Study of Category and Merchandising Management for E-Commerce ( Pepperfry)

STUDY OF CATEGORY AND MERCHANDISING MANAGEMENT FOR E-COMMERCE (PEPPERFRY)

By Kritika Singh MUM13MM21

Under the Guidance of Ms. Lip Choudhury

Submitted in Partial Fulfilment of the Requirements for the Degree of Master of Fashion Management

Department of Fashion Management Studies National Institute of Fashion Technology Mumbai (2013- 2015)

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EXECUTIVE SUMMARY Pepperfry is India‘s No. 1 Online Furniture, Home and Living Marketplace with over a whopping million customers. It showcases a curated range of furniture from the online portfolio of Pepperfry, and serves as a design inspiration. Pepperfry is based on three business models which are Marketplace, On Demand and Warehouse. Pepperfry enables Merchants from across the country to sell their items on the site after agreeing on commercial terms. It manages the entire process for the merchant. This includes pre-sale merchant listings, enabling photo-shoots, packaging to postsale shipping and providing customer service of the ordered items. This approach helps introduce the benefits to even those merchants who might not be Internet savvy and therefore ensures that a wide variety of products can be made available to on-line customers. Pepperfry trains suppliers to make knock-down, foldable products, similar to IKEA furnishings. The company also provides carpenters to assemble the items once delivered. Its unique and proprietary large-item shipment network ensures quick and damage-free doorstep delivery of bulky furniture. Pepperfry has 11 fulfilment centres in Mumbai, Bhiwandi, Jodhpur, Pune, Delhi, Bengaluru, Kolkata, Vadodara, Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products. In April 2013, Pepperfry launched its mobile site that can be surfed on any web browser or mobile device.

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The website has more than 600 global and national brands with more than 70 national brands in the furniture segment alone. Pepperfry features national brands like Godrej Interio, Nilkamal, Spacewood, @Home, Durian, Hometown, Furniture Kraft, Evok, etc. and global furniture brands like GEBE, Eurosteel Office Furniture, Defianz, HeveaPac, etc. on its website. For Pepperfry the main target market is 28-35 years of age group. People who are newly married professionals would be our target customers because they have better buying power and mass demand. Studying processes involved in Category Management enabled me to understand Vendor sourcing, vendor registration, product assortment and categorising, product listings and uploading, imaging, pricing, stock upload, couponing, and Quality Check. Managing bulk order for brand RAHA helped me understand product procurement, shipments, quality check and assembly, managing returns and customer engagement. Merchandising in Pepperfry deals with display of products in such a way that stimulates interest and entices customers to make a purchase. The process involves thorough check and correction of page layouts, images in different perspectives, proper product categorisation, and product description with detailed dimension image. In conclusion Pepperfry gave me the opportunity to understand various processes that makes the site to function and cater to the target customer effectively.

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INDUSTRY ON AN UPTURN In 2013, Asia-Pacific emerged as the strongest business-to consumer (B2C) ecommerce region in the world with sales of around 567.3 billion USD, a growth of 45% over 2012, ranking ahead of Europe (482.3 billion USD) and North America (452.4billion USD). The top three were followed by Latin America, and the Middle East and North Africa (MENA) region, according to E-commerce Europe. Globally, B2C e-commerce sales increased by24% over 2012. This reflects the huge untapped potential ofe-commerce by retail companies, both in their country of originand across borders. E-commerce or electronic commerce, deals with the buying andselling of goods and services, or the transmitting of funds or data,over an electronic platform, mainly the internet. These businesstransactions are categorised into either business-tobusiness(B2B),

business-to-consumer

consumer-to-business (C2B)

or

the

(B2C),

consumer-to-consumer(C2C),

recently evolvedbusiness-to-business-to-

consumer (B2B2C). E-commerceprocesses are conducted using applications, such as email, fax,online catalogues and shopping carts, electronic data interchange(EDI),

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file transfer protocol and web services and e-newsletters tosubscribers. E-Travel is the most popular form of e-commerce,followed by E-tail which essentially means selling of retail goodson the internet conducted by the B2C category. According

to

E-commerce

Europe, country-wise, the US, UK andChina together account for 57% of the world‘s

total

B2Ce-

commerce sales in 2013, with

China

having

total

sales of 328.4billion USD. As against this, India had sales

of

only

10.7

billionUSD, 3.3% of that of China in 2013 with fifth position in Asia Pacific.This is despite the fact that India enjoys high demographicdividends just like China. India‘s internet penetration with totale-households at 46 million against China‘s 207 million is one ofthe reasons behind India‘s poor B2C sales growth. According to Forrester Research, an independent technology and market research firm, only 16% of India‘s total population was online in 2013 and of the online users only 14% or 28 million were online buyers. India, therefore, was still in a nascent or immature stage of evolution of online retail spending. China was in ascending stage at 50%, whereas Japan (69%), Australia (57%) and South Korea (70%) were in mature stage. India‘s growth potential since the e-commerce industry is fast rising, changes can be seen over a year. The sector in India has grown by 34% (CAGR) since 2009 to touch 16.4 billion USD in 20142. The sector is

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expected to be in the range of 22 billion USD in 2015. An analysis of the demographic profile of internet users further testifies that ecommerce will rise rapidly in India in coming years. Around 75% of Indian internet users are in the age group of 15 to 34 years. This category shops more than the remaining population. Peer pressure, rising aspirations with career growth, fashion and trends encourage this segment to shop more than any other category and India, therefore, clearly enjoys a demographic dividend that favours the growth of ecommerce. In coming years, as internet presence increases in rural areas, rural India will yield more e-commerce business. By

2020,

e-Tail

in

India

is

expected to account for 3% of total retail. Further, orders per million are expected to more than double from five million in 2013 to 12 million by 2016, which will mean more opportunities for both consumers and e-Tail companies. While

the

shopping

share in

total

of retail

online has

increased at a fast pace in the last few years, it is still miniscule compared to the figure in China, where the share is 8-10%.

