PROFITABILITY
EFFICIENCY
SIMPLIFY
STREAMLIN COST-SAVINGS
E
PEPPERFRY.COM:
TURNING THE
TABLES ON
DISRUPTION
ODETTE CONSULTING: Brandon Lalonde, Jacob McCourt, Jordan Neposlan, Sahi
Veeraraghavan
PRESENTING TO: PEPPERFRY.COM EXECUTIVE TEAM
THE CHALLENGE
How can the company increase
profitability and what would that
profitability look like over the next five
years?
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
SWOT Analysis of Pepperfry.com
Weaknesses
Strengths -Low profitability
-Large product variety -Very complex business structure-a lot of
-Geographic spread-98% of orders are shipped in business units
less than 48 hours; hub and spoke model
-Highly reliant on the co-founders of the
-Physical retail driving high average sales
business
SWOT
Analysis
Threats
Opportunities
-IKEA entering the market
-Expand by opening up physical stores in
other major cities -Highly fragmented business (a lot of
suppliers)
-Promote private label house brands
-Expand operations in Malaysia and China
PEST Analysis of Pepperfry.com
P E S T
-Varying cultures in - Use of
Less regulations each city in India
technology
-Average Furniture
compared to North among teenagers
Rupee value rental = 22-29 years
is low in rural
American -Average Family keeps
tied to United areas
companies = Ease States dollar
their Furniture for 30
years
of foreign - TV advertising and
- Only 20% of
investment influencer marketing the country is
is very popular online
Porter’s Five Forces Analysis of
Pepperfry.com
• Consumers can meet their • High capital bar
needs offline or online for entry
Threat of New
Buyer Entrants
Bargaining Competitive LOW-MEDIUM
Power Rivalry
HIGH HIGH
Supplier Threat of
Bargaining Substitution
Power • Large number of
LOW-MEDIUM
LOW competitors (i.e.
• Assists business with Walmart and IKEA) • Some unique
logistics and other support items but high
competition
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Key Issues
Current Issues Future Risks
New Revenue Channels are Competitors will explore untapped
lacking markets for growth
Do not reach profitability goals and the
Decreasing Profitability business is liquidated and/or sold
Competitors may expand into the market
Degree of Competition and cause limited growth
If the company does not innovate with new
Need for Innovation products or programs, they remain stagnant
Main Take-away: The firm must find new revenue channels to remain
profitable. Competitor entry risk must be mitigated.
Key Issues
Future Risks Risk Avoidance Plan
Competitors will explore untapped Explore new revenue streams but
markets for growth avoid more complexity
Do not reach profitability goals and
the business is liquidated and/or sold Simplify business operations
Competitors may expand into the Solidify profitability plan and
market and cause limited growth then expand
If the company does not innovate with
Continue to monitor and look for
new products or programs, they
remain stagnant new opportunities
Main Take-away: The firm must mitigate risks by simplifying the business
and monitoring profitable growth opportunities.
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Alternatives
Alternative #1: Simplify and expand private label house
brands strategy
Alternative #2: Simplify and geographically expand
physical store location
Alternative #3: Simplify and explore the furniture rental
market
Alternatives
Decision Criteria Simplify + Expand Simplify + Expand Simplify + Explore
House Brands Strategy Physical Stores Furniture Rental Market
Geographically
Risk 8 6 4
Complexity 6 6 4
Profitability 8 5 7
Unique and Innovative 7 6 8
1-3 TOTALS 29 23 23
4-6
7-10
Data was collected via an independent poll by Odette Consulting
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Making a Decision
Decision Criteria Simplify + Expand Simplify + Expand Simplify + Explore
House Brands Strategy Physical Stores Furniture Rental Market
Geographically
Risk 8 6 4
Complexity 6 6 4
Profitability 8 5 7
Unique and Innovative 7 6 8
1-3 TOTALS 29 23 23
4-6
7-10
Data was collected via an independent poll by Odette Consulting
Recommendation
Simplify • Create simpler
Operations operations
and Expand • Increase
House Brands
Strategy profitability
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Assumptions
Tax Depreciation
and Amortization
are not taken into
account
Projected
Decrease in
COGS
We have moved out
of the utility
industry
Financial Overview
2012/1 2013/1
INR Millions 3 4 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
Revenue 341.00 439.00 992.00 2,001.00 2,580.00 2,838.00 3,121.80 3,433.98 3,777.38 4,155.12
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
COGS 883.00 801.00 2,247.00 4,993.00 5,066.00 4,306.10 4,090.80 3,886.26 3,691.94 3,507.35
₹- ₹- ₹- ₹- ₹- ₹- ₹ - ₹ - ₹ ₹
Profit/(Loss) 542.00 362.00 1,255.00 2,992.00 2,486.00 1,468.10 969.00 452.28 85.44 647.77
Projected Revenue
Growth 10%
Projected Decrease in
COGS 15%
Financial Overview
2013/1
INR Millions 2012/13 4 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
Revenue 341.00 439.00 992.00 2,001.00 2,580.00 3,225.00 4,031.25 5,039.06 6,298.83 7,873.54
₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹ ₹
COGS 883.00 801.00 2,247.00 4,993.00 5,066.00 4,306.10 4,090.80 3,886.26 3,691.94 3,507.35
₹ - ₹- ₹- ₹- ₹- ₹- ₹ - ₹ ₹ ₹
Profit/(Loss) 542.00 362.00 1,255.00 2,992.00 2,486.00 1,081.10 59.55 1,152.81 2,606.89 4,366.19
Projected Revenue Growth 25%
Projected Decrease in COGS 15%
Agenda
Situational Analysis
Key Issues
Alternatives
Recommendation
Financial Overview
Implementation Plan
Implementation Plan
Simplify Return to Profitability Growth and Prepare for
and Expand I.P.O.
• Rationalize SKU count • Continue to • Prepare for Initial
• Décor – reduce from rationalize SKU’s Public Offering
70,000 SKU’s to 5,000 • Create targeted
SKU’s marketing
• Utilities – Stop selling campaigns for
• House Brands under-penetrated
areas
• 10 brands to 2 brands
• Seek opportunities
• Pepperfry (13-tier
to sell second brand
brand) – sold online and into adjacent
catalogue markets
• Sold to other suppliers • Evaluate success of
• Implement quality house brand
assurance model strategy
• Process improvement • Formulate
contingency plans
• Explore furniture
rental or expand
geographically
• Create mobile app
Project Timeline
2018 2019 2020 2021 2022
Work with category managers to
rationalize SKU's
Work on new house brands
Launch new house brands
Implement new sourcing strategy
Explore other opportunities for process
improvement
Develop new marketing campaigns
Develop new app
Evaluate SKU rationalization process
Launch mobile app
Launch digital COE for digitization
Launch new marketing campaigns
around major holidays
Prepare for IPO
IPO
Conclusion
Lack of new revenue
Issue channels to increase
profitability
Simplify business
operations by
Recommendation expanding house brand
strategy
THANK YOU
We now welcome any questions.
