FabFurnish
Future Group buys FabFurnish, forays into e-marketplace. Picture: Bedroom furniture is prepared for display in the Salon Marie Antoinette at the Hotel de Crillon in Paris, 3 April, 2013.Reuters

Kishore Biyani-led Future Group has acquired FabFurnish (Alix Retail Pvt. Ltd) in an all cash deal, according to reports. The acquisition of an India-based start-up, which sells furniture on internet, marks the retail giant's foray into e-marketplace.

"Today I operate in only 20 cities (through Home Town). Now I can operate all over India," Biyani told the Economic Times, emphasising the potential internet and smartphone growth in the country hold.

The buyout could range between Rs.15 crore and Rs. 20 crore in cash to the Rocket Internet-backed start-up, reported the Mint, citing two sources privy to the deal. It added that the Future Group will retain the FabFurnish brand and will use the store's online platform to take its Home Town retail stores online.

The acquisition is expected to bunch together all of Future Group's home furnishings and decor services under the FabFurnish brand. It will, in turn, make the combined entity India's largest home décor e-marketplace. Biyani said Home Town is expected to become a Rs. 800 crore - Rs. 100 crore business by the end of the current financial year.

Without hiding his inhibition on the global furnishing giant IKEA's India entry next year, Biyani said his company was readying itself with internet technology acting as its "bulwark." "We are creating the largest home furnishings company in the country. Ikea is coming in, and it will take them at least two to three years to become a Rs 1,000 crore company, and we are already there," he told the ET.

The daily reported that senior executive from the Future Group and the chief of Home Town could provide leadership to the merged entity. 

The 100 odd employees at FabFurnish will be retained in whole, and deployed to fight the competition from newer rivals such as Pepperfry and Urban Ladder, said reports. Incidentally, Ratan Tata has an investment in Urban Ladder, and Goldman Sachs in PepperFry. Both the furnishing start-ups received fresh round of funding last year alone to the tune of $40 million and $100 million, respectively.

Though an early starter in India's online furniture retailing segment, FabFurnish could not sustain its market share and was losing to competition from the better funded rivals. In fact, for long it had raised the suitability of the business model its Berlin-based incubator, Rocket Internet, had followed in India. Rocket's other venture, online fashion retail company Jabong, is in look out for buyers too.