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KEY DEVELOPMENTS IN 2014 The last year has seen several developments that have given a fillip to the ecommerce industry. Mobile to be the most influential aspect of e-commerce

With mobile apps being developed by most e-commerce websites, smartphones are increasingly replacing PCs for online shopping. In 2013, only 10% of the mobile users used smartphones, and only 5% of the e-commerce transactions were made through a mobile device. This figure has more than doubled, and more than 13% of all e-commerce transactions today happen via mobile3. According to some industry players, over 50% of the orders are being placed through mobile apps, which is not only leading to substantial customer acquisition but also building customer loyalty for various brands. However, most mobile transactions so far are for entertainment, such as booking movie tickets and music downloads. This trend will change soon with more and more merchandise being ordered online. More business coming from smaller towns

E-commerce is increasingly attracting customers from Tier 2 and 3 cities, where people have limited access to brands but have high aspirations. According to ecommerce companies, these cities have seen a 30% to 50% rise in transactions. Enhanced shopping experience

Besides general online shopping, customers are also shopping online for weddings and festivals, thanks to wider range of products being offered and aggressive advertisements. The free and quick shipment and wider choice of products, along with the ease of shopping online as compared to in-store shopping, is also helping ecommerce gather momentum.Further, e-commerce companies are doing rapid business due to sales. New concepts such sales on weekends, holidays and festivals are attracting a lot of new customers and building customer loyalty among existing customers. Television and social media, particularly Facebook, are playing a proactive role in promoting e-Tailing through aggressive advertisements. This has helped several e-commerce companies build substantial brand image.

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Exclusive partnerships with leading brands

Over the year or so, there has been a trend of exclusive tie-ups between e-Tailers and established boutiques, designers, and high-end lifestyle and fashion brands. For instance, in 2014, Jabong added international fashion brands such as Dorothy Perkins, River Island, Blue saint and Miss Selfridge, along with local fashion brands through Jabong Boutiques. Similarly, Myntra benefited from exclusive tie-ups with brands such as Harvard Lifestyle, Desigual and WROGN from ViratKohli. Expanding the product basket

There is a recent trend of relatively newer products such as grocery, hygiene, and healthcare products being purchased online. Similarly, lingerie and Indian jewellery has also been in great demand among customers outside India. Export comprises 95% of cross-border e-commerce, with the US, UK, Australia, Canada and Germany being the major markets.

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OBJECTIVES 1.

Carrying out processes involved in Category Management for Pepperfry

2.

Analysing processes involved in Bulk Order Management

3.

Analysing and streamlining merchandising process at Pepperfry

4.

Study of Customer Engagement in E-Commerce (Pepperfry)

5.

Understanding Vendor Registration process for Pepperfry

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1. BRAND HISTORY Pepperfry is India‘s No. 1 Online Furniture, Home and Living Marketplace with over a whopping million customers! Pepperfry.com opened for business on 3rd January 2012 to give customers a wide selection of amazingly priced Furniture and Home merchandize with a consistently great shopping experience. Its managed marketplace model is an ideal platform for small and medium businesses who wish to sell their merchandize to millions of discerning customers. We currently work with over a thousand merchant partners to showcase their design skills, craftsmanship and service orientation to customers across India and the world. Today we are India‘s No. 1 online Furniture, Home Decor and Living destination, offering more than 45000 products across categories like Furniture, Home Décor, Lamps & Lighting, Bath & Body, Kitchen, Home Appliances, Housekeeping and Pet Supplies. Pepperfry won the Red Herring Top 100 Asia Award in 2012. Our mantra is to be the one stop shop for customers seeking to spice up their home; our customers love their home.

Why Pepperfry Pepper is honest and a spice that is proudly Indian. The organisation embraces Indian talent, craftsmanship and business acumen. This reflects in our merchandize selection and our habit of going the extra mile for our customers. Fry stands for fun. The organisation wants the Pepperfry journey to be enjoyable for all our employees, our community, our merchants and our business partners.

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Facts about Pepperfry

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Investors Norwest Venture Partners (NVP) is a global, multi-stage venture and growth equity investment firm that has partnered with entrepreneurs to build great businesses for more than 50 years. The firm manages approximately $5 billion in capital and has funded more than 550 companies since inception. Headquartered in Palo Alto, Calif., NVP has subsidiaries in Mumbai and Bengaluru, India, and Herzelia, Israel. NVP makes early to late-stage venture and growth equity investments across a wide range of sectors including: technology, information services, business services, financial services, consumer products/services and healthcare. For more information visit: www.nvp.com. Follow NVP on Twitter @NorwestVP

Bertelsmann is an international media company whose core divisions encompass television (RTL Group), book publishing (Penguin Random House), magazine publishing (Gruner + Jahr), services (Arvato), and printing (Be Printers) in some 50 countries. In 2013, the company‘s businesses, with their more than 110,000 employees, generated revenues of €16.4 billion. Bertelsmann stands for a combination of creativity and entrepreneurship that empowers the creation of first-rate media, communications, and service offerings to inspire people around the world and to provide innovative solutions for customers.

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STUDIO PEPPERFRY

Studio Pepperfry is a one-of-its-kind concept store from Pepperfry.com, India's

leading online Furniture and Home marketplace. It showcases a curated range of furniture from the online portfolio of Pepperfry, and serves as a design inspiration. At the Studio, one can experience the cutting edge designs, various types of furniture pieces with differing wood finishes, and get an idea of the overall quality of the furniture from Pepperfry. Here, iPad-wielding interior design consultants assist in browsing through the entire range of 11,000 Pepperfry furniture items online -making it an interactive session -- and provide a design expertise for the same. These designers additionally offer free in-store design consultancy on furniture products ensemble, to design homes that are aspirational and reflect the latest and the best in home décor and design.

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A unique concept from Pepperfry, Studio Pepperfry demystifies the furniture buying process and makes it a delightful experience.

