HOW FIRSTCRY BECAME A GIANT IN INDIA

Imagine a parent's struggle before 2010; they need everything from diapers and baby clothes to cribs and toys, and the hassle of running around different stores is overwhelming. Here comes FirstCry, the company that created a solution for every parent struggling to find a safe product. It is a place where every baby's need is just a click away. Need a stylish stroller? Check. Searching for baby lotion? Double Check. It's a go-to place for parents to buy products like diapers to cute outfits. In this blog post, I will be sharing how Firstcry became a giant in India's baby and kids' product market, strategies that made them successful, a peek at their finances, and how it took them 14 years to make it successful.

Source:ET Retail

Why did Supam Maheshwari choose to build a startup in a niche market?

Back in 2010, when e-commerce was still in its early days in India, Supam Maheshwari saw a huge market gap in the market for baby and kids' products. The journey of FirstCry started when Supam faced the problem of finding quality products for his own kid just like how Ghazal Alagh took the initiative to start Mamaearth as she struggled to find a safe skin product for her kids. Supam Maheshwari used to buy products from other countries until the birth of FirstCry. FirstCry seized this golden opportunity. He even stated in an interview, how baby and kids' products were imported heavily in India. He said that around "95-98% of products are imported" and only diapers were manufactured in India back then.

"The best way to predict the future is to invent it."

FirstCry Business Overview

FirstCry is a multi-channel retailing platform, combining both online and offline sales channels. They launched their online platform first, in 2010 and then, after one year of experience, they opened their modern store. FirstCry didn’t just stick to being an online store. They understood that Indian consumers still value the touch-and-feel aspect of shopping, especially when it comes to products for their kids. So, they rolled out an omnichannel strategy, they have 1,063 modern stores in 533 cities. Here’s the genius of it: they didn’t see online and offline as competing channels but as complementary ones. Click-and-Collect: FirstCry allowed parents to browse online, make a purchase, and pick it up from a nearby store. Modern stores are categorised into franchise-owned/operated and company-owned/operated modern stores. Both FirstCry modern stores and Babyhug modern stores fall under these categories. Their capital and operating expenditure including working capital are borne by the franchise.

Their average GMV per FOFO( Franchise owned) is much more than their average GMV per COCO( Company owned).

They sell products from -

• Third-party Indian brands
• Global brands
• Their own home brands

Home Brands further include-

1. Baby Hug- Products for newborns to children aged 6 years
2. Cute Walk- Exclusive babies and kids footwear, it is a sub-brand of Baby Hug
3. Pine Kids- Products for children aged 4-12 years.
4. BabyOye- Premium brand for baby fashion

FirstCry has grown into Asia's largest online store for baby and kids' products, serving millions of families. They enjoy a market share of 16-17% in the organised childcare products sector, making them the leader in the organised sector. Their focus is mainly on tier 2 & 3 cities, which gives them an advantage as most retailers focus on tier 1 cities. However, their target group is middle-income and upper-class income parents.

Industry Analysis 

India is the youngest nation with 306 million children between the ages of 0-12 as of 2023. The massive demographic presents a unique opportunity for the childcare market. And who is leading the charge? FirstCry.

India’s e-commerce market is on fire. In the financial year 2024, we had 220-240 million online shoppers. By 2029, this number is expected to explode to 320-350 million. What does this mean? The retail market, which already hit 75-77 trillion in 2024, is set to soar to 115-125 trillion by 2029. That’s massive growth, and the reasons behind this growth according to the report are-

• More people going online
• Higher disposable income 
• Urbanization 
• And the fact that people are becoming more comfortable with online shopping.

Did you see how India's e-commerce market is booming after COVID! 

Between 2017 and 2020, India’s e-commerce market grew at a scorching 26% CAGR. Fast forward to 2024, and the market size is 4,880-5,040 billion. It's creating a perfect environment for brands like FirstCry.

India’s birth rate is among the highest in the world—16.3 births per thousand people in 2022. That’s 1.5 times higher than in developed countries. What does this mean for the childcare market? It’s about to explode. Indian parents are increasingly aware of the importance of quality childcare products and are willing to spend. 

