The baby boom online

Two commodities on the rise in recent years have fuelled the boom in the baby products market: Guilt and disposable incomes.

Organised retail came up in the late '90s, adults and teens became its targets in the early 2000s, but people wondered whether they should spend money on babies – they grew out of the purchases soon enough. But in a rapidly changing India where nuclear families – many with both parents working – are growing in number, parents probably compensate for the little time spent with their child by showering him/her with the best.

The logistics of kitting out Baby, however, are tiresome. There aren't that many one-stop shops for all of Baby's needs. Diapers are bought from one store, clothes from another, toys elsewhere, so the attraction of specialist baby-goods Web sites is that they bring all these and more together.

“There are many categories in baby products, the options are huge, and those are still not represented in the stores,” says Sanjay Nadkarni, Director of Babyoye.com, the first baby Web site to be funded by venture capitalists. “You need at least 10,000 sq. ft. to display and stock good variety in a store,” he adds.

It's only in recent years that attempts at comprehensive retail have been made, with the UK-based Mothercare and Mahindra Retail's Mom & Me setting up shop.

Brands see this as a lucrative space to be in. In the FMCG segment, diapers are a big deal. When consumption for babies and infants grows, the first thing to boom is diapers, Nadkarni says, adding that the market has zoomed from Rs 200 crore to Rs 3,000 crore over the last four years (at vendor level) – parents are willing to spend on such disposable products.

The organised market for kids' (aged up to 12) apparel stands at Rs 3,000 crore, and the toys market between Rs 4,000 and Rs 6,000 crore.

On Babyoye, 60 per cent of the consumers come from the top eight metros, the rest from across the country. Metro consumers tend to buy the baby's daily needs, such as diapers, off the Web site, apart from toys, clothes and baby essentials. And products such as sophisticated feeding supplies and baby monitors are bought by consumers in smaller towns.

“Even in big cities, the dispersion of baby shops is not adequate,” says Nadkarni, who had an eight-year-stint in the telecom industry in various roles before quitting to set up Babyoye.

In one year, Babyoye, set up with initial investment of about Rs 25 lakh, grew nearly 100-fold in terms of sales, he says, without revealing numbers. It is probably the first baby Web site to be funded by venture capitalists, Accel and Tiger, which invested $5 million in April 2011, 10 months after it was set up. The company now advertises on television and has roped in actor Karisma Kapoor, also an investor in the site, to endorse it.

Babyoye started out selling 900 products, it now has 2,000. It is adding two more warehouses in Hyderabad and Chennai to four in Delhi, Mumbai, Bangalore and Pune.

“We're fairly competitive even today,” says Nadkarni, to a question on business prospects, “there's really no strong brick-and-mortar brand.”

The parent community is very well networked and that helps growth, he says. In another two years, he expects the going to be really good. He estimates the online baby products market at Rs 15 crore – 20 crore per month.

For Amurto Basuray, Managing Director, Olive Tree Retail Ltd, which owns Babeezworld, his experience as a franchisee of sports brand Puma and Chicco – he runs their stores in Delhi, Mumbai, Kolkata and Bangalore and “we meet moms everyday” – was the impetus to start a Web site for babies products.

Over the years, he figured out “online would be a natural extension” of the core business, forward integration for another set of customers.

Pointing to the baby products' business getting organised in the last 2-3 years, he remarks that whenever that happens to a business category, it attracts entrepreneurs and businessmen. The rise of retail for babies and that of e-commerce in India coincided about 2-3 years ago, he says, explaining the point he made about natural extension. Indeed, there are now a host of dotcoms that have sprung up to cater to babies and their mothers: Hoopos, hushbabies, firstcry, babyindia, babyproducts, a2zbaby, letbabyplay, mybabycart

E-commerce has to be seen as a retail business, not as a technical business. The same rules and kinks apply to both, he points out. Basuray should know - he was part of the team that set up Adidas India in 1995-96, when the sportswear business got organised. “There are too many guys in this (baby) segment, there'll be a rationalisation, but till the dust settles, the consumers have a gala choice,” he says.

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