Today we meet Mehul Agrawal, Managing Director and Co-Founder of FabFurnish.com. As all of us know, FabFurnish is a Rocket Internet backed venture and has recently surpassed the 100 crore revenue mark. They’ve “got just almost anything and everything that you’d require to make your home a wow-worthy, pleasant haven to live in.” FabFurnish are clearly redefining the way furniture retailing takes place online, in India.
Q. Tell us about how this business venture started.
We started in March 2012, when we formally launched the website. I was with BCG earlier, working out of Mumbai and Sydney. Moving to entrepreneurship was always on my mind. E-commerce was a fascinating story even back then and being part of the digital wave, whatever we have done for the last 10 years or so has been driven by the electronic medium. My idea was to do something in that. What I was doing was looking at categories and back then books, electronics, fashion had started picking up. People were buying and I wanted to do something which hadn’t been done. Home and furniture looked like the perfect category, was a huge market, highly unorganized and highly fragile. There were no players at substantial scale and staying in Mumbai my own experience of buying furniture was shoddy. It was a daunting task to furnish my own home and made me think – why not create a business proposition out of it? The biggest tipping point was when I spoke to people about starting to sell furniture online, everyone said it was crazy. But I was sure there was a breakthrough we could create. We decided to just take the jump! Vikram was at Wharton and dropped out in 6 months and he realized this was very exciting and the timing was perfect and that instead of delaying he would rather make this big jump. And we strongly feel it was a great decision. It has been 2.5 years and it is a fantastic space to be in.
Q. How did Rocket Internet come into the picture?
Rocket was in touch with us in different capacities since my time in Australia. There were a lot of ideas we discussed and this was something we felt strongly about. They were already working on this idea in different countries and that’s when the association started. We felt it was the right time and they were willing to back us and that’s how they came into the picture.
Q. In your opinion, what’s the market size of the opportunity?
It is such a highly unorganized market that the numbers are not even reported. In a country like ours there are stores in every nukkad. People buy furniture from any store and there is no organized segment to form a base from which you can extrapolate numbers. The number reported vaguely is about 25 billion dollars worth of home and furniture as of today, which is a huge number. But in potential it must be even bigger, which is not even identified. Every person needs to furnish their home and there are no exceptions no matter who it is – any level, any designation, any strata of society – everyone wants their home to be beautiful. And that expenditure is going to happen in everyone’s life at some point, hence there’s huge potential.
It is such a highly unorganized market that the numbers are not even reported.
Q. Furniture is largely associated with customization and there are players who try to get standard sizes. So how is it with FabFurnish – the segregation of customization and standard furniture?
I would break down customization into 2 parts – first, purely customized in terms of fit, like the size of the house, etc. Second, more around having variants like colors, etc. This revolves around configuration more than anything else. So what we realized, and I strongly feel that it is a big changing trend: my father would have a more orthodox way to get furniture made; while today, people actually want a hassle-free experience creating furniture. Even from a time horizon perspective, the earlier generation would go on to use the same bed for 20-30 years. It is not that I don’t want durability but I would also want to change the look or feel of my home every now and then.
Attitudes are changing as people want the furniture making process to be hassle-free and more transactional. That’s why we felt that this modern approach of people who are 25-45 years old, working professionals; they would not be able to spend as much time to go the orthodox way. For them this is the perfect segment and hence we provide standardized products which would not be made-to-fit but provide you as much designer variety and assortment. This is not just limited to colors but there are a lot more options to explore. Hence we have made FabFurnish based on our own experience and understanding and a lot of interviews with people.
Q. How does the competitive landscape look and how are you differentiating compared to them?
For us, competition is the unorganized market. It is Kirti Nagar in Delhi, M.G.Road in Gurgaon.
These are pockets of concern to us, because these are places where we aim to migrate people from the offline world to the online world. The organized sector in this is less than 5% and the online sector is extremely nascent compared to the size of the category, hence we compete against these unorganized pockets. The main struggle is how to make customers aware that this transition is happening and that even furniture can be bought online.
Two years ago, no one even used to search on Google for the words, ‘Buy Furniture Online’. Today the volumes are rising. Though it is way less than shoes or clothes, the trend is changing and we strongly focus on that. The way we try to position ourselves is on 4 key aspects. Access – in the offline organized sector, players like Hometown, Home Center or @Home are limited and available in selected cities. Convenience – because people don’t want to spend their weekend running around finding stores and still not get furniture as per their taste. Assortment – plays an important role in terms of the ‘value for money’ aspect. Modern Trendy Designs At Affordable Prices – not available today in the unorganized sector.