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BUSINESS MODEL

Pepperfry operates on a ―Managed Marketplace‖ model, which is an ideal platform for small and medium business artisans and merchants, who wish to sell their merchandize to millions of discerning customers. Currently, the website has over a 1000 merchant partners, who can showcase their design skills, craftsmanship and service orientation to customers across India and the world. For many merchants, it has become the primary source of their income. It is one of the few company in the Home and furniture vertical in India to ship products overseas. Customers from 12 countries (USA, Russia, Greece, and France etc.) have bought stuff for their homes on Pepperfry. Pepperfry enables Merchants from across the country to sell their items on the site after agreeing on commercial terms. Pepperfry manages the entire process for the merchant. This includes pre-sale merchant listings, enabling photo-shoots, packaging to post-sale shipping and providing customer service of the ordered items. This approach helps introduce the benefits to even those merchants who might not be Internet savvy and therefore ensures that a wide variety of products can be made available to on-line customers. Pepperfry trains suppliers to make knock-down,

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foldable products, similar to IKEA furnishings. The company also provides carpenters to assemble the items once delivered. Pepperfry recently rolled out a 30 Days No-Questions-Asked 100% Money Back Guarantee for customers across categories. Types of Business Model followed by Pepperfry: 1. Marketplace Model

An online marketplace (or online marketplace) is a type of site where product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. Online marketplaces are the primary type of multichannel e-commerce. In an online marketplace, consumer transactions are processed by Pepperfry and then delivered and fulfilled by the participating retailers or wholesalers (often called drop shipping). Other capabilities might include auctioning (forward or reverse), catalogues, ordering, wanted advertisement, trading exchange functionality and capabilities like RFQ, RFI or RFP. In general, because marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores. 2. On Demand Model

In this type of business model, products are listed on the website. As soon as order is placed, vendor gets intimation and after which products are manufactured and directly delivered to customers. 3. Warehouse Model

Products are either bought by Pepperfry or are with Sell or Return policy. Purchased items are then stored in warehouses. Pepperfry owns warehouses in Bhiwandi, Jodhpur, Bangalore, Gurgaon and Kolkata. Products are purchased according to the past sales data and current market demand.

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GEOGRAPHICAL PRESENCE

Pepperfry has successfully established the Last Mile Delivery in 127 towns directly and plans to extend the geographical reach across the country by reaching 400 towns directly through its own last mile delivery infrastructure by the end of next year. Till date, the company has shipped furniture to 2,700 towns across the country, and today it sells a piece of furniture every minute.

5.

SUPPLY CHAIN AND LOGISTICS

Pepperfry‘s unique and proprietary large-item shipment network ensures quick and damage-free doorstep delivery of bulky furniture. Pepperfry has 11 fulfilment centres in Mumbai, Bhiwandi, Jodhpur, Pune, Delhi, Bengaluru, Kolkata, Vadodara, Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products.

6.

MOBILE SITE

In April 2013, Pepperfry launched its mobile site that can be surfed on any web browser or mobile device. The experience gives its customers the convenience of shopping through mobile with facilities like customizable cart before checkout, creation of wish-lists – all of which can be shared with friends & families through Twitter, Facebook & Pinterest.

7.

MARKETING AND INITIATIVES

Pepperfry tied-up with Satchi&Satchi to release its first television commercial with ―Happy Furniture to You‖ as its unique brand proposition. The Mumbai-based agency conceptualized a themed film and two supporting films that highlight Pepperfry‘s value propositions of ―Free Delivery and Assembly‖ and ―100% Satisfaction or Money Back Assurance‖ for consumers. A successful 360 degree campaign, the marketing mix featured a sustained radio campaign, on-ground activation and key outdoor promotions across top cities. The campaign also came alive on digital and social platforms like Google, YouTube and Facebook.

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PRODUCTS AND BRANDS

The website has more than 600 global and national brands with more than 70 national brands in the furniture segment alone. Pepperfry features national brands like Godrej Interio, Nilkamal, Spacewood, @Home, Durian, Hometown, Furniture Kraft, Evok, etc. and global furniture brands like GEBE, Eurosteel Office Furniture, Defianz, HeveaPac, etc. on its website. In other home categories, Pepperfry has leading national brands like Philips, Portico, Raymond, Prestige, Tupperware, and global brands including Whirlpool, Joseph Joseph, Kitchen Craft, Philips, Corelle, Morphy Richards etc.

9.

AWARDS

Pepperfry was the recipient of the '2012 Red Herring Asia Top 100' award which honours the most promising private technology ventures from Asia. They also won the 'Pure-Play e-Retailer of the Year' at the Indian e-Retail Congress 2014 that recognises outstanding performance and innovation in retail.

10. LOCATIONS The company is based in Mumbai and now has warehouse operations in Mumbai, Delhi, Bengaluru, Jodhpur, Pune, Gurgaon and Kolkata.

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11. COMPETITION There are many players who have already made their entry into this niche segment and are doing unexpectedly well. Some such players are: 1. Urbanladder: Launched in 2012 and a venture of Bangalore-based Descasa Decor

Online Pvt Ltd, Urbanladder is currently delivering to Bangalore, Mumbai and Delhi / NCR region (Gurgaon, Noida). The online store has made a strong foothold in the segment and have recently raised $1 million in series A funding and is looking to close a Series B round in coming months. 2. Fabfurnish: A rocket internet backed venture and the most visited online home

store in India, fabfurnishwas launched in January 2012. It is currently known for its designer furniture, furnishings, décor items and kitchenware. 3. Zansaar: A Bangalore based start-up and a brand owned by Singapore-based

Salar Online Pvt Ltd has forayed into online home decor space in 2012. Backed by Accel Partners and Tiger Global, it has recentlyraised $6 million funding from them with an aim to bring in exclusive range in categories such as Home decor, Kitchen Tools, World Foods, and Cushion Covers. 4. Roomstory: An online multi-brand home store, Roomstory is offering products

across three classifications, Bed & Bath, Décor & Furnishings and Kitchen & Dining. It was launched in 2011 with an aim to become a one stop destination for all home decor products. The company is currently looking for funding of around $1 million. 5. The Home Label: An online marketplace by Sussanne Roshan, Home Label is

backed by The Label Corp., the first retail brand in the online marketplace to introduce a unique tastemaker styled model. Under this business model, the celebrity Creative Directors bring along an assortment of exclusive and trendy products. 6. Bedbathmore: An online portal, bedbathmore deals in home decor, bed, bath and

other furnishings. It also has its own warehousing facility in Mumbai. It is a part of Creative group, one of the India‘s largest exporters of home furnishing and apparels to US and Europe. Bedbathmore also raised an undisclosed amount recently in

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Series a funding from Blume ventures with plans to establish private labels and expanding the technology team. 7. Mebelkart: A Bangalore based start-up, Mebelkart provides a range of products

including Bean bags, Seating, Home furniture, Kids furniture and Décor. It claims to be ‗the biggest dealer in Beanbags and Office chairs‘. Also, it has tie-ups with some of the major furniture companies like Durian,Zuari, MoBEL, Rhome and Wood Dekor. The other major online retailers with Home decor categories include Jabong, Yebhi, Homeshop18 and Snapdeal.Although, the online retail is grabbing the attention, there are players in the offline segment too like Godrej interio, D‘Decor, Zuari, Durian, @home, etc. which are there from years and are still among the best choices for the consumers.

