It’s the end of the week and Ambareesh Murty is wrapping up a business trip to Bengaluru. Over a Zoom call, the Mumbai-based CEO and co-founder of Pepperfry says he has been travelling since October, for both work and pleasure. He has done two cross-country trips on a motorbike he bought last September—one to Ladakh in the north, and one to Dhanushkodi in the south. He met up with members of his team in cities along the route.
Through most of last year, many of us could not shake off the feeling that we had lost control over our lives. Ambareesh (Murty is his father’s name) did not let that feeling seep in. He made sure he got out of the house once the lockdown was lifted, whether it was to cycle, run or walk. “I didn’t consider myself to be locked down. Mentally, I always thought that things were in my control,” says Ambareesh, 47.
This may be one reason the furniture and home décor omnichannel company was one of the first non-essential businesses to restart its supply and delivery chain, as early as mid-May.
Pepperfry, set up in Mumbai in 2012, delivers to 500 cities and has three warehouses and over 60 experiential studios across 20 cities. According to Crunchbase, which provides information about companies, Pepperfry has raised $245.3 million (around ₹1,770 crore) since its inception. Early last year, it had closed a $40 million funding round led by Fevicol’s parent company, Pidilite Industries. Ambareesh recalls wrapping up a mid-term planning meeting for 2020 towards February-end. Within weeks, the country went into lockdown. “Everything changed. Say, if I had put out six things to do, I had to revisit five of them in just one month. Our strategy, priorities and approach to life had to change,” he recalls.
The first call to action once they went virtual was to ensure internal processes and team communication and collaboration did not suffer. They streamlined processes. From simple things, like thinking through specifics before you got on to a video call so you didn’t take up too much time, to cutting out one tier of product pricing to retain only the MRP (maximum retail price) and final price on all products.
It helped that the company already had an “intense” work culture, with people effectively connected 24x7. So while other firms were dealing with employee exhaustion and burnout, Pepperfry managed to hit the ground running. “That intensity held us in great stead,” says Ambareesh. “Ashish (Shah, a co-founder) uses the term ‘anti fragile’ for us because we have the tenacity to bear the challenges that have come our way, and we have had our fair number of them,” says the Indian Institute of Management (IIM), Calcutta alumni.
They needed to re-examine their offline business, which comprised 35% of their revenue pre-covid, Ambareesh says. They also had to reconfigure their product and technology offerings, ensuring an online experience nearly as good as offline, and start deliveries safely. Companies became customers as they tried to help employees settle into the work-from-home rhythm, and Pepperfry’s merchant base expanded as outlets sought tie-ups to tide over their own crises of fewer walk-ins.
As a marketplace, Pepperfry’s business is driven by small manufacturers who use the platform to showcase their products. They were badly hit as cash flows dried up. “We needed to work with them to ensure if there were short-term cash advances we needed to give out even when orders were not being placed, so that they continue to survive, then we did that. They are the reason Pepperfry exists, and I think we did well,” says Ambareesh. The firm helped a couple of hundred merchants, employing about 10,000 people, he says. Once operations resumed, sales offset this credit.
But like many companies, they too had to downsize and cut salaries. At the start of April, Ambareesh recalls, people who earned the highest salaries—less than 20% of the workforce—saw a 25% salary cut, and the contract staff were given minimum wages. These were rolled back by 1 July, when business picked up. Similarly, about five-eight per cent of the staff was laid off in May. By June, when things started picking up, most of them were rehired. Today Pepperfry has over 1,500 full-time employees and contract staff. Between October and December, 2020, the overall revenue of Pepperfry was up by 65%.
One of the positives of the pandemic for their business, Ambareesh believes, was that people developed a greater appreciation for home and its comforts.
He can see the difference in himself. A few weeks before the lockdown, Ambareesh and his family—wife and nine-year-old son—shifted to a new house. “I had done a whole bunch of things. Now, my wife and I have made a list of things we need to change. One thing we both agree on is replacing the sofa in our TV room. We went for style last time, but this time we are going to go entirely for comfort, a sink-in type sofa,” he says with fervour.
