Chennai: In the online furniture business, horizontal e-commerce players are grabbing market share faster than the category-focused verticals.
Though horizontal e-commerce biggies, including Flipkart and Amazon, started furniture e-tailing at least three to four years after verticals like Pepperfry and Urban ladder started operations, they have a higher market share.
Between 2017 and 2019 horizontals have retained 54-55 per cent share of the online furniture market, which has almost tripled in these three years from $104 million to $310 million. According to RedSeer, the horizontals are poised to grab 60 per cent of the market, which is estimated to more than double to $700 million in 2020.
They have been dominating the market by offering quality furniture at low cost and by providing customer support. Better awareness and trust with private labels offered by horizontals are driving growth. Private labels are usually priced competitively against brands.
More than 75 per cent of the Gross Merchandise Value of horizontals are coming from metros and tier I cities. Tier 2 cities account for 15 to 20 per cent of their sales and are estimated to account for $140 million of the $700 million market in 2020. Tier 2 cities accounted for $50 million sales in 2019. Low price, trust and better supply chain management is driving sales in these cities.
On the other hand, verticals are more focused on top cities, where they have experience stores, for sales. While metros too are poised to double their sales in 2020, tier II cities are estimated to grow by 180 per cent.
"Currently 80 per cent of the sales come from metro cities. But we are increasingly seeing the sale of online furniture in tier 2 cities being driven by better awareness and robust supply chain offered by e-tailers," said Ujjwal Chaudhry, Director, Redseer Consulting.
Indian furniture market is valued $16 billion in size as of 2018, with 15 per cent of it being the organized sector and with 2 — 3 per cent accounting for online sales.