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12. PRODUCT OFFERINGS AND BRANDS The website has more than 600 global and national brands with more than 70 national brands in the furniture segment alone. Pepperfry features national brands like Godrej Interio, Nilkamal, Spacewood, @Home, Durian, Hometown, Furniture Kraft, Evok, etc. and global furniture brands like GEBE, Eurosteel Office Furniture, Defianz, HeveaPac, etc. on its website. In other home categories, Pepperfry has leading national brands like Philips, Portico, Raymond, Prestige, Tupperware, and global brands including Whirlpool, Joseph Joseph, Kitchen Craft, Philips, Corelle, Morphy Richards etc.

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13. SEGMENTATION Market segmentation is a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses, or countries who have, or are perceived to have, common needs, interests, and priorities, and then designing and implementing strategies to target them.

18-28 1. Young people 2. Enthusiastic 3. Trendy 4. Fashionable 5. Sense of aesthetics 6. Good understanding of E-SHOPPING 7. Buying power is low

28-35 1. Newly married working people 2. Independent 3. experimental 4. Buying power is good 5. Willing to spend on products like home décor 6. Mostly lives in a nuclear family 7. High demand of portable products

35-45 1. Working professionals 2. High demand of home décor related products 3. Very particular about the design and aesthetics of the product 4. Buying power is very high as compare to other segments

45 and above 1. Industry professionals 2. Buying power is good 3. Experienced 4. Particular with designs

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5. Not experimental 6. Demand is very limited

14. TARGETING AND POSITIONING A target market is a group of customers towards which a business has decided to aim its marketing efforts and ultimately its merchandise. A well-defined target market is the first element to a marketing strategy. For Pepperfry the main target market is 28-35 years of age group. People who are newly married professionals would be our target customers because they have better buying power and mass demand. The brand is dedicated into making peoples life interesting by their wide range of designs and colors, using so many vibrant colors to energize the design is what make us different from others, brand offers good range of home décor products at high competitive price point

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PROJECTS UNDERTAKEN 1.

Study of processes involved in Category Management for Pepperfry

Category management is a retailing and purchasing concept in which the range of products purchased by a business organization or sold by a retailer is broken down into discrete groups of similar or related products; these groups are known as product categories (examples of grocery categories might be: tinned fish, washing detergent, toothpastes). It is a systematic, disciplined approach to managing a product category as a strategic business unit. The phrase "category management" was coined by Brian F. Harris. The industry standard model for category management in retail is the 8-step process, or 8-step cycle developed by the Partnering Group. The eight steps are shown in the diagram on the right; they are : 1. Define the category (i.e. what products are included/excluded) 2. Define the role of the category within the retailer 3. Assess the current performance 4. Set objectives and targets for the category 5. Devise an overall Strategy 6. Devise specific tactics 7. Implementation 8. The eighth step is one of review which takes us back to step 1 The 8-step process, whilst being very comprehensive and thorough has been criticized for being rather too unwieldy and time-consuming in today's fast-moving sales environment; in one survey only 9% of supplier companies stated they used the full 8-step process. The current industry trend is for supplier companies to use the standard process as a basis to develop their own more streamlined processes, tailored to their own particular products.

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Market research Company Nielsen has a similar process based on only 5 steps: reviewing the category, targeting consumers, planning merchandising, implementing strategy, evaluating results. Following are the processes involved in Category Management:

Vendor Sourcing and Management Vendor management is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle. Pepperfry Sourcing team approaches brands like Me n Moms, Pebbleyard, Godrej, etc. Interested vendors/ Brands themselves can directly approach the organisation online through the website (pepperfry.com). Business Models are explained to the vendor and margins are set. Usually agreed upon margin is 45%.

Vendor Registration Pepperfry operates on a ―Managed Marketplace‖ model, which is an ideal platform for small and medium business artisans and merchants, who wish to sell their merchandize to millions of discerning customers. Currently, the website has over a 1000 merchant partners, who can showcase their design skills, craftsmanship and service orientation to customers across India and the world. For many merchants, it has become the primary source of their income. It is one of the few company in the Home and furniture vertical in India to ship products overseas. Customers from 12 countries (USA, Russia, Greece, and France etc.) have bought stuff for their homes on Pepperfry. Pepperfry enables Merchants from across the country to sell their items on the site after agreeing on commercial terms. Pepperfry manages the entire process for the merchant. This includes pre-sale merchant listings, enabling photo-shoots, packaging to post-sale shipping and providing customer service of the ordered items. This approach helps introduce the benefits of two even those merchants who might not be Internet savvy and therefore ensures that a wide variety of products can be made available to on-line customers. Pepperfry trains suppliers to make knockdown, foldable products, similar to IKEA furnishings. The company also provides carpenters to assemble the items once delivered.

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Pepperfry recently rolled out a 30 Days No-Questions-Asked 100% Money Back Guarantee for customers across categories.