As for the organized sector, modern trendy designs will be available but the prices would be pretty high. In India, you can’t open your store 50 miles from the core of the city like it happens in the US or Germany. You have to open your store in the heart of the city and have a good ambience but the rentals will kill you. That’s why those prices are high. In the unorganized sector, pricing is relatively affordable but every year they carry the same designs and there is no innovation in design or variation. That’s why we position ourselves in the segment where modern trendy furniture is available in an affordable range. And lastly, service capability. In terms of the timelines in which delivery is happening, the quality of the experience and the after-sales service: instant assembly, help over period of usage… We care about our customers even after the purchase.
All these prove to be a great reason for a customer to migrate online. The only struggle is how to make them aware and that’s where our focus is – to build an ecosystem to make people aware. I am sure the market will grow radically from there.
Q. There are certain companies like Godrej, etc. which offer standard furniture. These kinds of showrooms are sprouting in many cities by means of franchisees or company-owned stores. Do you consider them competition in certain segments?
Again, the problem with them is on the pricing side and their pricing would be significantly above ours because the cost structure is high. Unlike fashion, where you can have 2000 sq ft and you can showcase all your products, in furniture even 30000 sq ft space is not sufficient, considering the size of furniture. As for us, we are probably a virtual showroom of 10,00,000 sq ft space or even more than that. That kind of access won’t be available to offline showrooms unless you spend insanely on rentals. That combination is why office furniture beyond a point isn’t growing and in this category the only way to sell furniture is online. Otherwise, the organized industry is stagnant because they are just not able to solve this problem due to issues around infrastructure, awareness, the monetary situation of people, etc. Till the economical solution comes up, it won’t be able to grow by itself and hence online will restructure the industry.
Our virtual showroom has 10,00,000 sq ft space
Q. There have been models where they are designing DIY systems online but then getting it done by waiting 10-12 days and having it delivered. So is that a way you intend to take?
A lot of variants of this model can happen. We need to acknowledge the ecosystem around us. In India if I look at the knockdown panel wood furniture segment, it did not even exist till some time ago. It was mostly imported because the kind of facilities China, Malaysia, etc. have, we don’t. What we have is the standard factories which are more manual, not really automated, and that’s where we create a lot of solid wood furniture. The issue is that this segment is very unorganized in terms of processes, quality checks, etc. Things are not very standardized and thus trying such things means you hamper the customer’s experience. We think it’s not the right time to make this trade-off because if once the customer’s experience is ruined, he may not want to come back again. To ensure that the experience is much more controlled, we spend time with the suppliers and their base and build them in such a fashion that they can cater to online requirements but we take the entire risk as we work in the inventory model. We have built warehouses in various locations of around 250,000 sq ft, which is a huge investment but done totally to protect this part so the entire experience is controlled by us. At the same time, some of these vendors have migrated to a stage where we are confident of them doing it directly. Once these transactions happen, that is the time we’ll start handing it over.
Q. Is this a movement towards a managed marketplace eventually?
I still don’t think it’s a model where you would want to make it entirely a marketplace. It would rather be a combination of inventory model plus marketplace. It’s all about being smart. I have seen a lot of people stay away from the inventory model because it is so working capital intensive, very risky and you can get stuck with unsold inventory. I feel if you can manage it well, it is a much more robust way of doing business than a marketplace model. We want to end up as a combination and that will depend on specific domains, pockets, etc. and developing a marketplace would mostly be for exploring and expanding our base.
I don’t think we want to move entirely to a market place model. It would rather be a combination of inventory model plus marketplace.
Q. What milestones has this venture surpassed in the last few years?
I think one of the milestones was crossing the 100 crore mark. I remember the entire office floor being so excited and happy as we had anticipated reaching this mark much later. The way this industry has been shaping up, growth has been phenomenal. This year we won The Red Herring Asia Top100 Award and we also participated in the global Top100 level which was Top 100 from Asia, Africa, America, etc. coming together, then competing against each other. We won the Top 100 global award as well. This inspires us to strive for more. Recently, we came up in the Top 200 sites in India on Alexa.
