Last one year has been the year of entrepreneurs and start ups which created a battlefield for new age business ruled and run via smartphone and mobile, targeting the urban youth and millennials. Such startups have written ample stories with young professionals visionaries paving their paths to the hard earned success.
Discarding the classic David versus goliath wars, these new age businesses strive hard on the instincts of stability, survival and share in the market. One of the new startups to emerge is Urban Ladder, which is not an exception, allowing people to buy furniture online.
Cofounded in July 2012 by Ashish Goel and Rajiv Srivatsa, Urban Ladder is a accreted marketplace for furniture that is backed with funding more than $75 million from investors like Sequoia Capital, Steadview Capital, SAIF partners, Ratan tata etc. Growing massively over the last couple of years.
Urban ladder has a popular name in the startup space over the last one decade. Much like other startups, the Bengaluru headquartered entity delivers to more than 100 towns and cities across India. Urban Ladder has dabbled with the idea of going app-only but still holds on strong to the website.
It is consistently adding new locations to its delivery map, which is helping the company to expand its business operations and increase revenue. Urban Ladder focuses on stylish and modernistic furniture that comes with the promise of superior quality.
However, geographical diversification demands more customized design, material, and quality as the buyers from different states demand for vivid taste and preferences based on social, cultural, religious, weather and other factors.
For instance, North Indian states preferred solid wood and carved furniture. In contrast, the south Indian states preferred lightweight and modular furniture. Wester Indian states demand for big sized furniture due to bigger houses, whereas eastern Indian states have a knack for classical carves.
Urban Ladder invested heavily in data analytics to understand each geographical preference. They started customized and categorizing products for a specific geography. With over 4,000 products and 35 categories, by the end of 2014, they expanded to 12 cities.By the end of 2015, UL planned to expand its presence to about three dozen cities.
To ensure customers didn’t receive damaged goods, special packaging teams were set up in all their 10 warehouses and each product was packed with at least five layers of foam sheets. By controlling the supply chains, they ensured that they reduced the damages to nearly 0.3%, which were previously as high as 25%.
To tackle and take on the stiff competition they seek strong financial backing, which they managed after roping in SAIF Partners and Kalaari Capital in November 2013 for a massive $5 million investment. This paved way to innovations and they increased their reach to Chennai and Pune as well. Their revenue also increased and topped the $1 million mark.
In July 2014, they raised another whooping USD $21 Million from Steadview Capital (along with existing investors SAIF Partners and Kalaari Capital) as they were reaching the verge to break-even and staved for hefty capital to sustain the humongous growth.
Tata Group chairman, Ratan Tata also invested an undisclosed amount in Urban Ladder in November 2014. This was Tata group’s third investment in e-commerce after Snapdeal and Bluestone.
Urban Ladder had acquired Gurgaon-based furniture and home décor marketplace ‘BuynBrag’ in 2014. The acquisition was aimed at strengthening the home decor business of Urban Ladder. The acquisition was done privately and the details were not disclosed publicly. BuynBrag had also started operations in 2012.
Urban Ladder is continually creating and launching new collections like the Malabar, the Eleanor & Louise, and the Fujiwara range. Urban Ladder launched design consultation as a service in 2016. The furniture exchange offer is provided by Urban Ladder’s partners Zefo and Quikr.
Competitors in the market
While Urban Ladder was planning expansion, it was not the only player in the online furniture market.
By October 2016, Urban Ladder decided to take a risky bet. Going offline. Faced with mounting losses, online furniture company Urban Ladder has decided to foray into offline retail as a separate vertical. The company introduced its first shop-in-shop store in Bengaluru within sofa retailer Balini’s store.
Doing so, they now came in direct competition with all the big offline & online players such as Home Town, Lifestyle Home Centre, Godrej Interio, Fab India, Style Spa, DLF Pure, Evok (Hindware), Pepper Fry, Fab Furnish and Zensaar.
That’s why ‘Experience Centre’ became a much sought after demand which led to Urban Ladders pivot from a pure-play e-commerce platform to an omnichannel furniture brand. To fuel this, Urban Ladder even explored debt funding and raised around $3 million in venture debt funding as it got ready for the capital intensive world of furniture retailing.
Dilemma of Tough Times
Startups get funded for potential and exponential growth. As Urban delivered average growth in financial year 2017-18 it became difficult for them to raise funds from external investors and had to raise funds through existing investors.
By late 2018, Urban Ladder had to let go of around 25% of its employees to manage cost pressure and low bank balance. By Sep 2019, Flipkart was capturing 41% of the online furniture market. The market itself was leap frogging with a CAGR of 80-85% with expectation that it would reach $700 million by 2022
In Apr 2019, its President and COO resigned. By June 2019, it fired 40% of its 1,1100 employee base in an effort to become lean and profitable and closed several verticals. The delay in paying vendors and the long wait also pushed vendors to ask for 100% upfront from the company
Reliance climbed up to the ‘Ladder’
In November 2020, Reliance Retail Ventures, Retail arm of Asia’s richest person Mukesh Ambani, acquired a 96% stake for over Rs 182 crore. The deal was concluded at 42% of the company’s Topline in FY 2019-20. The company has the option of acquiring the remaining stake. It has proposed to make a further investment of up to Rs 75 crore in next few years.
In the pandemic hit year of 2020, Reliance Retail Ventures, the subsidiary of Reliance Industries has completed its fund raising exercise and announced that it has raised Rs 47,265 crore ($6.4 Billion) for a 10.09% stake. The war chest was built by the company after it bagged deals with some the leading tech giants and private equity funds.
Ambani led Reliance group has waged a retail war and thumping taking on players such as Jeff Bezos-led Amazon, Walmart-owned Flipkart, Swedish home furnishing major Ikea, and smaller rival Pepperfry in the battle for India’s $32 billion worth furniture market.