

whopping million customers. It showcases a curated range of furniture from the

online portfolio of Pepperfry, and serves as a design inspiration. It is based on three

business models which are Marketplace, On Demand and Warehouse. Pepperfry

enables Merchants from across the country to sell their items on the site after

agreeing on commercial terms. It manages the entire process for the merchant. This

includes pre-sale merchant listings, enabling photo-shoots, packaging to post-sale

shipping and providing customer service of the ordered items. This approach helps

introduce the benefits to even those merchants who might not be Internet savvy and

therefore ensures that a wide variety of products can be made available to on-line

customers. Pepperfry trains suppliers to make knock-down, foldable products, similar

to IKEA furnishings. The company also provides carpenters to assemble the items

once delivered.

Its unique and proprietary large-item shipment network ensures quick and damage-

free doorstep delivery of bulky furniture. Pepperfry has 11 fulfilment centres in

Mumbai, Bhiwandi, Jodhpur, Pune, Delhi, Bengaluru, Kolkata, Vadodara,

Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products.

In April 2013, Pepperfry launched its mobile site that can be surfed on any web

browser or mobile device.






For Pepperfry the main target market is 28-35 years of age group. People who are

newly married professionals would be our target customers because they have

better buying power and mass demand.


XLVIII

Studying processes involved in Category Management enabled me to understand

Vendor sourcing, vendor registration, product assortment and categorising, product

listings and uploading, imaging, pricing, stock upload, couponing, and Quality Check.

Managing bulk order for brand RAHA helped me understand product procurement,

shipments, quality check and assembly, managing returns and customer

engagement.

Merchandising in Pepperfry deals with display of products in such a way that

stimulates interest and entices customers to make a purchase. The process involves

thorough check and correction of page layouts, images in different perspectives,

proper product categorisation, and product description with detailed dimension

image.

In conclusion Pepperfry gave me the opportunity to understand various processes

that makes the site to function and cater to the target customer effectively.


XLIX

Learning Outcomes

1. Vendor Sourcing

2. Vendor Registration

3. Product Listings and SKU generation

4. New Product uploads

5. Inventory Management

6. Online Merchandising

7. Image photoshoot

8. Bulk order Management

9. Handling Category: Mattresses and Beanbags

10. Customer Engagement


L

Webliography

http://www.pepperfry.com

http://jlsears.squarespace.com/blog/2012/12/20/e-commerce-assortment-

planning-and-merchandising-101.html

https://www.pwc.in/en_IN/in/assets/pdfs/publications/2015/ecommerce-in-

india-accelerating-growth.pdf

https://econsultancy.com/blog/62658-the-importance-of-a-value-proposition-

in-lowering-bounce-rate

http://succeedasyourownboss.com/three-ways-increase-ecommerce-

customer-engagement/

https://twitter.com/pepperfry

http://ecommerceconsulting.com/2012/05/online-merchandising-what-it-

means-why-it-matters-why-its-so-misunderstood.html

http://jlsears.squarespace.com/blog/2012/12/20/e-commerce-assortment-planning-and-merchandising-101.html









https://www.pwc.in/en_IN/in/assets/pdfs/publications/2015/ecommerce-in-india-accelerating-growth.pdf





https://econsultancy.com/blog/62658-the-importance-of-a-value-proposition-in-lowering-bounce-rate





http://succeedasyourownboss.com/three-ways-increase-ecommerce-customer-engagement/







http://ecommerceconsulting.com/2012/05/online-merchandising-what-it-means-why-it-matters-why-its-so-misunderstood.html





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