These numbers would look small as we keep climbing but from the team perspective, achievements happens on a daily basis when the delivery guys go for a delivery and the customers are really happy and they give great feedback. Or when customers send photographs saying that we ordered furniture for the first time online and it was a brilliant experience and we never imagined the process would be so easy and smooth. These moments feel like real achievements. As for what really lies ahead, I’m sure the numbers would keep changing as the years pass.
Recently, we crossed the 100 crore mark
Q. In your opinion, what has been the key to this venture’s success?
Team and People. You need passionate people, aggressive people, people with drive, willing to put things on hold for this. And that’s one thing we have been blessed with. All of our team feels this and they are very dedicated. They always strive to keep the customers in front, for whatever they do. And that’s one of the core reasons we are growing.
Q. In what areas are you looking for alliances, partners and vendors?
From a sourcing perspective, it’s a constant thing because we keep increasing assortment and finding different vendors. It is all about prioritizing that these are the set of people I want to work with and explore innovative products which can be launched through different vendors who are capable of handling them. Beyond that even operationally we are trying to expand and trying to be as close to customers as possible. On the delivery side, warehousing side, those are operational requirements where we keep on partnering.
To fulfill our operational requirements we have alliances on the delivery side & warehousing side
Q. Talking of merchandising operations what are some of the key challenges you have addressed so far, and what are some challenges that you aim to address going forward?
From a merchandising perspective, what we really need to deliver, I think, is new modern products, which are aesthetically pleasing, and which are available at affordable prices. Now that’s a trinity which we have to achieve and that’s where the complications lie. By picking any two angles, you can come up with something. Trying to solve for all three is the real struggle. Building a huge assortment which is unique as well as appealing and is priced absolutely perfectly. This is the real challenge and this is what we constantly work to solve.
For example, on the assortment side what has really helped us is the kind of global expertise we have built. Being part of the Rocket ecosystem, there are also furniture ventures in Germany, Brazil, Australia, etc. and they work together as well at times and it helps us in deciding variety and assortment other than what we already have or could have otherwise achieved. Getting those unique differentiated products is what we really strive for. That’s what we strongly focus on. The kind of exposure our team now has across continents, geographies and different parts of India is immense. That really helps to solve that part. Affordable pricing is again something where it is all about negotiation. Because the way we normally approach it is – we know the price points the customer would want from the market, so we keep them frozen, that this is what we need to create for ourselves.
If the margin requirement is x%, the sourcing team has the challenge to find such vendors who will provide quality products at the desired prices. A lot of buying typically would happen in bulk as in a country like China, they export a 100 containers every month. One or two containers don’t make any difference. In terms of the appealing look of furniture, we have worked very hard for that. We have an in-house design team who figure out what to buy and what kind of products to bring, that would really make sense to customers.
The kind of exposure our team now has across continents, geographies and different parts of India is immense
Q. What are the key challenges in customer service and how are you training your employees for better customer service?
From a customer service point of view what is really important and how things are shaping up is the power to make the customer do everything on the go and let him have control of the entire piece: right from the delivery to the time of assembly. The entire process, the options, etc. is what we are trying to create in-house – which is how to make the entire technology so seamless that things can be done more easily. Going beyond that, given the category standard ,a focus one-commerce and customer care would be there. What is really different is the expectation people have at times when they contact us. The team used to get calls around the specifics of the product, which is when we realized that information also has to be there within the customer care team and that is the kind of database we started creating, so any agent who is recruited is given a thorough training about what furniture is all about, the kind of finishes, the kind of aspects, what kind of questions come up, etc. So they can answer a question that this wall shelf can handle this much weight or the cushion of the sofa is this thick. Those are minor details people are really bothered about because it is a big decision to buy such a huge product only by seeing a product or photo online.
So to offer that experience we need to make sure it is clubbed with information in all aspects. When they hear that they also feel very comfortable that we are buying from the right destination, these guys really know. If the answer has been somewhat different, like we will check the size of the furniture and let you know, those are answers which I wouldn’t appreciate, and then the customer would buy offline not online. As a customer I would wait till the model develops and then I would make the transition online, so these minor things help a lot. So when we started with live chat – that was a great example of how people wanted to connect with us before buying things. Around lot of tools and technologies we have adopted, we have seen great acceptability from customers trying to engage, to really experience what this is all about. Customers do ask questions for which information is visible on the website but they just want to get reassured, which is what a normal storekeeper would also do (‘main hoona aap chinta mat kijiye’). That is something people want as an assurance, which is what we are trying to create though our customer care team, the delivery guys or the assembly team, to give that assurance that yes, you are making the right decision; do not worry, we are there. No matter what issue you face, we will always be there to take care of it.