Assortment Planning Many businesses suffer from ―over assortment‖. In ―bricks and mortar‖ the assortment is naturally limited by space and by inventory investment. In the ole Catalogue business the assortment is limited by paper, printing, and postage cost – another form of space. And, inventory investment. These traditional limits on assortments don‘t exist in the same way online. In fact, it‘s fairly easy to put an image online and begin to sell the product. Assortment planning from a customer selection standpoint is more crucial for the ―specialty‖ retailer. But, basic merchandising, where the retailer focuses or limits their assortment on behalf of the customer (and the brand) often isn‘t a priority. The poor shopper has to scroll down pages and pages of styles if they choose to spend the time. Inventory investment and cash flow, is another reason to limit the assortment – too much. And, customer satisfaction can be lost by carrying too many styles if one can‘t keep the sizes/colours in stock for the customer – too little. ―Sku rationalization‖ or ―culling‖ is the ―science‖ of assortment reduction. The ―art‖ of developing your assortment is crucial also. Brand positioning among other things must be considered. This is not ―as‖ true for ―commodity‖ websites. But, ―commodity‖ websites still have some shoppers entering via the home page versus the product pages. (There is a Google Analytics report which shows this flow and ―drop offs‖ very well.) And, most companies still need to manage inventory investment and cash flow along with stock outs and the customer experience. Six factors are taken into account in planning the size and content of assortment: 1. Brand strategy 2. Business model 3. Current market trends 4. Sales and margin history

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5. Channel(s) of distribution requirements 6. Organization‘s financial plans (sales, margin, and inventory) It is crucial to see what has sold well both last season and the same season last year for your organization. In addition to sales, final margin must also be considered including all discounting! As always, if something sold well but the margins were very low it‘s not worth repeating in the same way. Taking a look at the categories and styles that have sold well in the past is often the starting point for assortment planning but I have certainly seen too much weight given to this activity. Even in a traditional business model newness is important! When looking at this history it is good to begin selecting items that can be ―carryover‖ items prior to developing or buying ―new styles‖.

Categorising and Listing Products are segregated according to categories as follows: Furniture, Home Décor, Furnishings, Lamps & Lighting, Kitchen & Dining, Appliances, Bath, Housekeeping and Pet Supplies.

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Further Furniture is divided into Sofas, Seating, Beds, Bedrooms, Dining, Cases & Cabinets, Tables, Bar Furniture, Kids Furniture and Collections. Listing is made in includes product name,images with different perspectives, Retail price, Our Price, You Pay price, Coupon percentage, available product quantity, Serviceable pin code, item description and Set option.

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Imaging However impressive the rest of your e-commerce business is, if you‘ve not paid any attention to the visual aspect of your site then your sales are guaranteed to suffer. Just as a high street shop with badly thought out displays and no visual promotions is likely to lose custom, so an online retail site with clumsy or unattractive page displays will deter users. Following are ways of effective measures taken for proper imaging for the website. 1. Manage different brands

Pepperfry sell products for a number of different brands. We know that organising the display of multiple brands can be a headache – which is why we‘ve developed our brand adjacency technology to give retailers a helping hand. This clever functionality can help you keep products from one brand together, whilst separating brands that you think are best kept apart. This allows customers to find what they are looking for quickly and easily, and prevents your site from looking disorganised and unappealing.

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2. Sequence products effectively

Carefully sequenced products can benefit both the user and the retailer. Our balance factor technology allows you to organise your site‘s product display in line with specially selected site metrics. Grouping products together with other similar items will keep your customers satisfied, and has the added bonus that you, the retailer, can target consumers more efficiently. 3. Customise your homepage

The homepage is often the customer‘s first point of call, and as such can be key to whether or not a sale is made. 4. Implement promotional banners

High street shops use promotional banners to entice customers and get them excited by a particular brand or offer. E-commerce sites can also use promotional banners to their advantage. Therefore Pepperfry implement banners that are triggered by user behaviour, focussing, for example, on product category. This ensures that customers are exposed to relevant deals for them, increasing chances of conversion.

Pricing Vendors provide with their manufacturing cost for the product to the category Associate in pepperfry. To that VAT of 12.5% is added after which agreed upon profit

margin is added which is usually 45%. Maintaining higher spread, Coupons are applied to the ―You Pay‖ amount.

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Product upload Listings are made for all products and uploaded in bulk through Bridge. Bridge is software used for online assistance to Pepperfry. Once SKUs for all the products are generated, images are uploaded for every indivisual SKU. Images should be from different perspectives and with dimensions mentioned.

Stock Update and Couponing Post product upload and SKU generation. Stocks are added which are provided by the vendor to Pepperfry team. Stock upload is very important without which items won‘t go live on website. Inventory management is the process of ordering, storing and utilization of the raw materials needed during manufacturing and the process of monitoring and controlling the final product that is ready for sale. This inventory is one of the company‘s major assets and represents an investment that will not reap returns until the goods are finally sold. For this reason, inventory management is a serious concern for any

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business, whether it is small scale or large or whether it is an online store or a bricksand-mortar setup. Since there is a significant investment in the inventory itself as well as in storage, tracking and insurance of it, mismanaged inventories can cause substantial financial concerns and problems for the business. The ideal inventory management system should create a plan that ensures that there is neither an inventory surplus not a shortage. Companies can use several methods for inventory management such as just-in-time where the items are received as needed for production or materials requirement planning, which bases inventory orders directly on forecasts of sales in a particular period.

Quality Assurance Merchandising in retail is like candy on Halloween; it‘s hard to think of one without the other. In the current state of retail, and especially online retail, merchandising is the cherry on top that converts shoppers into buyers. With the seemingly endless numbers of competitors out there, an up-to-date merchandising strategy is a must to convert and gain new customers. The vast majority (97%) of website visits don‘t end in a purchase, which can be a major drag

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for online retailers. There‘s a huge opportunity, though, as August 2014 saw an 11% increase in sales, compared to August 2013. It‘s just a matter of attracting the right consumers and getting them to complete their purchases. This is where merchandising comes in to save the day. Merchandising can come in many different forms, from inventory to pricing, and beyond—but the end goal is always the same: to drive conversions. It can be tricky to keep up with all the different ways online retailers can optimize their stores through the magic of merchandising, so here is a list of the top five tips to help retailers of all sizes. 1. Get mobile optimized

Almost half (40%) of consumers don‘t feel comfortable shopping online and it doubles to 80% when we‘re talking about shopping on mobile. This may look dismal, but it means that your web store not only needs to be mobile friendly, but also wow shoppers on whichever screen they prefer. 2. The clearer, the better

Shoppers don‘t want to be confused. Do you know what happens when they‘re confused? Yep, you guessed it, they vanish. Luckily, there are many things you can do to cut down on those pesky abandoned carts. Here are a few: Add interactive tools that aid customer purchase decisions. This can help retailers see up to a 40% boost in conversions. This is especially important for ecommerce because you can‘t be there like a salesperson can in a brick and mortar store. Add a live chat feature to support shoppers and get them closer to checkout. Improve your search function. Did you know that 11%-15% of consumers start shopping by searching for a specific product in search bars? This number is on the rise, so it‘s prime time to take advantage of this. Shoe retailer, FootSmart, made a small change by adjusting search results to include top items sold and saw an impressive 82% increase in conversions. Provide shipping policies and estimations as early as possible in the checkout process. Offering free shipping is a great way to increase average order value because 93% of shoppers take actions to qualify for free shipping.

