Livspace was earlier relying on contractors in the market, but it’s now moving towards working with contractors who will be more dedicated to its projects. Currently, 30% of Livspace’s projects are done by “in-house” or captive contractors, but it wants to take this figure up.
There are 1,000 servicemen—plumbers, electricians, and carpenters—who work with the company but aren’t on its rolls. How does it maintain exclusivity? Livspace gives them a regular order flow, ensuring pay consistency. Also, in case of any discrepancy, it can halt payments.
Enhancing the quality of services
And while it is perfecting its services offering, some experts find Livspace’s design partner system problematic. The company has a network of freelance designers who work on a per-project basis. Hipcouch, an interior decor firm, also followed a similar model of working with freelance designers but is now moving away from it.
“Freelance designers work on several projects at a time. Obviously, they are not going to give the time needed for one project. Clients are very demanding—they want iterations, sometimes they would like to meet on a Saturday. All that becomes very difficult with freelance designers,” says Pankaj Poddar, one of Hipcouch’s founders.
Ashish Dhingra, the founding partner of Marks Dzyn (a Delhi-based interior decor firm), agrees. “The sense of ownership isn’t there. If someone is spending Rs 8-10 lakh ($11,700-14,500) on interiors, they are expecting a very high level of customer service and quality, which, at times, is difficult with freelancers,” says Dhingra.
Tanuj Choudhary, the chief business officer of HomeLane, which follows a model similar to Livspace, however, is open to designers working independently. “They want flexibility and our platform offers that,” he says. Founded in 2014 by former Tutorvista CEO Srikanth Iyer, HomeLane differentiates itself on a couple of points. It targets the mass-affluent customers, a category lower than Livspace’s target audience.
It also has fewer offerings to bring operational efficiency and follows an asset-light model by not owning its experience centers. HomeLane’s revenues stood at Rs 41 crore ($6 million), with a loss of Rs 29 crore ($4.2 million), for the year ended March 2018.
40% of the $25-30 billion interior design market is currently under Rs 40 lakh ($58,300), claims Choudhary, with people buying budget homes now warming up to spending on interiors. HomeLane’s average ticket size of Rs 5.5-6.5 lakh ($8,000-9,000) caters to this market. But a vendor who works with both Livspace and HomeLane says that may not be exact, as even Livspace negotiates on pricing to accommodate customers.
Unlike Livspace, HomeLane guarantees 45-day delivery. If it fails, HomeLane pays Rs 1,000 ($14) per day. Livspace offers no such guarantee, but Sharma says that it, too, compensates customers for delays.
HomeLane’s plan is similar to what happens in retail—lower costs and have more visibility on products by reducing the number of stock-keeping units (SKUs).
“Unlimited catalog is the enemy of scale. There are some 2,000 shades of laminate, but for 60% of them, there are supply-side issues. Rather than figuring out vendors for those, it makes sense to have few but quality products in our stock. And if the supply is sorted, promising 45-day delivery becomes easier for me,” says Choudhary.
An emotional journey indeed
But interior design is not retail. It’s an emotional journey; “At times, customers look out of the catalog and want something custom made,” says Karan Sharma, co-head of the digital and technology vertical in Avendus’ investment banking division.
Livspace has 4 million SKUs on its platform, though even this has its limitations. “Everybody wants a unique design because you are spending a lot. If it is going to come from the same catalog, it becomes boring after a point,” explains Hipcouch’s Poddar.
But in the business of aesthetics, this is bound to be a problem. One which Livspace can rise above with its IKEA link-up.