Q. Are there any special guarantees you offer customers?
We offer a one year guarantee for all our furniture products and for anything beyond that we are more than happy to resolve things based on the kind of issues being faced.
We offer a one year guarantee for all our furniture products
Q. The web format would be very intensive on product information, how are you ensuring that product information flows to all your executives and to your front-end in a better way?
For every product, when it comes to our warehouse and is shot in our studio – we try to cover all the details and we have a huge template with 100 fields for each product where all the information is captured and that’s shared internally through our CRM with our customer care people. Any information on any dimensions can be easily answered. Our buying team goes through regular trainings. They are aware of the different kind of questions, issues, topics which people ask which are beyond generic questions and are based on the nuances of the category. These trainings happen at regular intervals.
Q. What would be your advice to budding entrepreneurs and peers in this space?
The most important aspect is the team. The team should be passionate. They have to be passionate about the idea, business and opportunities. That would really drive their success. Being aggressive is also one essential mantra. Don’t try to be too diplomatic or conservative around how you want to plan it out. This is the right time to try out new things. You should have that aggression. If you’re too conservative or pessimistic then that’s not the right way to explore this domain and the third would be always wear the customer hat. Always think about the problems customers have or something which they have not even realized and try to solve it from their perspective. Unless you solve real problems, you will never succeed.
Unless you solve real problems, you will never succeed
Q. What do you see happening in the furniture space in the next two to three years?
In general, there’s a lot of transition seen between how people from the offline space have moved to online in fashion and other verticals. That’s one transition I’m expecting to happen in furniture. It will be delayed because it’s a highly unorganized domain. But the trends that will shape up in the next 6-12 months will build up seriousness around these vendors and suppliers. The space needs to be more organized, professional and transition to the online business and that’s something which will change a lot.
I think given the structure of the items, it’s operationally challenging. There’s a lot that can be done to make the experience smoother, quicker, and easier and we need to be closer to the customer. Fundamentally, the transit time is high. The only way to solve for that is to be closer to the customer. The ‘in-a-day’ guarantee can happen for a lot of products but probably not furniture. Transitioning and creating an entire back-end that’s sustainable in that aspect is the area where I see changes and improvements. That’s where a lot can be done.
Q. Are there any categories in the furniture space which are doing much better compared to others?
Sofa as a category is a great one. People somehow have not found great options in the offline world when it comes to sofas. I think the designs have been pretty standard and mundane. Online, they find great sofas. Even recliners are products people have known or heard of but never knew where to buy it from. Availability has changed the entire equation.
Q. We see a few international brands being sourced by you and a lot of private labels, what are your comments on the same?
We do a lot of private labeling already. The entire design aspect is of importance to the consumer, and this is what is different about our site. For that you have to have your own branding, your own view of how things will shape up and then create that atmosphere. International sourcing plays a great role in that. A lot can be done given our experience and the networks we have. We can definitely keep on expanding on that.
Q. What are some customer trends like the average ticket price at which they are purchasing products online, is there a movement towards making large value purchases?
That’s already happening, where people have been comfortable making high value purchases. When we started, a Rs 20,000 purchase used to be a big deal for us. Now it runs to lakhs. People are buying without much discomfort or apprehension. When we did our first TV advertisement, it helped a lot in building our confidence. Furniture buying is a very natural decision. The home remains an identity for people and for that people need to be sure they are buying from the right place and that the items would last for years not months. Those things become really important. That’s what’s crucial for sure.
Q. What would you say are typical mistakes made by entrepreneurs and how will you guide them against it?
I think it’s good to make mistakes. Just make sure you’re aggressive and keep learning what’s happening in your surroundings. That’s what shapes our opinions and the way we approach the business. That is a constant source of learning. Talking to many people and getting their feedback always helps.
Be aggressive in whatever you want. Mistakes are always fine. For us to venture into a category which was unknown to us, we would not have created what we have done till today without that attitude. There’s so much we think we know but in a few years we realize our understanding was very limited. That’s why there’s always more to explore.
