Reliance Retail Ventures (RRVL) has snapped up struggling furniture e-retailer Urban Ladder, a sign of increasing consolidation in the e-commerce space. The start-up was losing ground well before the pandemic set in and had given up 40% of its value between 2018 and 2019, sector watchers said.
RRVL will buy a 96% stake for Rs 182 crore. Urban Ladder`s turnover in FY19 was Rs 434 crore while the profits were Rs 49.41 crore. In FY18, the company reported a loss Rs 118.66 crore.
Even as several online businesses thrive and Goldman Sachs estimates India’s internet will have a gross transaction value of $180 billion by FY25, a three-fold growth over current levels, the number of burnouts too is going up. Large players with deep pockets are scouting for good brands with weak balance sheets. Among the sectors doing well are grocery, food delivery, edtech and gaming.
The gross merchandise value for the online furniture market is estimated to touch $700 million by CY2020 from about an estimated $310 million in CY2019, according to RedSeer Consulting. Analysts at the firm said the market has been growing at a CAGR of about 80-85% led primarily by the metros and tier one cities.
In a study published last year, the firm said Flipkart increased its market share in the space to 41% in Q2 2019 from about 31% in the year-ago period. The rest of the market is split between players like Pepperfry and Amazon.
In a recent interview, Ambareesh Murthy, co-founder & CEO at Pepperfry, said retail furniture was a tough category since one was not selling a standard product.
“Many start-ups found it tough in the furniture sector. It’s a sector where money doesn’t decide whether you succeed or not but the processes and operations do.” RRVL said in a stock exchange filing it has an option of acquiring the remaining stake in Urban Ladder, taking its shareholding to 100%.