Baby products go online

“When our son was born, we wanted customized, quality and development appropriate kids bedding but were unable to find anything suitable in the market,” says Anuj Mahajan, co-founder and CEO, Thepipal.com. Sharing similar experience, Supam Maheshwari, co-founder and CEO, Firstcry.com, says, “When I became a parent in the year 2001, my wife and I found hardly anything suitable to offer to our child. On every business trip of mine, I use to visit store after store searching for small and typical baby products such as toothbrush, toothpaste, etc.” It was then Maheshwari decided to launch Firstcry.com. He says, “When I thought of starting my own business, I wanted to do something scalable, which can be started with little investment and e-commerce happened to be the best way forward in terms of scalability as well as getting into the retail sector. And with my personal experience, I realised that baby product is one category where there is a huge supply-demand gap. There wasn’t anything available earlier and the situation hasn’t changed till now.” 

Mahajan also shared something similar to Maheshwari. He says, “When we were unable to find anything suitable for our kid, we created our own personalised crib bedding and customised nursery décor. The passion to achieve the right affordable look without compromising on the quality led to several commissions. Word of mouth generated demand for our customised nursery decor. Driven by the success and demand of the personalised products, we founded The Pipal – a marketplace exclusive for baby and kids products.”

Untapped market potential

The market size for baby products is Rs 15-20 billion in India. Like Firstcry.com and Thepipal.com, there are several other baby product e-commerce portals mushrooming in the country today, including - Babyoye.com, Babyproducts.co.in, Kidsstudiostore.com, Hushbabies.com and many more. 

So, what’s making all these new players enter the baby product e-commerce business? “Physical retail’s supply chain model is completely broken right now, so there is no other way to supply that demand unless you provide products on all India basis,” Maheshwari says is one of the reasons.  However, the mismatch in supply-demand is making the space abuzz with e-commerce activities. With such e-stores for baby products, new parents across the country have easy access to quality items, especially those of foreign brands.  The positive indication of the market is well transformed into recent fund raising of $4mn funding from Saif Partners by Firstcry.com and BabyOye’s $2.5 mn fund raising from Accel Partners and Tiger Global. E-commerce, in general, is growing at a rapid pace in India and baby product is a huge industry waiting to be tapped in to.

Explaining the potential of e-commerce in this category, Mahajan says, “The big name retail chains cater to the metro and large cities and online retailing is a great way to reach the tier II & III cities for smaller players. The first movers will have an advantage and everyone is trying to capture the market share quickly. The market size is huge and worth an estimated 

Rs 5,000 crore so there is room for a lot of players to come in.”  Veena, a mom and E-commerce professional, who is the founder and CEO of Hushbabies, says, “ E-commerce is more than just selling online. One needs to have an in-depth knowledge and experience to run this kind of business. The category has very high potential in non-metro cities and it will be growing in the near future.” 

Route to rural market

While the physical retail stores have their limitation, e-commerce portals have been quite successful in stretching their reach to remote areas such as Arunachal Pradesh, Kerala, Jammu & Kashmir and many more non-metro cities. “Top 15 cities generate 70 per cent of revenue for our company which includes non-metro cities,” says Maheshwari. 

Comparing the potential of physical retail and virtual retail, Mahajan says that it’s more a question of expanding the market share and reach rather than competition to the brick and mortar stores. Physical stores are limited by a lot of factors and their overheads are high for running the store. They cannot be present everywhere, and that is why e-retail has an opportunity to service those areas that have demand but not much supply or options. “But do keep in mind our majority customer base still originates from metro cities since they are more open to making payments online and internet awareness is higher,” adds Mahajan. 

Challenges are opportunity

For any company to be successful, there should be a strong supply chain and logistic model to deliver products across India. “We have our own inventory management team, a very large warehouse, so basically we stock everything that we sell. We have tie-ups with courier companies and through them we ship the items all over the country,” says Maheshwari.

Maheshwari feels that e-commerce in the baby product category is an interesting business because it is highly unorganised and is very import driven. The most challenging part of it is that there is no standardisation of products. “What people call challenges, are actually opportunities in my mind,” adds Maheshwari.   

Another important aspect of e-commerce business is timely delivery and track of shipping. “We built up our IT systems keeping in mind logistics management and tracking. We have a robust CRM system which we use to keep track of our orders and their statuses including delivery confirmations.” Logistics is a big challenge since courier companies in India are not efficient or reliable. Thepipal.com has a full time team for tracking packages and talking to the courier company regarding the timely delivery of packages to consumers.

Racing towards growth

“We forecast as much as 10 times growth in the next three years in this category,” says Veena. The rural and remote areas of the country have huge untapped potential. The consumers there are willing to spend but there is a paucity of product availability. Thepipal.com wants to reach to these consumers. Mahajan says, “Currently, Mumbai is the highest selling zone for us. Since we are completely self funded at this stage, we do not have the luxury of a large marketing budget but very soon we will be expanding to reach to our potential rural consumers. We want to make sure that our bottom line is healthy.”

“In five years’ time, we should be a Rs 1,000 crore company,” says Maheshwari. Maheshwari is taking the promotional route to strengthen its hold in the baby product e-commerce market. The promotional activities will include online-offline promotional campaigns to build a relationship with new parents for word-of-mouth publicity. “With good and frequent deliveries and facilities like cash on delivery, we aim to make our customers happy. If the consumer is happy then he will come back and do repeated shopping,” concluded Maheshwari.