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“Offline stores drive ~2.5X ticket size compared to online” – Rajiv of UrbanLadder [AMA]

We had a wonderful conversation with Rajiv Srivatsa, Co-founder of UrbanLadder with discussions ranging from his entrepreneurial journey to UrbanLadder’s decision to launch offline stores to product managmement process.

Here are the key excerpts from the AMA (you can join the #ProdGeeks Community here).

How is the offline launch shaping up?

Offline is shaping up really well. We probably have the most crowded furniture store in India. And one of the most beautiful. All our original capacity planning on staffing has gone for a toss – since traffic has been 3x of what we estimated. So that’s good.

The ticket size is approx 2.5x of online.

What are the key behavioral changes you see between people shopping furniture online vs. offline

Early to fully answer. Offline ticket sizes are higher – which means people are shopping for the bigger products / for the entire home versus single pieces of furniture online. Their expectation of touch and feel is of course higher. Their expectation of the entire catalog being present (which is almost infeasible) is also higher. Intent is higher too – since they have taken physical effort to come to a store.

Marketplace vs. Inventory model : At scale, what do you think works in furniture space?

Ikea – the largest furniture company in the world – doing some $30bn or so annually – is a full inventory model. In our experience too, the full inventory model seems to make sense given better planning, better control of quality, better vendor relations, stronger brand recall etc.

How has your definition of competition changed over the last few years?

The real learning is that – it’s too early to look at competition. In the first one or two years, you worry so much about who is first to launch something. But it’s your own mistakes, specially when you don’t do customer first thinking, that can come and hit you. Amazon / Bezos breath this philosophy well. Thankfully, we learnt that lesson early enough and have always been a lot more customer focused at this stage of our life than being competition focused.

How difficult is it for a startup like *Bewakoof* (for example) to start offline stores. What are the usual barriers while moving offline?

Starting an offline store needs to have a strong reason – for us it was about (a) Better touch and feel (b) Consumers starting to compare us online against cheaper online options whereas our product quality was far better than that (c) Trust in brand since we were not a marketplace. If you are selling smaller accessories, or some other products like that, you may have to really question strongly on if offline is critical at all. It takes a lot of effort to run good offline stores, and integrate them seamlessly with online etc. Offline is also tougher to scale. So unless there are 2-3 strong reasons like what we had, it’s not wise to think of offline, until you totally maximise online distribution and penetration via existing marketplaces.

Now with the consumer facing product decently stable and not changing too much too often, what are the main areas your product teams are busy with (and if possible a rough distribution of effort that’s going into each area)

Our big efforts for the product teams are in 3 areas currently, and possibly 1-2 new ones in the coming calendar year. For the rest of this year (next 6 months), a lot of the effort is on making sure the supply chain is geared for the single brand license we just got, making sure our omni channel customer experience is water-tight (flow of users from online to offline, tech help inside store, better discovery, help for our retail consultants to sell better etc.), and continuing initiatives on our core online storefront + mobile app + mobile web (performance, new business initiatives like exchange, gift cards etc.).

In addition in the coming year, we are going big on VR and modelling / building pretty strong user experiences specially for VR in our retail stores and the next big piece will be around fixing a lot of the data models, and ensuring that we move further towards predictive analytics / data science since that’s one area we have under-invested in.

What are 2-3 biggest pain points of your customer today ?

Some of the pain points continue –

(a) Getting a true sense of the product online given the high nature of touch and feel (it’s going to take time for us to expand on offline across all the cities we are in), specially bigger categories like sofas, mattresses, beds, etc.

(b) Tracking the product end to end – specially categories that we manufacture against orders – like wardrobes, kitchens etc. – these are not well integrated systems yet with our vendors and the customer wants to know the status of these orders since they are also longer lead times, and we don’t really do a good job there

(c) Basic knowledge and explanation on what to buy – while we have tried a bunch of things, I still think this is under-solved in our category, on helping you choose the right product for your need / budget / visual senses etc.

Now as GST centralised taxation has come into play, which is better for Urban Ladder are you into localised warehouses now or centralized warehouses?

This is a question that’s still awaiting answers :) It’s not an easy one to model, since we have also gotten a single brand license, hence we can hold our own inventory now. Because this model also includes the amount of orders that we get from the different cities, the stock levels that we need to hold closer to customer location, and the supply sources such as China, S.E.Asia, India etc. and where does it make to ship products to, on a business that’s still growing, and is undergoing a lot of changes in terms of category mix and online-offline mix, it’s very difficult to get one single solution.

For now, we have one big one outside Bangalore and a couple of small ones, but the right answer will emerge only over time.

As an entrepreneur, what are some of your low moments? How have you handled ? The market has generally been brutal for all

I can write a book on that :)

I guess it’s always ups and downs. For me customer complaints (and a lot sometimes when we badly screw up), smart people leaving, some of our initiatives where we put a lot of effort not making the outcomes, etc. – all these are low moments. Of course, a part of the excitement of being an entrepreneur, is for you to go through these :)

You don’t design life to go through these, but inevitably, it’s part of the entrepreneurial journey.

