Niche startup selling small home products wins investor interest

Niche startup selling small home products wins investor interest

2024-09-23 16:49:08 :Home and lifestyle brand Nestasia, founded in 2019 by Aditi Murarka Agrawal and Anurag Agrawal, raised approximately $8.35 million on September 10, led by Susquehanna Asia Venture Capital and Stellaris Venture Partners. According to Tracxn data, this is one of the largest funding rounds in the space, apart from HomeLane (Homevista Decor and Furnishings Pvt. Ltd and LivSpace, which also provides interior design services).

Similarly, Vaaree, founded in 2022 by Garima Luthra, Pranav Arora and Varun Vohra, raised $2.5 million in a Pre-Series A round in May led by Capier Investments with participation from Surge Ventures, a unit of Peak XV. In September 2023, $4 million was raised.

Startups such as Decortwist, founded in 2022, and Nestroots, founded in 2016, Supporters were also found.

“The $15 billion home furnishing and kitchen market is growing rapidly as consumers increasingly seek higher quality products and innovative designs. Despite strong customer demand, establishing an outstanding presence in this category has proven Branding is challenging, resulting in limited venture capital (VC) interest,” said Rahul Chowdhri, partner at Stellaris Venture Partners. Mint.

big opportunity

While big players like Flipkart-owned Myntra, Nykaa (FSN E-Commerce Ventures Ltd), Amazon India, and furniture startups Pepperfry and Urban Ladder have embraced home décor as a category, there is an opportunity for companies to build a business focused on this segment. business. to industry experts.

Chowdhri added: “A company that can consistently deliver innovative designs while keeping tight control over inventory has the potential to scale up and become a major player in the space.”

Satish Meena, consultant at data platform Datum Intelligence, said the category has seen a lot of interest in the wake of the covid-19 outbreak. “This is happening across income groups and also because of the improved catalog of products these companies offer,” he said.

“Many companies that focus on home furnishings have better designs. Customers have more trust in direct-to-consumer (D2C) brands than in the past.” He added that investor interest is related to the sales these companies are able to generate. Amount is directly proportional to size. “All these factors are working together. ”

To be sure, these startups have their work cut out for them. The market is dominated by companies such as IKEA and Home Center.

The Swedish multinational group’s sales in India increased by 61% $1,768 crore in 2022-23. Revenue from Lifestyle International’s home centers is $642 crore in the same financial year.

In comparison, Nestasia’s revenue was $37 crore in 2022-23, compared with Rs. $Revenue in 2021-22 is Rs 22 crore, while Vaaree’s revenue is $2 Crore for the first year of operations (2022-23).

Despite the small size of the orders, investors appear to be betting on order frequency. “While the average order value (AOV) is relatively lower than in the home design and furniture sectors, purchase frequency is much higher. The average customer purchases 5-10 times per year, while home design only purchases once or twice in a lifetime.”

Vaaree follows a factory-to-home model, connecting “quality local manufacturers and artisans with the end consumer.” Nestasia, on the other hand, launches new products every week, which should be a pull factor.

“Two major trends prevailing in the industry that are key reasons for peak investor interest are premiumisation, whereby shoppers now prefer well-designed, higher quality products, and the emergence of brand buying. Brand market share, although still Nestasia co-founder Aditi Murarka said:

Trampoline, a B2B home decor startup that provides retailers with a D2C website-like experience, also raised $5 million in June from Matrix Partners and Waterbridge Ventures.

Anushka Mahanti, co-founder and chief commercial officer of Trampoline, said: “It’s great to see more startups verticalizing in the home décor space, creating more technology-enabled solutions and increasing efficiencies across the value chain.”

social media push

According to Datum Intelligence’s holiday sales forecast, kitchenware, gifts and home décor are among the top 10 subcategories that consumers want to buy from fast commerce platforms.

Additionally, short videos on social media platforms are the third most preferred source of research among consumers, the report said.

This change in the way customers discover products has also led to an increase in organic discovery from such players compared to the days when Amazon or Flipkart were the only two product discovery platforms.

“If you go to Amazon, you’ll see that these items aren’t discovered as much. But if you have a dedicated space, it has a better chance of providing a unique experience,” Mina said.

By focusing on non-furniture products, these companies also relieve themselves of a significant logistical burden. “Returns are a big issue in the furniture sector as returns logistics costs are very high due to the size and weight of the product. Many brands also offer same-day and next-day delivery by choosing logistics partners that offer distributed warehousing.” Meena said.

Nestasia’s Agarwal said the volumetric weight, shipping, storage and overall logistics complexity of our category is relatively low compared to furniture.

Calmness in furniture

Aside from these startups raising funds, there hasn’t been much activity in the space lately.

Pepperfry and Urban Ladder have raised significant amounts of money over the years but are currently struggling to stay afloat. In fact, Pepperfry, which claims to have around 65% market share in the organized furniture market, is reportedly considering selling.

Pepperfry revenue up 10% $272 crore in 2022-23, while Urban Ladder’s revenue fell by nearly 15% $193 crore in the same financial year.

On the other hand, India’s furniture market is growing healthily and may reach $39 billion by 2027, according to data portal Statista.

Follow us On Social Media Twitter/X

Join WhatsApp

Join Now