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3. Keep it short and sweet

The fewer steps to purchase, the better. When retailers ask for too much information or otherwise complicate the process, shoppers drop out of the sales funnel. To help this, you should decrease the number of steps it takes to complete a purchase and provide a status bar up top to show that it won‘t take them long to checkout. You also want to provide clear, descriptive, and to-the-point product descriptions to resolve any confusion. 4. Be data driven

Analytics can help retailers make better merchandising decisions. More than half of retail leaders (63%) already do it—so if you want to keep up and get ahead, you should, too. Data is your friend because it can teach you what works and what doesn‘t. Walmart is a great example of a retailer that used data to its advantage. After crunching the numbers, Walmart learned that diapers and beer sales were highly correlated. So you know what stores did? They put these two aisles side by side and saw a sales increase for beer. Cheers to that! 5. Keep your enemies closer

You already know that competition is fierce in online retail, but what can you do about it? The first step is to know exactly what‘s going on in your competitive landscape at all times. How are your competitors pricing? What do they have in stock? When do they run out of products that you carry? Tracking competitors and their inventories can clear this up once and for all. Then retailers can fill in the gaps in their inventory and effectively become a more successful competitor. The more you know, the better your sales can be.

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2.

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Understanding processes involved in Bulk Order Management

Bulk orders are brought in. Once the order is placed by the customer, Business Development Team is responsible for handling the orders. Following are the steps followed by the team.

Procurement of Products Procurement is the acquisition of goods and services from an external source. It is favourable that the goods and services are appropriate and that they are procured at the best possible cost to meet the needs of the acquirer in terms of quality and quantity, time, and location. Corporations and public bodies often define processes intended to promote fair and open competition for their business while minimizing exposure to fraud and collusion.

Shipments It is made sure that all the products in an order are shipped in proper packaging from vendor‘s or Pepperfry warehouse to the customer. Committed delivery time is to be maintained for smooth running of the organisation.

Quality Check Products are checked before getting it delivered to the customer, if it is getting delivered from Pepperfry warehouse to customer. And in case, products are shipped directly from Vendor‘s warehouse to the customer, in that case minimum of one member from Business Development Team should be present at the time of delivery.

Product Assembly Product assembly is provided by Pepperfry once they are delivered to the customer. Therefore arranging for product assembly is crucial in case of Furniture.

Managing Returns Furniture bought on Pepperfry.com is shipped for free. Products also comes with 30 Day Money Back Guarantee in case customer is not satisfied with their purchase.

Customer Engagement Customer engagement (CE) is the engagement of customers with pepperfry about the shipment, delivery, assembly, and returns.

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To streamline merchandising process at Pepperfry

Merchandising refers to the variety of products available for sale and the display of those products in such a way that it stimulates interest and entices customers to make a purchase.‖ It‘s the second part of that definition: ―display of products in such a way that stimulates interest and entices customers to make a purchase‖ that is at the heart of online merchandising. Online merchants typically don‘t select or manage the inventory, but they optimize the performance of the inventory in the online store environment based on customer behaviour.

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Merchandising Attribute All the product should have the spec sheet along with it. All the products should have the dimension image. The first image should be the isometric/front image. The product description should be there. The dimensions should be given in detailed form (Mattress size, Seating height). There should not be any duplicates. There are five major categories in furniture category: 1. Contemporary 2. Colonial 3. Modern 4. Indian ethnic 5. Eclectic

4.

Study of Customer Engagement in E-Commerce

Customer engagement (CE) is the engagement of customers with one another, with a company or a brand. Customer engagement has been discussed widely, numerous high-profile conferences, seminars and roundtables have either had CE as a primary theme or included papers on the topic. Customer engagement marketing places conversions into a longer term, more strategic context, and is premised on the understanding that a simple focus on maximising conversions can, in some circumstances, decrease the likelihood of repeat conversions CE aims at long-term engagement, encouraging customer loyalty and advocacy through word-of-mouth. In store, or offline customer engagement is best leveraged by associates‘ extensive brand and product knowledge, and the digital access that supports it. Equipped with

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a tablet that also delivers store and sales training, educated on-floor associates become brand ambassadors who can show consumers high-definition product imagery and video to help cross-sell, up-sell, grow relationships and foster loyalty. Online customer engagement is qualitatively different from offline engagement as the nature of the customer‘s interactions with a brand, company and other customers differ on the internet. Discussion forums or blogs, for example, are spaces where people can communicate and socialise in ways that cannot be replicated by any offline interactive medium. Customer Engagement marketing efforts that aim to create, stimulate or influence customer behaviour differ from the offline, one-way, marketing communications that marketers are familiar with. Although customer advocacy, for example, has always been a goal for marketers, the rise of online user generated content can take advocacy to another level. The concept and practice of online customer engagement enables organisations to respond to the fundamental changes in customer behaviour that the internet has brought about, as well as to the increasing ineffectiveness of the traditional 'interrupt and repeat', broadcast model of advertising. Due to the fragmentation and specialisation of media and audiences, as well as the proliferation of community- and user generated content, businesses are increasingly losing the power to dictate the communications agenda. Simultaneously, lower switching costs, the geographical widening of the market and the vast choice of content, services and products available online have weakened customer loyalty. Enhancing customers' firm- and market- related expertise has been shown to engage customers, strengthen their loyalty, and emotionally tie them more closely to a firm. Leveraging customer contributions is an important source of competitive advantage – whether through advertising, user generated product reviews, customer service FAQs, forums where consumers can socialise with one another or contribute to product development. Amazon re-branded into 'serving the world's largest engaged online community', the World Federation of Advertisers (WFA) has created a 'Blueprint for ConsumerCentric Holistic Measurement' and the Association of National Advertisers (ANA), American Association of Advertising Agencies (AAAA) and the Advertising Research

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Foundation (ARF), have put together the 'Engagement Steering Committee' to work on the customer engagement metric. Nielsen Media Research, IAG Research and Simmons Research are also all in the process of developing a CE definition and metric. Online customer engagement refers to:A social phenomenon enabled by the wide adoption of the internet in the late 1990s and taking off with the technical developments in connection speed (broadband) in the decade that followed. Online CE is qualitatively different from the engagement of consumer offline. The behaviour of customers that engage in online communities revolving, directly or indirectly, around product categories (cycling, sailing) and other consumption topics. It details the process that leads to a customer‘s positive engagement with the company or offering, as well as the behaviours associated with different degrees of customer engagement. Marketing practices that aim to create, stimulate or influence CE behaviour. Although CE-marketing efforts must be consistent both online and offline, the internet is the basis of CE-marketing. Metrics that measure the effectiveness of the marketing practices which seek to create, stimulate or influence CE behaviour. Here are just 10 features that help to keep customers engaged on ecommerce websites. If you've seen any innovative new features from ecommerce companies, please let us know below.

