Growth and profitability are the two most important parts of a startup journey towards becoming a sustainable entity. While growth may be required for maintaining a competitive advantage, profitability is essential to be self-sustainable in a long run.
And most often, after a few years into its existence and burning cash, startup goes for a profitable route, which makes it sensitive to costs and revenue projections.
Ratan Tata-backed online retailer Urban Ladder is on the same path. The six years old furniture e-tailer, which eyes to be profitable in the next 18 months, has laid off about 90 employees to cut back its losses. The numbers may go up in coming days.
At present, the company employs 800 people.
Ashish Goel, co-founder, and chief executive officer of Urban Ladder said that the company is currently behind its target and that is why they are taking some hard decisions. Urban Ladder plans to curb losses by 70 per cent in FY19.
In FY18, Urban Ladder’s net losses narrowed by 74 per cent to Rs 118.66 crore compared to Rs 457.69 crore losses recorded in FY17.
In the next fiscal, Urban Ladder plans to bring down losses to below Rs 50 crore. By 2019-20 first quarter, it aims to achieve marginal profitability.
In the last few years, with uprise in competition from Pepperfry and entry of IKEA, Urban Ladder has been struggling with growth. The company’s consolidated revenue in the latest fiscal year doubled to Rs 204.73 crore from Rs 101.87 in FY17.
Currently, Urban Ladder operates 11 stores in Bengaluru and Delhi. It has also been starting a franchise model and plans to open 20 more stores in the country, Goel told Business Standard.
Urban Ladder claims to increase its average order value and lower customer acquisition cost through omnichannel strategy. Before going for an IPO in FY21, it plans to achieve revenue of Rs 900 crore with over Rs 70 crore profit.
So far, Urban Ladder has raised $112 million funding. The company has got backing of investors such as Ratan Tata, Sequoia, Steadview Capital, SAIF Partners, and Kalaari.