Between Flipkart, Snapdeal, and Quikr, India is already home to several high-flying e-commerce companies with impressive valuations. The list figures to grow in the coming years as investor sentiment remains high for a country with a talented workforce, stable government, and steady economic growth (and Internet penetration). One such beneficiary could be FabFurnish, a company determined to become the online Ikea of India.
The thesis for FabFurnish, put forth by co-founder Mehul Arawal, is that those in India otherwise face an unsavory choice when it comes time to buy home furnishings: they can either take their chances with the number of local shops peddling products of limited variety and a largely unknown quality, or they can pay a substantial premium for quality items at an established retailer, while absorbing the significant rent payments these sellers are forced to pass on to consumers. The workaround to this problem, developed in Sweden by the founders of Ikea, is to buy up less expensive real estate in more remote areas and have the customers come to them. India, however, lacks the transportation infrastructure to make such a business plan feasible.
Furthermore, there’s the issue of scarcity, at least when it comes to a purchasing environment that can offer known quality. According to Arawal, a former consultant with BCG, and his own estimates, 90 percent of India’s home furnishings market consists of these local shops. The existing home furnishings retailers, meanwhile, are concentrated in the country’s most expensive and densely populated areas, meaning that large swaths of the country’s 1.2 billion people can only buy from independent local shops. For members of India’s growing middle class, buying home furniture is frequently cited as a pain point. To Arawal, and his co-founder Vikram Chopra, the situation represented an opportunity.
Today, FabFurnish carries 60,000 unique items of inventory through its online site, FabFurnish.com, and operates four physical stores, in Gurgaon, Bangalore, and Faridabad. Since being founded in 2011, the company has consistently tripled revenue growth year over year. The early success can be attributable at least in small part to Rocket Internet, the German incubator with a proven track record of executing e-commerce strategies in emerging markets. Rocket Internet has wholly owned the company since its inception. More important, though, has been India’s embrace of e-commerce solutions more generally. Forrester expects that India will continue to experience 50 percent compound annual growth in online retail spending into 2018, while Amazon India declared in August that it anticipates it will be the first country to amass $1 billion in total sales, only shortly after opening its domestic operations. All of this momentum bodes well for FabFurnish, which hopes to have a billion dollar business of its own by 2017.
Homebrewed 