1. Clustering Adding a dose of reality to shopping online is often desirable. What I'm talking about is adding some serendipity and the experience that comes from being in a shop. Clustering of products that wouldn't necessarily sit together in navigation or in stores is a way of adding a human touch to merchandising. And of course it's about crossselling, encouraging people to see outfits rather than pieces (when used in apparel). M&S is probably the most high profile proponent of this approach, as its new website focuses more on fashion than utility.

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2. 'Content' Content and commerce often collide, in fact there's an E-consultancy report on where the two meet (Where Content and Commerce Collide). In this instance I'm talking about additional content, as opposed to product descriptions, video etc. The best term might be lifestyle content, or perhaps just content marketing. There are many examples to hand - from big grocers using recipes on site in order to sell the requisite ingredients, to apparel merchants hosting look books from designers. Schuh goes from product video into product demo, where a merchandiser talks to the consumer about the shoe and how to wear it. The Watch Gallery has a magazine section on its site where it ties together reviews, videos, editorial and more. This is an important section of the site for a retailer that doesn't have a presence on the high street. And, slightly better known, TopShop does a similar online mag titled 'Hitlist' that sits under the 'Inspire me' call-to-action in the header. I've included a shot below.

3. Copy Sell the benefits, not the features of products. Use category page copy for SEO benefit. Inject some fun into proceedings where appropriate, but write for your audience (who are people, remember). Most importantly, as Peter Meinertzhagen points out, provide detailed and unique copy. The example below from Bench is one of how not to write product copy.

4. The value proposition If you're Tesco in the UK (only Tesco is), perhaps a value proposition on your website isn't that important. But for most other ecommerce merchants, and indeed for any company with a website, a value proposition is vital. Design will give people an impression of your site and your products (after all, users are reluctant to read unless they have to) but you should still make sure the website states what you stand for.

5. Product video Some retailers have found video gives a boost to conversion - certainly the presence of video would hint at a richer, more persuasive product page.

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David Moth has previously rounded up retailers who are creative with product video. ASOS gained the most praise for its array of quirky models, I even went to the trouble of screen casting the dancer below. As Darin Archer advocates, one can also go further with product video, exploring post-purchase or targeting a particular segment of your audience.

6. Customer reviews (with a face) Customer reviews are incredibly powerful, which is why they are used in many different marketing channels. On an ecommerce website they can take myriad forms - as a product filter (X number of stars), on the store-finder page (to show the kind of service to expect on arrival), against product listings and on product pages etc. They can be more powerful when combined with the face of the reviewer. The majority of shoppers are shown to consult these reviews before purchase, and these reviews don't just encourage purchase (their primary purpose) they also have SEO benefits, too - fresh content and non-duplication.

7. New categories and filters While you don't want to disorient your audience by continually fiddling with filters and navigation, there's a lot that can be done to enliven the browsing experience. Even simply, looking at Matalan's homepage, categories for 'Holiday Shop' and 'Sale' immediately jump out. Managing these spaces for different holidays and adding filters that allow people to browse by reviews, colours, who they are shopping for etc. - these can all be good tactics.

8. Site search Look at the example from ToysRUs below. Autocomplete is used, showing me the SKUs for each term and bolding the differences between them. This is ideal and unambiguous for the shopper.

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Of course, accuracy of results is the most important thing. If a result is not surfaced, the SKU may go unsold, and if the results don't inspire faith in the user, the feature will quickly be ignored. Setting up a custom report in analytics to show site search terms is a key part of any ecommerce merchandiser‘s strategy - knowing what isn't being surfaced or what needs to be stocked is important.

9. Social media This is quite a broad area. It could include crowdsourced imagery (tools such as Olapic allow for this), social sign-in for comments, simple embedded tweets, share imperatives or even incentives against content, trending items and more. The example from ASOS below is particularly effective. The 'as seen on me' feature will encourage users to browse and even participate, doing ASOS's content creation and giving up data in the process.

10. Live chat (including video) Although the call to action for live chat isn't a big part of an ecommerce site, it stands out nonetheless and is a valuable feature because of its range of uses. In fact, some surveys show live chat as the customer service channel consumers are most satisfied with.A customer may not be satisfied with a list of FAQs, whereas live chat enables questions about products, ranges, fulfilment, stores, payment etc. Here's a screen grab of Vee24's solution on the LandRover site. For such a considered purchase, live chat makes a whole lot of sense - it doesn't take many sales to recoup the outlay. With a pre-recorded introductory video and the option to chat via text or via live video, there's plenty here to reassure the customer, whether they want to engage face-to-face, or simply fire off a question.

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Understanding Vendor Registration process for Pepperfry

Pepperfry follows the 'managed market place' model, roughly a middle path between the marketplace models of eBay (essentially a facilitator between sellers and buyers), and Myntra.com and Zovi.com, which manage the inventory and logistics of retailing business. Through this model, the portal controls various aspects such as quality, packaging logistics, listing, etc. Though the portal started selling many goods online, it soon found its niche in retailing furniture, home furnishings and decor. For its products, Pepperfry has set up a network of merchants and artisans in Jaipur, Jodhpur, Delhi, etc.; it has also set up its own fulfilment centres or packaging centres that check quality and package goods. On its site, the portal lists the products of its merchants. Once an order is placed, the merchant is intimated. He then sends the product to Pepperfry's fulfilment centres. The products are checked for quality, packages and sent to courier companies for delivery. While most products are delivered within three to four days, a few categories such as furniture and jewellery might take a fortnight, in case merchants do not have the required stock. The portal gets about 1, 00,000 hits a day. It ships its products to 1,000 cities and towns across the country. It also supplies products to countries, including Israel, Australia and Germany. Pepperfry operates on a ―Managed Marketplace‖ model, which is an ideal platform for small and medium business artisans and merchants, who wish to sell their merchandize to millions of discerning customers. Currently, the website has over a 1000 merchant partners, who can showcase their design skills, craftsmanship and service orientation to customers across India and the world. For many merchants, it has become the primary source of their income. It is one of the few company in the Home and furniture vertical in India to ship products overseas. Customers from 12 countries (USA, Russia, Greece, and France etc.) have bought stuff for their homes on Pepperfry.

