“It’s been a rollercoaster,” says Itai Gross, founder and CEO of Naduvi, as he begins talking about the pandemic. Gross is one of those founders who built a startup right when the pandemic was taking roots across Europe. Naduvi is an online platform offering a wide range of interior design products from various European brands and is active in the Netherlands, Belgium and Germany.
The ability of Naduvi to offer discounts at all times during the year has made it one of the fastest growing startups in the Netherlands. With more than 50,000 products and over 250 different brands, the platform is a cohesive blend of off-price selection and exclusivity. However, becoming a high-flying scaleup was not an easy road for Gross and his team.
The Pandemic CEO
“Starting [during] the pandemic was obviously not something that anyone could have seen coming,” Gross explains. He says that starting during the pandemic presented him with the unique challenge of not only building a company but also building a culture with a “lot of uncertainty” around. With people unable to come to the office, the challenges only took a different shape.
He says Naduvi and his team have gone through “all the phases”. He explains that they have gone from no people at the people to few people for certain schedules to opening the office and then closing down again. Gross doesn’t shy away from explaining the complexity and his journey will be a lesson for many aspiring to start on their own.
For Naduvi, the challenge of people not getting to see their colleagues in person was always present but they faced their biggest challenge during summer. Gross says the company had a lot of temp workers in Naduvi’s customer support department who had come from the restaurant industry, which had suffered the worst due to the pandemic.
When the Netherlands opened up after the initial wave of COVID-19, these restaurant workers wanted to go back and Gross says that half of his “customer support team disappeared”. While human challenge was unavoidable, Naduvi also had business challenges.
The challenges faced by Gross were echoed last year by Marc de Vries, who joined Swapfiets as CEO in 2020 and said “the biggest challenge has been knowing the company.” It is important for any leader to define the cultural fit first and then scale the organisation and the story illustrated by de Vries and Gross show that it is possible even during the pandemic, when you are behind a screen and not in front of a person.
Home is about living and working
The pandemic may have killed millions of people around the world but it also shined a new light on the concept of “work from home”. While work from home was practised in silos, it went mainstream in 2020 and all signs indicate it is here to stay in some or the other form. Gross says Naduvi was built on the foundation of this fact – consumers are much more at home.
This meant that consumers were constantly looking for ways to elevate their living or as Gross puts it, “how can I redecorate my living room?”
On the business front, he says that home and living did a proper job over the course of the pandemic. However, Naduvi and many other companies were soon faced with a new challenge – supply chain. While most people go back to Ever Given blocking the Suez Canal to describe supply chain issues, Gross says it was not the only challenge. He explains that lack of production in Asia, due to the pandemic, made supply difficult.
He says the slow production cycle in Asia “led to a shortage of products in Europe”. Naduvi also had to cycle through the price hike seen by certain raw materials like wood, lumber, steel, et cetera. Optiply CEO Wiebe Konter echoed similar sentiments about the supply chain ecosystem.
You cannot build supply when there is none but you can manage with what is at your disposal. During this turbulent period when Asian factories were closed due to COVID outbreak and Europe was opening up with renewed demand, Gross says Naduvi saw a lot of partners with “out of stock” labels on certain products and it was time to put on the crisis manager hat.
“I think the interesting part in our [business] model is that we have several hundreds of suppliers, which allows us to relatively easily shift,” Gross explains how they managed to match demands in the face of slow supply. In order to make up for the lack of production in Asia, Gross says Naduvi turned to their production partners in Eastern Europe.
He quickly points out that these suppliers in Eastern Europe were also affected and had issues sourcing raw materials or absorbing the exorbitant price but they managed it easily compared to shipping from Asia. Naduvi also saw container prices from Asia go up ten times during the pandemic, which resulted in prices of certain products going through the roof.
“Luckily for us, we are not dependent solely on Asia production. We have a lot of our partners here in Europe,” Gross concludes.
This ability to navigate the supply chain constraints, changing demand cycle can be traced back to Itai Gross’ decade long experience in the home and living industry. He co-founded Westwing Home and Living, which is now part of the Rocket Internet Group, and has consulted private equity, VCs in various capacities. Gross says these roles allowed him to meet the wholesale manufacturers, visit their warehouses and see “the enormous amounts of products that were physically there”.
Gross asked these suppliers, manufacturers about the time that their products/furniture stayed in the warehouse. He was amazed to know that some products stayed at warehouses for as long as three years and sometimes suppliers had to destroy their unsold goods. This led Itai to think about a DTC business model and thus Naduvi was born.
