Urban Ladder’s story could be India’s case study to a start-up growth in the country. Vision, Mission is all the cake and tea here, but the real story is how they would have grown over time. The company was once India’s leading furniture showroom for exquisite furniture. Having a valuation of 1200 Crore in 2018 and 750 Crores in 2019, it is a wonder as to how they could have gone to a sale of 182.18 Crore to Reliance. The company acquired a total takeover (96% stake) in Urban Ladder. Reliance now assured that they have the full power to take over the rest of the stake and absorb the Urban ladder into Reliance. They also assured that they would be investing a further 75 Crores into Urban ladder development by 2023.
Urban Ladder’s history into growth
Urban Ladder is one of India’s most recent ventures. They are an Omnichannel furniture store initiated in Bangalore. It was initially a start-up and was into the idea of selling furniture due to the country’s lack of décor homes. Inspired by IKEA, they wanted to revolutionize the Indian Market, leading to further growth and maximization. Owners- Ashish Goel and Rajiv Srivastav started the company in early 2012. Ashish Goel was, in fact, also an entrepreneur. He worked in McKinsey and company and even managed Amar Chitra Katha, an Indian mythological comic series. The company was born out of small investments from both of them, and their idea is what captured much of their growth and investments into the company. (1)
Urban Ladder initially started in Bangalore, after initial success and fame; it grew over the country and was a unit of inspiration for Décor growth. Companies like pepper fry entered the market, and the market slowly started to turn saturated. Competition rose, and Décor companies did whatever they could to expand their sales and growth but, the Urban ladder’s ideologies kept them in the chase ahead of the curve.
“There was a need for better, quality furniture and dependable customer service, at reasonable prices. That solution did not exist,”
says Goel. “The range was limited, the designs weren’t good, or the vendors were not dependable.” Is what Ashish Goel said. The idea of the Urban ladder came from an experience that changed their lives. Ashish and Rajiv were college buddies and lived next door. They had to decor the apartments they were moving into, but the furniture people did a blasphemous job, so they had to cancel the order. They slept for 15 months on mattresses on the floor.
Investments and Growth
While India’s furniture market is assessed to be at 15-20 billion (Rs 93,000-1,24,000 crore), the biggest furniture business in the nation, Godrej Interio, which sells office furniture, is assessed $80 million or Rs 496 crore. Goel and Srivatsa saw a doubt here. They could see the development of a billion-dollar company, they felt. The team wagers web-based business would see the rise of a couple of huge companies, for example, Flipkart, Snapdeal, and Myntra.
“The classification needs to have break-out financial matters. The unit financial matters of such a classification must be altogether extraordinary,”
says Srivatsa.
The urban ladder had raised 5 Million with SAIF Capitals in 2013. The investment had also been inclusive with previous venture capitalists, Kalaari Ventures. Goel had advised that their ticket prices grew from Rs. 10000 to Rs. 15000. This lead to even more investments and help from Sequoia capital for 50 Million. Even Ratan Tata based Tata had invested 25 Million into the company in earlier rounds. They even made an additional raise of 12 Million as per MCA reports. In 2016, the Urban ladder tied up with Amazon to engage in décor online. This eventually boosted sales numbers. The urban ladder then launched their online base for décor and other materials ranging from mattresses, cushions, Cupboards, etc. (2)
The recent investment turned out o be a takeover by the Mukesh Ambani giant, Reliance, who bought a 96% stake in the company for a mere price of 182 Crores. This came as a shock for a company whose valuation is around 700-1200 crores. The company’s failure to adapt to a pandemic stricken environment led them to undergo a complete sale. Reliance also wishes to purchase the owner stakes as well by investing 74 Crores by December 2023. Earlier, Reliance was in the news for the acquisition of Future Group’s stakes and brands.
Competition and Growth
Urban Ladder’s journey into the décor market didn’t come without competition. The law of market: “where money grows, the world enters.” So, Godrej Interio, Pepperfry, and many more became huge competitors for Urban Ladder. Pepperfry had also raised 128 Million dollars from Goldman Sachs, Helion Ventures, Norwest Venture Partners, and Bertelsmann India. Pepperfry’s transition gre to measures wider than Urban Ladder’s scope of reach. With more advantageous offers that the public could take part in, the Urban ladder failed to understand that (3).
Increasingly, Pepperfry had ventured into Online sales quickly after initialization. They started to take space on amazon, Flipkart, Snapdeal, and even through their own app space, unlike Urban Ladder, who never completely entered the online market. Urban Ladder instead started up an “offline décor interiors showroom” called Urban Interiors. With showrooms ranging from in Metro Cities like Mumbai, Bangalore, Chennai, etc. Over 35+ showrooms were launched.
Later on, consumers were onto the online platforms more than offline stores, which affected the Urban ladder’s sales. Meanwhile, PepperFry had already been online, and thus, their décor and furniture sales zoomed the charts. Urban Ladder had faced severe financial pulldowns and had to engage in selling stakes and laying off employees (4) by giving off pink-slips. Urban Ladder’s transition into bankruptcy explains the Reliance deal. Mr. Goel had to say this “,
“We have made more than our share of mistakes and have made some tough, painful decisions and gone through a reset from January to March. We are now on track to be profitable at the Ebitda level next month, and our goal is to deliver Rs 8-10 crore this fiscal. It ain’t a big number, but it is a start”.
Detailing the profits of the online furniture retailer Urban Ladder, Reliance Industries informed that the company’s audited turnover in 2018-19 was Rs. 434 crores with a net profit of Rs. 49.41 crore.