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Pepperfry enables Merchants from across the country to sell their items on the site after agreeing on commercial terms. Pepperfry manages the entire process for the merchant. This includes pre-sale merchant listings, enabling photo-shoots, packaging to post-sale shipping and providing customer service of the ordered items. This approach helps introduce the benefits of to even those merchants who might not be Internet savvy and therefore ensures that a wide variety of products can be made available to on-line customers. Pepperfry trains suppliers to make knockdown, foldable products, similar to IKEA furnishings. The company also provides carpenters to assemble the items once delivered. Pepperfry recently rolled out a 30 Days No-Questions-Asked 100% Money Back Guarantee for customers across categories. Pepperfry Sourcing team approaches brands like MenMoms, Pebbleyard, Godrej, etc. Interested vendors/ Brands themselves can directly approach the organisation online through the website (pepperfry.com). Business Models are explained to the vendor and margins are set. Usually agreed upon margin is 45%. Types of Business Model followed by Pepperfry: 4. Marketplace Model

An online marketplace (or online marketplace) is a type of site where product or service information is provided by multiple third parties, whereas transactions are processed by the marketplace operator. Online marketplaces are the primary type of multichannel e-commerce. In an online marketplace, consumer transactions are processed by Pepperfry and then delivered and fulfilled by the participating retailers or wholesalers (often called drop shipping). Other capabilities might include auctioning (forward or reverse), catalogues, ordering, wanted advertisement, trading exchange functionality and capabilities like RFQ, RFI or RFP. In general, because marketplaces aggregate products from a wide array of providers, selection is usually wider, availability is higher, and prices are more competitive than in vendor-specific online retail stores.

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5. On Demand Model

In this type of business model, products are listed on the website. As soon as order is placed, vendor gets intimation and after which products are manufactured and directly delivered to customers. 6. Warehouse Model

Products are either bought by Pepperfry or are with Sell or Return policy. Purchased items are then stored in warehouses. Pepperfry owns warehouses in Bhiwandi, Jodhpur, Bangalore, Gurgaon and Kolkata. Products are purchased according to the past sales data and current market demand.

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CONCLUSION Pepperfry is India‘s No. 1 Online Furniture, Home and Living Marketplace with over a whopping million customers. It showcases a curated range of furniture from the online portfolio of Pepperfry, and serves as a design inspiration. It is based on three business models which are Marketplace, On Demand and Warehouse. Pepperfry enables Merchants from across the country to sell their items on the site after agreeing on commercial terms. It manages the entire process for the merchant. This includes pre-sale merchant listings, enabling photo-shoots, packaging to post-sale shipping and providing customer service of the ordered items. This approach helps introduce the benefits to even those merchants who might not be Internet savvy and therefore ensures that a wide variety of products can be made available to on-line customers. Pepperfry trains suppliers to make knock-down, foldable products, similar to IKEA furnishings. The company also provides carpenters to assemble the items once delivered. Its unique and proprietary large-item shipment network ensures quick and damagefree doorstep delivery of bulky furniture. Pepperfry has 11 fulfilment centres in Mumbai,

Bhiwandi,

Jodhpur,

Pune,

Delhi,

Bengaluru,

Kolkata,

Vadodara,

Hyderabad, Chennai and Cochin to enable smooth and speedy delivery of products. In April 2013, Pepperfry launched its mobile site that can be surfed on any web browser or mobile device. The website has more than 600 global and national brands with more than 70 national brands in the furniture segment alone. Pepperfry features national brands like Godrej Interio, Nilkamal, Spacewood, @Home, Durian, Hometown, Furniture Kraft, Evok, etc. and global furniture brands like GEBE, Eurosteel Office Furniture, Defianz, HeveaPac, etc. on its website. For Pepperfry the main target market is 28-35 years of age group. People who are newly married professionals would be our target customers because they have better buying power and mass demand.

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Studying processes involved in Category Management enabled me to understand Vendor sourcing, vendor registration, product assortment and categorising, product listings and uploading, imaging, pricing, stock upload, couponing, and Quality Check. Managing bulk order for brand RAHA helped me understand product procurement, shipments, quality check and assembly, managing returns and customer engagement. Merchandising in Pepperfry deals with display of products in such a way that stimulates interest and entices customers to make a purchase. The process involves thorough check and correction of page layouts, images in different perspectives, proper product categorisation, and product description with detailed dimension image. In conclusion Pepperfry gave me the opportunity to understand various processes that makes the site to function and cater to the target customer effectively.

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Learning Outcomes 1.

Vendor Sourcing

2.

Vendor Registration

3.

Product Listings and SKU generation

4.

New Product uploads

5.

Inventory Management

6.

Online Merchandising

7.

Image photoshoot

8.

Bulk order Management

9.

Handling Category: Mattresses and Beanbags

10. Customer Engagement

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Webliography  http://www.pepperfry.com  http://jlsears.squarespace.com/blog/2012/12/20/e-commerce-assortmentplanning-and-merchandising-101.html  https://www.pwc.in/en_IN/in/assets/pdfs/publications/2015/ecommerce-inindia-accelerating-growth.pdf  https://econsultancy.com/blog/62658-the-importance-of-a-value-propositionin-lowering-bounce-rate  http://succeedasyourownboss.com/three-ways-increase-ecommercecustomer-engagement/  https://twitter.com/pepperfry  http://ecommerceconsulting.com/2012/05/online-merchandising-what-itmeans-why-it-matters-why-its-so-misunderstood.html

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