Are you working on technology to create better in-store experience, like in-store personalisation suggestions on app and personalised discount coupons, counter-less walk-in systems using beacons/IoT etc. for a seamless online-offline connectivity as well as marketing as you mentioned? Do you even consider it essential in retail stores like yours or Lifestyle/Westside?

Yes. Elaborating on the kind of tech – we are starting with self-serve understanding of products, much faster billing that what is currently being done, helping retail consultants do a better job of answering customer queries, beacons and monitoring systems to understand user behavior within the store better, etc. We will get into personalisation (based on past browsing history of customer assuming privacy is taken care of) after solving the basic use cases.

Do people prefer paying for interior design consultantion while buying from Urbanladder, and how minor/major a share is that? What are the barriers faced in Interiors as the large ticket size and decision time by varied TG makes it quite necessary to get in early into user buying cycle?

We look at the interior design consultation as a means to selling our furniture and offer a great customer experience. So the charge for the consultation itself is a small one – the real value for the customer as well as for us is in buying the modular kitchens / wardrobes or the products post the consultation. It’s similar to the sofa trial service also we have – it’s a small price to make sure conversion on the core product is good. The cost of all this is subsumed that way with a higher conversion.

Are there currently any other offline stores/chains in India using such technologies? Such technology can only be fully utilised by a startup like yours which has an active online as well as offline presence. Am I right?

Products function on typical sprint cycles. We do quarterly plans where business teams align with the online product / engg. team. We have T-shirt sizing estimates on different features, and prioritisation is done based on some level of impact / effort estimation. The backlog items themselves come in after a ton of primary research, observing users on the floor, etc. Once the items are prioritised within a quarter (and typically there is a good balance of low hanging fruits and big ticket ones), the usual UX process follows (interaction design, engineering feedback, iterations, visual design, sprite, development, testing, code push, monitor, etc.) We operate with small  teams of 5-6 engineers max on any of the problems that are taken up to be solved, or any of the big areas.

To that extent, the process for the tech parts are very similar, whether they are for the online (UL.com or app) or for the consultant. In the case of consultants though, there’s also more rigorous training and roll-out that’s planned as part of the product rollout process itself. AB testing is employed a lot more for user based features.

how much independence do individual PMs get or is the decision process more central?

A lot of decision making is completely decentralised. The different team members (for e.g. the retail business head, the engineering manager, the product manager, the UX designer) all  act as a pod whose goals are all aligned, and they make the decisions on what is taken up and what goes live.

The rest of the folks may have questions and viewpoints, but pretty much decisions are taken by that team. Accountability & responsibility end of the day lies with the pod that owns the metrics. Collaboration is critical of course.

What’s the team mix? Across engg / marketing / product / sales / support?

In the corporate office of around 300 folks, approx 25% is customer service & operations, 20% in marketing, creative & merchandising, 15% in engineering and online product, 15% in interior design and consultative sales services, 10% in product / category / sourcing, 5% each in finance, HR, others.

You talked about omni channel integrated experience. What is the % of prospect base in India demanding such seamless experience?

The first wave of omni-channel as defined from some 7-8 years back was offline companies going online. While some of them are seeing traction, no one has really cracked it because of DNA mismatch. Finally they just end up having a site with a catalog. The new wave internationally and even in India is online companies going offline. Since our DNA is more digital, we can reimagine how offline experiences should be. Of course, we don’t have the years of expertise on offline that the offline first folks have, but we can more than compensate I believe in terms of innovation.

The verdict is still not out, but our first physical store trumps pretty much every other ‘offline first’ store in terms of every metric on customer experience and revenue, so customers are going to be a lot more demanding of a seamless experience, the more such companies try and solve this well.

Do you believe in north star metric funda? that is – have 1 key metric for business and have everyone align to it ? What’s UL’s key metric that you track every day

We have had debates on what it could be for us, but said, maybe we need to discover it. For this year, revenues and our focus on NPS / profitability continue to be the key metrics that we track. But I found the literature behind the north star metric pretty strong, and would be interested in at least understanding what it is for us, as part of our annual operating planning cycle that starts january.

What about more traditional companies as competition? For instance Godrej Interio already has a very strong offline presence and now they are moving online.

How does a new age company like yours compete against such a strong brand?

The real learning is that – it’s too early to look at competition. In the first one or two years, you worry so much about who is first to launch something. But it’s your own mistakes, specially when you don’t do customer first thinking, that can come and hit you. Amazon / Bezos breath this philosophy well. Thankfully, we learnt that lesson early enough and have always been a lot more customer focused at this stage of our life than being competition focused.

Actually, now we do more business than them largely (w.r.t. the B2C part of the business), and we have not even yet started doing anything offline. We are catering to 1% of the market (online – offline is probably lesser than 1-99 currently), and this is our current status. So I do believe, we would rather solve it our way in a slow and steady manner (can’t make mistakes offline as easily as you can online and wind back), and take a strong part of the 99% of the market as well!

You have been a PM for a decently long time. If there is something you wish you had known as a PM before starting UL?

The importance of investing in strong systems for the backend. I was too focused on the consumer side of things, and took the backend things a bit too late, or went for pre-packaged solutions. That’s come and bit us always.


» Join the #ProdGeeks Community for insightful conversations around business, products and growth.

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