Urban Ladder, the online furniture retailer is expecting to break even on the operational basis when it reaches revenue of $200 million that might happen by the middle of 2016. Ashish Goel, the CEO of Urban Ladder stated that once the portal gets to a net revenue range of $150 to $200 in mid 2016, they will focus on their contribution margin to the 25 percent zone.
The term contribution margin is actually the selling price per unit leaving the variable cost per unit. Goel added that the contribution margin should be a minimum of 10 percent points over the marketing costs for most of the e-commerce portals to make money and get into profitability.
Furthermore, he added that for the first 18 months of their business, their contribution margins were more than their marketing as they have been pressing on the growth recently. Their marketing spend has increased, but they have a differential under control.
This move comes as the Indian startup firms have sharpened their concentration on unit economics after the rapid growth for two years. Urban Ladder based in Bengaluru believes that its revenues will grow by five folds in the current fiscal year in comparison to the previous one.
He stated that they expected six fold growth, but in the mid year they slowed down for two months and focused deeper on the segment of customer experience. They pulled back on marketing, focused on some top categories, pushed back on category launches, redefined architecture and operational efficiencies. He stated that if they had not done so, they would have witnessed some problem in customer satisfaction.
Urban Ladder that was launched in 2012 and it provides online furniture via its controlled supply and inventory based model. Its competitors in the industry are Pepperfry and FabFurnish.
