Startups catering new-generation Indian parents take baby steps

A few years ago, parents were happy with options like Barbie, G.I Joe, and Lego Blocks for their young children. But now, parents know and want much more.

Over the last five years, the demand for more options, especially for products and services that cater to babies around the world, has made baby startups quite a hot sector in India.

Why is there scope for baby care startups in India?

• Convenience is a factor now
• Naiyya Saggi, founder of BabyChakra, a community-building platform for young parents , says, “The demographics in India has changed over the last few decades. Most families opt for a nuclear structure now, so neither do they welcome joint families nor do they entertain friendly neighbors, who are known to come in handy. So we need relevant products and services to help with this journey of baby care”.
• Women decision makers finally have internet
• “Women make most of the decisions with respect to their babies, and these women are now coming online. This means they needs more options for their children,” adds Naiyya.
• More exposure means more expectations

Rahul Anand, founder of Hopscotch.in, says “I had friends who visited the US multiple times and knew the options there were much better, and so visited the country again just for shopping before having babies. They expect the same at India”.

• Evolved audience and their behavioural patterns

Supam Maheswari, founder of FirstCry.com, says, “Behaviour among parents is changing. They are consuming more content online, and do a lot of online shopping. So they want the same convenience for their baby stuff hunt too”.

Case of consolidation

All this being said, it is also true that there is only place for a few players in this market. Only a handful of them have been able to grab the opportunity and scale at the right time.

FirstCry.com, almost the Amazon for baby related stuff, is one of them.

When Supam first started FirstCry.com in August 2010, there were only four players in the whole industry: HushBabies, BabyOye, Hoopos.com, and Mom&Me.

Over the last few years, players realised that consolidation was key, as target audience in this sector is quite sticky. This knowledge led to multiple acquisitions in the baby care space.

Hoopos.com and BabyOye are now part of the third company, Mom&Me, which is part of Mahindra Retail.

Early in 2013, BabyOye, a Mumbai-based online retail company acquired its Bangalore-based competitor Hoopos.com in an all-stocks deal. The merged entity raised around USD 12 million capital from Helion Venture Partners, Accel Partners, and Tiger Global.

HushBabies acquired online retailer MangoStreet and also online forum for parents BabyBOX, before it shut shop completely.

Who are the biggies now?

Baby care is the second most searched category online after skin care. This is the reason why even horizontal players like Amazon and Flipkart are trying to carve their niche in this industry.

Some of the better-known vertical retailers in the industry are:

Mom&Me – This company is part of Mahindra Retail and specially focuses on maternity wear and baby care products. They are present both online and offline in the form of retail stores in multiple cities.

FirstCry.com – Most new parents know this baby e-commerce startup for its wide range of baby-related products. Sources say that the platform has over 90,000 products ranging from maternity wear and bath toys, to diapers and colorful mittens and booties. They did not just want to capture the online market, but also make their presence felt offline across multiple cities in India. They have 125 franchised, brick-and-mortar stores in 83 cities.

Hopscotch.in – This online retailing website, launched in 2012, focuses on getting Indian customers access to international brands. They will be launching about 2,000 international brands on their website this year.

One other baby startup that has been quite successful in the last year-and-a-half is BabyChakra. The platform, which was founded by Naiyya, works as a community forum for parents to interact with each other. BabyChakra currently has users from over 80 countries in the world writing reviews and discussing products and services.

This startup recently raised an undisclosed amount from Mumbai Angels, Patni Family Office and Singapore Angel Network.

The sector has its challenges

• Massive information asymmetry

“Whether it is a preschool nearby or a service they want to enroll for, parents need information to make informed decisions all the time. They need that one place they can trust, where they can read reviews and know about products and services,” says Naiyya.

• Sensitive sector

“Anything to do with children is a very sensitive topic, so you just cannot afford to get things wrong. A lot of work has to go into quality checking and researching,” says Supam.

• Low brand penetration
• “Not many parents know brands beyond Mattel and Lego; brand penetration is very low. You cannot expect them to search for a brand they don’t know. This is the biggest gap in the market,” adds Rahul.

A glimpse into the market and future

By 2018, the market for baby products is projected to be Rs 1800 crores, with immense opportunity for growth in this sector.

“Horizontal players overestimate themselves and underestimate the niche vertical players. They might find it difficult to compete with vertical players because they don’t know much about the needs of parents and kids. In general, there will be a lot of activity in this space, maybe in the form of consolidations,” says Sanjay Nadkarni, co-founder of BabyOye.