By Boby Kurian & Samidha Sharma
MUMBAI: Online babycare products retailer, Firstcry is close to raising around $15 million from Singaporean sovereign fund Temasek's subsidiary Vertex Venture Holding with plans to shore up its offline presence, said people familiar with the development.
This marks a recent trend in the burgeoning Indian consumer internet space where online players in categories like furniture and jewellery have crossed over to physical stores thereby operating on a hybrid business model. The investment will also mark the entry of Temasek's unit in to the domestic e-commerce market touching $1 billion in annual shipments.
The Pune-based Brainbees Solutions runs Firstcry.com and Goodlife.com, an online retailer of health and wellness products with IDG Ventures and SAIF Partners as existing investors. With the latest funding, Firstcry will compete with brick-and-mortar retailers like Mahindra Retail's Mom & Me and UK's Mothercare. The e-commerce company was founded by Supam Maheshwari and Amitava Saha in 2010.
Firstcry currently operates about 15 physical stores through the franchise route and plans to step up this network aggressively. Vertex has made more than 350 investments in the internet, social media and healthcare businesses across the south-east Asiaian markets.
An email query sent to Maheshwari and Vertex remained unanswered till going to press. Boutique investment bank Signal Hill advised Fistcry on the fund-raise.
"Globally, some online players have experimented with the hybrid model and expanded their brands into physical stores. This has worked well in categories where technology has not been able to solve the problem of trust or touch & feel, especially in big ticket size categories such as furniture and jewellery", said Tarun Davda, VP-Internet Investments at Matrix Partners India.
Global players like eyewear startup Warby Parker, men's clothing e-tailer Bonobos, fashion e-tailer Justfab in the US have successfully expanded their brands offline. In China, jewellery e-tailer Zocai and online furniture brand Meilele have moved to include anm offline strtaegy to expand the market.
Closer home online jewellery store Bluestone.com, backed by serial entrepreneur- turned-investor duo K Ganesh and Meena Ganesh, has implemented the hybrid online-offline model with six stores across as many cities. "The biggest opportunity in the Indian e-commerce industry for some categories lies in having a mix of the online and offline. It gives customers the trust and comfort and the conversion rates are far higher in these physical stores," said Ganesh.
Rocket Internet-backed Fabfurnish, an online home furnishing and furniture store, has also adopted the hybrid model by opening a physical store and will look to extent the offline presence of its private label through own stores and multi-brand outlets , Vikram Chopra, co-founder of the e-commerce company, told TOI.
Bluestone.com, is also piloting a shop-in-shop model with department store chain Shoppers Stop and plans to extend its guide stores from the current six to 20 cities this year.
Some early adopters of this model have been the likes of Makemytrip and many of the matrimonial sites which opened up physical centres to strengthen their reach.