Customization and Lead qualification key to scalability in the Online Interior Design market
Published on: Apr 2019
Online Interior Design market is a large and fledgling opportunity in India (RSC estimates the market to be ~$ 100 mn in FY19, with online penetration of <1%). Despite the large addressable opportunity, leading Online players (LivSpace, HomeLane, Furdo, Design Café) face stiff competition from the unorganized/semi-organized sector. RSC believes Interior design is a very high involvement category and there is an inherent need for personalization in which limits the ability of players to easily replicate successful models (from one city to another, or for that m.atter, from one customer to another).
According to a RedSeer analysis, Home Interior Design customers can be broadly bucketed into 4 distinct clusters – Convenience seekers, Value seekers, Deal hunters, and DIYs. In our understanding, leading players have hitherto been able to penetrate the first two clusters with limited success amongst the latter two. Unlike other Consumer Internet sectors that continue to drive some revenue from Deal hunters (in some cases >25-30% of revenues, thereby building a pipeline for future), Online Design has had little success on that front. The key reason for such divergence has been the varied decision-making criteria across clusters.
RedSeer estimates ~25% of addressable metro users to be Convenience seekers who attach high value to the experience of Home Design and execution and assigns lower weightage to Budget control. These are the immediately addressable market for Online companies followed by the next set of a cohort – Value seekers (~35%). The analysis holds special significance as we believe lead qualification in the industry is a challenge – significant efforts are being put into low margin customers in the hope of up/cross-selling. Companies are experimenting with varied psychometric and socio-economic profiling tools to help address the challenge.