By Mirzaan Jamwal
Indian baby and kids-focused e-commerce site FirstCry.com was not the first mover in its segment when it launched in 2010. Kalaari Capital-backed HushBabies and Babyoye, an Accel Partners and Tiger Global portfolio company, were among those already operating in a highly fragmented market. Last year's e-commerce funding crunch heralded a degree of consolidation: HushBabies shut down and Babyoye acquired rival Hoopos.com. FirstCry, meanwhile, has continued its growth trajectory with a push into offline stores across India.
The firm has raised a $15 million Series C round of funding led by Temasek Holdings subsidiary Vertex Venture Management, with participation from existing investors IDG Ventures India and SAIF Partners. It is the largest-ever round for a vertical e-commerce company in India and will be used to build the offline and mobile strategy alongside the online offering.
"The team quickly realized that there is very strong potential in the offline world as well and a lot of synergies," says MukulArora, vice president at SAIF Partners. "Wherever you open a franchisee store there is a clear rub-off effect on online transactions coming from that city." He puts this down to building trust and familiarity with the brand offline, which translates into online purchasing.
FirstCry's product catalogue runs to over 70,000 items from more than 500 national and international brands, covering consumables such as diapers and toiletries, accessories including strollers, apparel and footwear, as well as books and toys for children up to the age of 15 years. BrainBees, which operates FirstCry, used a purely online and inventory-led model when SAIF invested $4 million in Series A funding in April 2011. The investment was driven by the limited availability of baby products in stores and the segment's potential, given that the frequency of purchase is very high as a child grows and new categories of products needed.
The company's first franchisee stores opened in 2011 and there are now 50 of them across 45 cities. BrainBees acts as a wholesaler to the franchise store owners and operates a supply-chain and logistics network. It owns four warehouses in Pune, Bangalore, Delhi and Mumbai. Offline stores currently account for around 20% of revenue.
"The offline model is very capital efficient because it's a franchise business," says ManikArora, founder and managing director at IDG. "It allows us to leverage a brand that's been built online and take it to the offline world to reach more people across the country."
Vertex's experience in hybrid online-to-offline (O2O) business models includes investments in Chinese furniture e-commerce company Meilele and LOHO Eyewear. It will leverage that expertise and its presence in other growing markets in Asia to help the company grow. BrainBees aims to take its number of stores from 50 to 100 in the next 18 months.