Naduvi – a fantasy name to sell furniture
Naduvi, Gross explains, is a “marketplace model in which the most beautiful brands offer their overstock and sell it directly to the end consumer”. This means that consumers received the package directly from the supplier, which cut out the middlemen and made the whole process attractive for both the brands as well as consumers.
A VC backing Naduvi says that the marketplace for “old permanently discounted furniture” is under-penetrated. Gross enlightens by sharing that this under penetration is mostly common in the online space. The reason behind this under penetration goes back to the supply chain. Gross cites this example of a consumer in Amsterdam ordering a couch directly from a manufacturer based in Poland.
Apart from access to an inventory of “beautiful products”, Naduvi also says that it is trying to crack this complex supply chain.
He adds that Naduvi is a fantasy name, which offers the advantage of being unique and direct access to all the URLs related to it. Gross explains that fantasy names also come with the advantage of “being able to craft a brand around it” and another reason they chose this name is how people quickly associated with it. From Scandinavian to Japanese to even South India, Naduvi – the name – resonates in a way that can become interpersonal for a lot of people.
A discounted shopping experience
Naduvi stands out for its marketplace, a direct-to-consumer business model but what sets it apart is the discounts. Discounts are common at the start but discounts on Naduvi have stayed consistent even when the startup is turning two years old in a few weeks time. Gross says Naduvi is not always pricing these products and it is often the partner or supplier setting the price.
Since most of the items listed on Naduvi are not available anywhere else, he says the partner finds value even at discounted price. “Normally, the manufacturer or partner sells the item to a retailer, and the retailer sells it to the consumer. And the markup here between the selling price and the consumer price, therefore, can go up by as much as six times,” Gross explains.
By selling directly to the consumer, Naduvi is able to bring the price of some of the products up to six times, which is passed on to the consumers in the form of discount. As the owner of the platform, Naduvi takes a small fee, which is often lower than a traditional retailer. “There is more space between the production cost and the selling price to give a discount,” he adds.
Since its start in 2020, Naduvi has grown to house over 250 partners and Gross says the platform is getting inbound leads or new partners wanting to collaborate on a daily basis. It has a stringent process in place to vet these partners before bringing them onboard. Naduvi looks at the quality and brand atmosphere, commercial viability and operational complexity, before bringing any partner onboard.
“As a matter of fact, we are getting posts on a daily basis from partners overseas, whether it’s from India or the Philippines or China,” he says. However, Naduvi is trying to crack the process of shipping a product from India to Europe before onboarding partners from these Asian countries.
Rise helps solving challenges
Itai Gross and Naduvi team was one of the nine participants of batch six of Techleap’s Rise programme. Gross says he joined Rise because of the opportunity to be “surrounded by other super ambitious, super smart founders”. As someone familiar with the luxury of having other founders, he saw the opportunity to learn from others joining batch six even before entering.
“When I saw an opportunity to be surrounded by a group of other like-minded people, with whom you can share your challenges, your fears, your learnings, I think that’s super valuable.”
He also liked the way the Rise programme was structured by Techleap. The weekly topics centred around a certain domain and ability to build a strong network, Gross considers being his major takeaway from Rise. “So, I’ve got several very valuable introductions to potential partners that are still running now,” he quickly adds.
Gross says he also met a “super interesting partner” at Techleap Rise that he cannot say much about right now. He notes that connection day helped him connect with a number of valuable venture capitalists. “So I think, all in all, the whole process was very useful for me personally, but also for the company,” he sums up the experience as a batch six entrepreneur of Rise programme.
Growth on the mind
Naduvi has raised over €10M and Gross says the immediate goal is to close the Series B round. “I’m from the school, always be raising,” he explains his approach to funding. He is constantly having conversations with professional investors, venture capital partners, from all over the globe. “If there is an interesting collaboration at hand from a potential financial partner, then we are always open to it,” he exclaims.
In fact, if the opportunity presents itself, Naduvi is open to a large series B round by the end of this year. With that funding, Gross aims to expand Naduvi to at least 10 European markets and since Europe is big, he desires Naduvi to be the go-to furniture marketplace for European consumers in at least 15 countries. “I believe that this model could work everywhere,” he says.
He notes that Naduvi is not suffering too much from the supply disruption and Naduvi aims to build the business by broadening the assortment. “Getting more fantastic goods in for you as a consumer that our job is unleashing the potential of European suppliers or later on also Asian suppliers,” he says.
Lastly, Gross says the key to success is the determination to “never give up”. He says an entrepreneur’s journey will be filled with “some success, some failure, and some disappointment” but the key is “standing up again and putting your energy behind the mission”.