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Cloudion Homes: Revolutionizing Furniture ‘Business’ in India

CASE FRAME, E-COMMERCE
ET Cases, 5 Pages
AUTHOR(S) : R. Muthukumar and Dr. Nagendra V. Chowdary

Case Preview

Cloudion Homes: Revolutionizing Furniture ‘Business’ in India

 

With 78% of Indian furniture retailing under unorganized sector, organized furniture (22%)retailing consists of offline furniture retailers – like Godrej, Wipro, Damro, @ Home, Homeshop, etc., – and online furniture retailers – like Urban Ladder, FabFurnish, Pepperfry, MebelKart, etc. With the increasing penetration of online furniture retailing in India, how would unorganized furniture retailing in India be affected? Cloudion Home’s (along with eDIY) new business model seems quite riveting and disrupting. How would Cloudion Home’s furniture retailing model affect the Indian furniture retailing? .......................

Teaching Note Preview

Cloudion Homes: Revolutionizing Furniture ‘Business’ in India

 

Synopsis

Indian furniture market, with a value of INR140,000 crore, is dominated by unorganized sector with 80% of total Indian furniture market. The organized furniture market consists of both offline and online retailers. The offline furniture retailers include Godrej Interio, Durian, Hometown, eHome, Damro, Wipro, Homeshop, Usha Lexus, etc. With the advent of internet and increasing penetration of e-commerce, online furniture retailing – both from horizontal players like Flipkart, Amazon, Shopclues, eBay, Snapdeal, etc. and from vertical players like Urban Ladder, FabFurnish, Pepperfry, Housefull, MebelKart, etc. – has been witnessing considerable growth rates and is expected to grow at a CAGR of 75% and reach $700 million by 2020. There is an immense competition amongst online furniture retailers and between offline and online furniture retailers. This Case Frame provides scope to understand and analyze the Indian furniture retail market.

Amidst such competition, Cloudion Homes (through its retail venture EDIY) enters Indian furniture market with seemingly disruptive customer-business proposition. What is Cloudion Homes’ (Cloudion) Business Model? What are the distinguishing features of this model? Does it have the power to disrupt Indian furniture market? What are the challenges to this model? This Case Frame also provides scope to analyze if Cloudion’s business model can revolutionize Indian furniture market.

Prerequisite Conceptual Understanding

Mandatory Exercise

As a part of this Case Frame’s classroom analysis, the following exercise is suggested to enable an effective discussion and analysis of this Case Frame:

  • • Students/participants must visit www.cloudionhomes.com and www.ediy.in to understand the unique customer value proposition, its operating, business and revenue models, and how customer has been collaborated with to create value
  • • Visit any of the online furniture retailers’ sites – Urban Ladder, Pepperfry, FabFurnish, etc. – to have an overview of product profile, delivery models, etc.

 

Case Positioning and Setting

This Case Frame can be used for either of the following Programs/Courses/Modules:

  • • MBA Program – eCommerce Course – Online Furniture Retailing Formats – To understand the two different online furniture retail formats (Horizontal vs Vertical), the value chain implications thereof and the challenges in each of these two models
  • • MBA Program – eCommerce Course – Business Models – To examine and discuss the prevalent business models in Indian online furniture retailing – The Marketplace Model vs In-House Model, and debate on the organizational implications of these two models and also to understand Cloudion’s business model
  • • MBA Program – Strategy Course – Business Models – To analyze Cloudion’s business model and examine its ability to disrupt the Indian furniture market’s retailing landscape

 

Preamble to this Case Frame’s classroom analysis

This Case Frame is meant to analyze the business landscape of Indian furniture retail market, offline vs online furniture retailers, and Cloudion’s business and revenue model. The sequencing of questions – organized through the three sections given in the Case Frame – is meant for this purpose. However, as can be seen, the questions related to the advertisement appear in the last section as a sufficient understanding of the basics of Indian furniture retail market (both online and offline) is necessary to address the questions related to the advertisement given in the last section. Accordingly, the Case Frame was orchestrated [Exhibit (TN)-I]....................

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Product code: ECOMM-5-0007, ECOMM-5-0007A

Abstract

This Case Frame, based on Cloudion Homes' (Cloudion) advertisement (in The Economic Times, December 3rd 2015), is an attempt to analyze if Cloudion's business model can revolutionize Indian furniture market. Having co-opted customers as a part of the furniture retailing business value chain, how would customers and company be benefited? Indian furniture market, estimated to be INR140,000 crore, is dominated by the unorganized sector with 78% of total Indian furniture market. The organized furniture market, with 22% of the total Indian furniture market, consists of both offline and online retailers. The offline furniture retailers include Godrej Interio, Durian, Hometown, @Home, Damro, Wipro, Homeshop, Usha Lexus, etc. With the advent of internet and increasing penetration of e-commerce, online furniture retailing - both from horizontal players like Flipkart, Amazon, Shopclues, eBay, Snapdeal, etc., and from vertical players like Urban Ladder, FabFurnish, Pepperfry, Housefull, MebelKart, etc., - has been witnessing considerable growth rates and is expected to grow at a CAGR of 75% and reach $700 million by 2020. The competition amongst online furniture retailers and between offline and online furniture retailers is not only bringing new dimensions to customer value propositions but also putting pressure on the margins. Amidst such competition, Cloudion (through its retail venture EDIY) enters Indian furniture market with seemingly disruptive customer-business proposition. What is Cloudion's Business Model? What are the distinguishing features of this model? Does it have the power to disrupt Indian furniture market? What are the challenges to this model?



Pedagogical Objectives

  • To understand the nature and business landscape of Indian furniture market from the stand point of view of size, segments, players, market shares, the value chain, etc.
  • To discuss and debate on online furniture retail formats (Horizontal vs Vertical formats of online furniture retailing), the value chain implications thereof, the business models of online furniture retailers (Marketplace Model vs In-House Model) and examine the critical success factors for the same
  • To analyze Cloudion’s business model and discuss the impending challenges and debate on its ability to “disrupt” Indian furniture market

Case Positioning and Setting
This Case Frame can be used for either of the following Programs Courses/Modules:

  • MBA Program – eCommerce Course – Online Furniture Retailing Formats – To understand the two different online furniture retail formats (Horizontal vs Vertical), the value chain implications thereof and the challenges in each of these two models
  • MBA Program – eCommerce Course – Business Models – To examine and discuss the prevalent business models in Indian online furniture retailing – The Marketplace Model vs In-House Model, and debate on the organizational implications of these two models and also to understand Cloudion’s business model
  • MBA Program – Strategy Course – Business Models – To analyze Cloudion’s business model and examine its ability to disrupt the Indian furniture market’s retailing landscape



This Case Pack Includes:
- Abstract
- Case Frame
- Teaching Note (**ONLY for Academicians)
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