This means millions of new parents are eager to provide the best for their children every year. As a result, spending on childcare products is expected to skyrocket.

Right now, apparel is the biggest segment in the Indian childcare market, making up 68% of the market in 2024. Indian parents love to dress their kids in trendy and comfortable clothes, and it shows. Another booming segment is the diaper market, which was worth 92-94 billion in 2024 and is expected to nearly double by 2029. It’s a shift in how Indian parents perceive childcare.

From a Baby to a Giant- Success Strategies 

Recently, FirstCry's parent Brainbees Solutions got listed on the Stock Exchange at a 40% premium over the IPO price. What made them successful? Many factors made them thrive in the niche market. Some are stated below-

1. Omnichannel Strategy - 

Competing with horizontal online players like Amazon and vertical online players like Reliance Trends, their online-offline strategy gives them an edge. As I stated earlier about their click-and-collect strategy, it is not just about convenience, this is about trust. Parents can walk into a store, see the product quality and make an informed decision. They also have a one-price policy which means online and offline products have the same prices. We all compare prices online and weigh them against what local stores offer, choosing the best deal. FirstCry understands this customer behaviour and ensures that they cater to what parents really need. They focus on brand visibility, and this strategy enhances their presence in the market.

2. Interacting with Hospitals-

FirstCry distributes gift hampers to new mothers through hospitals and maternity clinics, a strategy that has proven highly effective. These hampers include FirstCry coupons, allowing parents to redeem products and experience the brand firsthand. They have distributed 18.5 million gift hampers in collaboration with over 20,000 hospitals.

3. Marketing Strategy-

India is a country of diversity. What works in one state might not work in another. FirstCry’s localized marketing approach was a game changer.  FirstCry collaborated with regional parenting influencers to build trust within local communities. This approach allowed FirstCry to penetrate deep into tier 2 and tier 3 cities, capturing a customer base that other brands were struggling to reach. 

4. Content-Led Strategy-

This strategy focuses on interacting with the customer through their parenting community. They cater to three parenting needs: shopping, parenting community and education. The parenting community provides high-quality content that helps them engage with parents early in their journey. According to reports, customers who participated in the parenting community were twice as likely to make purchases compared to those who did not engage with the community. The community provides advice through its parenting community. FirstCry nailed it by making each customer feel like their needs were understood.

5. Training Staff-

FirstCry understands the sensitive mindset of parents regarding their kids, so they focus on training store staff through FirstCry Academy. They also employ customer-relationship officers for modern stores who assist parents in choosing the best product for their kids. 

6. Control on Quality-

FirstCry maintains strict control over quality and safety by overseeing the entire manufacturing and retail distribution value chain. Their subsidiaries: Swara Baby, Swara Hygiene and Solis Hygiene, manufacture diapers for home brands which ensure that safety standards are met. From non-toxic toys to hypoallergenic skincare, parents can shop with confidence. Products are investigated during the production process also.

7. Pre-Schools -

FirstCry owns a network of preschools dedicated to educating young children. Revenue from preschools contributed 0.50% in Revenue from Operations. They’ve given parents a one-stop solution, from the cradle to the classroom. It’s like the ultimate brand evolution, where FirstCry isn’t just about products anymore. In a country where education is paramount, FirstCry’s entry into this space isn’t just smart, it’s a goldmine.

What do the financial numbers reveal?

There was a decrease in net cash generated from operations due to higher working capital requirements and an increase in trade receivables. Despite the financial loss, the company still managed to generate positive cash flow from operations, although it was lower than the previous year. The rise in trade receivables and other financial assets suggests that FirstCry might be extending credit terms to its customers or experiencing delays in collections.

Total assets increased by 13.9%, reflecting a strong equity base and solid financial foundation. However, the increase in the debt-equity ratio indicates that FirstCry is increasingly relying on debt financing. In 2024, the debt-equity ratio stands at 0.13.

References-

Firstcry Prospectus and Financial Statements