Pepperfry partners with Franchise India to expand its offline studios model

Pepperfry, the online furnishing startup, is planning to expand its offline presence by further leveraging Studios model in collaboration with Franchise India. The firm, backed by Goldman Sachs and Norwest Venture Partners, is trying to cut its costs while expanding in offline space. Ashish Shah, COO Pepperfry, said that “Studios are working for us as a model and therefore we want to expand in this direction. Lesser capital requirement and the idea of empowering entrepreneurs is what led us to this model. Every studio can potentially clock sales of INR50-70 lakh month. Basis on our attribution today, some of the flagship stores can clock sales worth INR1 crore per month”.

The Mumbai-based startup has 18 studios as of now, and plans to expand to 46 studios spread over 15 cities by the end of current fiscal through franchise model. It operates on a commission-based revenue model with margins spanning 8-13% per order. Shad further added that “We invest INR70 lakh in capex per studio even as we incur an operating cost of INR6-7 lakhs per studio. The franchise model will help the company cut costs by over INR20 crore for FY18.

The company has decided upon two new service lines to further increase its revenues. First, the company has tied up with interior designers and architects as channel partners for leads and order fulfilment. Second, it is also building a community of real estate builders starting with Pune, where builders will earn a similar commission on every order they direct to the company from a home buyer.