Demand for furniture remained steady, though it changed nuance somewhat. There were more takers for home office set-ups and ergonomic chairs, for instance. Pepperfry gained from an increased willingness to buy ready-made furniture rather than call in the carpenter. “Consciousness towards home will continue,” says Ambareesh. “Health is another key thing people will focus on, which means investing in better beds and mattresses,” he predicts.
In a “new phenomenon”, Pepperfry, predominantly a B2C (business-to-consumer) company, saw companies joining the ranks of customers. That wasn’t the only change, though. There’s a greater interest today in opening franchise studios of Pepperfry in smaller towns and cities like Dimapur, Nagaland, or Udaipur, Rajasthan. In the last six months, 20 such studios have opened in non-metro cities. Offline businesses, notes Ambareesh, are more ready to collaborate with existing digital entities to ensure a digital presence. Between July and December, Pepperfry’s merchant base increased by 40%. “That sense of cooperation and cooperative partnership has been the result of the pandemic.” Currently, they have more than 2,000 merchants as partners.
Amidst all this, Pepperfry is also preparing itself for an IPO (initial public offering) in 12-15 months. “I need to keep everyone in the organisation centred on the IPO goal. Often, as startups, we do stuff which (we) say let’s try it. I think the trying has to reduce and more planning has to happen,” says Ambareesh.
He understands that becoming a publicly listed company will come with its own pressures. To prep for this, he says he wants to start making Pepperfry’s results public from the April-June quarter. “But don’t hold me to it. It will be good to let people have a proof of concept. As for the pressure, if you are saying you want to do an IPO 12-15 months from now, that pressure is going to come at some point in time. You might as well take the pressure earlier,” says Ambareesh.
Third time’s t charm
Ambareesh is not new to challenges. His first brush with entrepreneurship came when he was studying at the Delhi Technological University in the early 1990s. He used to home-tutor classes XI and XII students in physics and maths till he realised there was more money to be made connecting students to good tutors. He started a tutors’ bureau. “I would give classified ads in Hindustan Times every Sunday and then man the phone at home,” says Ambareesh, grinning. He recalls having 20-30 tutors and earning about ₹15,000 a month. He did it for two years, till he starting preparing for the IIM entrance exam.
Ambareesh did the “classic engineering-MBA” because he says he first wanted to ensure he had enough money to survive. After graduating from IIM, Calcutta in 1996, he joined Cadbury as a management trainee, and was sent to Kerala as an area sales manager. “It was a very tense time.... There was lot of unionisation happening at the distribution and retail levels. And as the sales manager, it was a bit of a trial by fire,” he recalls. A year later, he was transferred to look after the Delhi and Rajasthan regions. He went on to spend a few years in the marketing division of Cadbury’s Mumbai office, where he says he had “a few good successes and some dismal failures as well”.
After leaving Cadbury in 2001, Ambareesh worked in unrelated sectors, a reflection of his myriad interests. At ICICI Prudential AMC, he learnt to launch mutual fund products. In 2003, he spent six months with Levi Strauss India in Bengaluru, quitting to start Origin Resource, a financial training venture. “I thought there would be opportunity for trained and certified advisers who understand and can sell customised financial products.” It didn’t satisfy him, however, and he returned to corporate life in 2005, joining Britannia as a marketing manager. Seven months later, he switched to eBay India because “I thought it would be a good experiment into an industry which I knew nothing about”. Within two years, he was country head of India, Philippines and Malaysia. “I knew the e-commerce market was coming in India. But eBay didn’t want to invest in the India business for various reasons. And I didn’t want to sit by the wayside and watch the market move on. So, I decided it was time for me to move on.”
He took a month-long sabbatical, a feature he has introduced in Pepperfry too. This was when the idea of an e-commerce platform for home décor and furniture came to him. He wasn’t sure customers were ready for it, though. “So we thought we will sell all lifestyle products to acquire customers. It was a tactical decision. But in a year, when we realised we had good traction, we pivoted to only furniture and home décor,” he says.
“We have learnt to improve processes and come a long way since then. But will there be a customer who will be angry and vent it on Twitter? Yes. I also feel that people are sometimes unreasonable. What we need to figure out is whether we have good processes and practices, which ensures that if something goes wrong and it’s our fault, we are able to fix it. That’s the one thing we can do well,” he signs off.