SIMPLIFY profitability Efficiency streamline COST-SAVINGS Streamline, Efficiency, Cost-Savings, Profitability. All of these words describe the goals of a firm looking to create and sustain profitability. One way to do that is to SIMPLIFY business operations. streamline COST-SAVINGS

PEPPERFRY.COM: TURNING THE TABLES ON DISRUPTION Good morning everyone, we are Odette Consulting. Introduce ourselves. And today we would like to share with you our analysis of Pepperfry.com along with a recommendation for how your company can simplify and generate greater profit. ODETTE CONSULTING: Brandon Lalonde, Jacob McCourt, Jordan Neposlan, Sahi Veeraraghavan PRESENTING TO: PEPPERFRY.COM EXECUTIVE TEAM

THE CHALLENGE How can the company increase profitability and what would that profitability look like over the next five years?

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

SWOT Analysis of Pepperfry.com Strengths -Large product variety -Geographic spread-98% of orders are shipped in less than 48 hours; hub and spoke model -Physical retail driving high average sales Weaknesses -Low profitability -Very complex business structure-a lot of business units -Highly reliant on the co-founders of the business Opportunities -Expand by opening up physical stores in other major cities -Promote private label house brands -Expand operations in Malaysia and China Threats -IKEA entering the market -Highly fragmented business (a lot of suppliers) SWOT Analysis

PEST Analysis of Pepperfry.com Less regulations compared to North American companies = Ease of foreign investment Rupee value tied to United States dollar -Varying cultures in each city in India -Average Furniture rental = 22-29 years -Average Family keeps their Furniture for 30 years - TV advertising and influencer marketing is very popular - Use of technology among teenagers is low in rural areas - Only 20% of the country is online P E S T

Porter’s Five Forces Analysis of Pepperfry.com Some unique items but high competition Assists business with logistics and other support High capital bar for entry Consumers can meet their needs offline or online Buyer Bargaining Power HIGH Threat of New Entrants LOW-MEDIUM Threat of Substitution Supplier Bargaining Power LOW Competitive Rivalry HIGH Large number of competitors (i.e. Walmart and IKEA)

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Key Issues Current Issues Future Risks New Revenue Channels are lacking Competitors will explore untapped markets for growth Decreasing Profitability Do not reach profitability goals and the business is liquidated and/or sold Degree of Competition Competitors may expand into the market and cause limited growth Need for Innovation If the company does not innovate with new products or programs, they remain stagnant Main Take-away: The firm must find new revenue channels to remain profitable. Competitor entry risk must be mitigated.

Key Issues Future Risks Risk Avoidance Plan Competitors will explore untapped markets for growth Explore new revenue streams but avoid more complexity Do not reach profitability goals and the business is liquidated and/or sold Simplify business operations Competitors may expand into the market and cause limited growth Solidify profitability plan and then expand If the company does not innovate with new products or programs, they remain stagnant Continue to monitor and look for new opportunities Main Take-away: The firm must mitigate risks by simplifying the business and monitoring profitable growth opportunities.

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Alternatives Alternative #1: Simplify and expand private label house brands strategy Alternative #2: Simplify and geographically expand physical store location Alternative #3: Simplify and explore the furniture rental market

Alternatives Decision Criteria Simplify + Expand House Brands Strategy Simplify + Expand Physical Stores Geographically Simplify + Explore Furniture Rental Market Risk 8 6 4 Complexity Profitability 5 7 Unique and Innovative TOTALS 29 23 1-3 4-6 7-10 Data was collected via an independent poll by Odette Consulting

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Making a Decision Decision Criteria Simplify + Expand House Brands Strategy Simplify + Expand Physical Stores Geographically Simplify + Explore Furniture Rental Market Risk 8 6 4 Complexity Profitability 5 7 Unique and Innovative TOTALS 29 23 1-3 4-6 7-10 Data was collected via an independent poll by Odette Consulting

Simplify Operations and Expand House Brands Strategy Recommendation Create simpler operations Increase profitability Simplify Operations and Expand House Brands Strategy

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Assumptions Revenue Growth will plateau at 25% Tax Depreciation and Amortization are not taken into account Assumptions We have moved out of the utility industry Projected Decrease in COGS Revenue Growth will plateau at 25%

Financial Overview INR Millions 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Revenue ₹ 341.00 ₹ 439.00 ₹ 992.00 ₹ 2,001.00 ₹ 2,580.00 ₹ 2,838.00 ₹ 3,121.80 ₹ 3,433.98 ₹ 3,777.38 ₹ 4,155.12 COGS ₹ 883.00 ₹ 801.00 ₹ 2,247.00 ₹ 4,993.00 ₹ 5,066.00 ₹ 4,306.10 ₹ 4,090.80 ₹ 3,886.26 ₹ 3,691.94 ₹ 3,507.35 Profit/(Loss) ₹ -542.00 ₹ -362.00 ₹ -1,255.00 ₹ -2,992.00 ₹ -2,486.00 ₹ -1,468.10 ₹ -969.00 ₹ -452.28 ₹ 85.44 ₹ 647.77 Projected Revenue Growth 10% Projected Decrease in COGS 15%

Financial Overview INR Millions 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22 Revenue ₹ 341.00 ₹ 439.00 ₹ 992.00 ₹ 2,001.00 ₹ 2,580.00 ₹ 3,225.00 ₹ 4,031.25 ₹ 5,039.06 ₹ 6,298.83 ₹ 7,873.54 COGS ₹ 883.00 ₹ 801.00 ₹ 2,247.00 ₹ 4,993.00 ₹ 5,066.00 ₹ 4,306.10 ₹ 4,090.80 ₹ 3,886.26 ₹ 3,691.94 ₹ 3,507.35 Profit/(Loss) ₹ -542.00 ₹ -362.00 ₹ -1,255.00 ₹ -2,992.00 ₹ -2,486.00 ₹ -1,081.10 ₹ -59.55 ₹ 1,152.81 ₹ 2,606.89 ₹ 4,366.19 Projected Revenue Growth 25% Projected Decrease in COGS 15%

Agenda Situational Analysis Key Issues Alternatives Recommendation Financial Overview Implementation Plan

Implementation Plan Simplify Rationalize SKU count Décor – reduce from 70,000 SKU’s to 5,000 SKU’s Utilities – Stop selling House Brands 10 brands to 2 brands Pepperfry (13-tier brand) – sold online and catalogue Sold to other suppliers Implement quality assurance model Process improvement Return to Profitability and Expand Continue to rationalize SKU’s Create targeted marketing campaigns for under-penetrated areas Seek opportunities to sell second brand into adjacent markets Evaluate success of house brand strategy Formulate contingency plans Explore furniture rental or expand geographically Create mobile app Growth and Prepare for I.P.O. Prepare for Initial Public Offering Implementation Plan

Project Timeline Work with category managers to rationalize SKU's   2018 2019 2020 2021 2022 Work with category managers to rationalize SKU's Work on new house brands Launch new house brands Implement new sourcing strategy Explore other opportunities for process improvement Develop new marketing campaigns Develop new app Evaluate SKU rationalization process Launch mobile app Launch digital COE for digitization Launch new marketing campaigns around major holidays Prepare for IPO IPO

Conclusion Issue Recommendation Lack of new revenue channels to increase profitability Recommendation Simplify business operations by expanding house brand strategy

We now welcome any questions. THANK YOU We now welcome any questions.