Hopscotch.in co-founder Rahul Anand is a former executive of Diapers.com, the number one US online retailer for children which was acquired by Amazon for approximately $550m in 2011. After the exit, Rahul with the other co-founder Lisa turned his attention to India and launched Hopscotch.in to transform the way Indian moms shopped for their kids. Based on a flash boutique model, Hopscotch.in is eyeing a revenue of Rs 25 crore this fiscal. Anand and Wei Yan, CTO of Hopscotch share why the flash sale model is gaining ground in India.
Q. What led to Hopscotch.in? How did you come up with the concept of flash-boutique model and why?
Anand: Hopscotch.in co-founders Lisa Kennedy and Rahul Anand are former executives of a company called Diapers.com, a company I had co-founded and is the number 1 US online retailer for children, which was acquired by Amazon for approximately $550m in 2011. After the exit, Lisa and Rahul turned their attention to India and launched Hopscotch.in to transform the way Indian moms shopped for their kids. The business was launched with the intent of solving the problem of access to the Indian mom to international brands not available in India. A flash boutique model makes it easier to introduce a host of new brands to the Indian mom and keep the excitement going.
Q. Tell us about your business model in detail.
Anand: Hopscotch.in works to bring moms the best baby and kids’ brands from around the world without having them step out of their homes. We bring unique products for newborns, toddlers and kids. In a flash boutique model, Hopscotch.in brings a curated selection of merchandise for a limited time. Boutiques go live every morning at 9.30 am and it is a mad rush. Our selections are hand-picked by our buyers who always focus on what moms want, rather than what is available to sell. We have two warehouses in Mumbai but we are looking to expand to a larger facility in the near future.
Q. How do your pre-order boutiques work?
Anand: Pre-order boutiques allow our customers to place an order on Hopscotch.in for products not in inventory. We then consolidate the sales and import or source the items. Doing this we are able to offer a customer a strong discount.
Q. What are the challenges faced in operating a flash boutique model and how do you tackle them?
Anand: At a technical level, the challenges are similar to those of other ecommerce sites. At an operational level, they are quite different. Because the boutiques operate on a limited time, if a critical portion of the boutique is not sold out, you are left with stock that needs to be liquidated. In a traditional model, there isn’t much urgency to push sales in a matter of days, or even hours. We mitigate this risk by trying to sell products based on demand, not supply. We have found that there is a wide range of good quality products from apparel, shoes, school stuff that the Indian mom is starved of and as long as we are mindful of bringing merchandise that solve the demand-supply gap, we are able to achieve great sales.
Q. What are the latest trends in kidswear space in India?
Anand: In India, the kidswear space is very fragmented and largely mass marketed. Over the last few years the trend has moved towards wanting more comfort and quality at attractive prices. A lot of the discerning, educated moms shopping for their kids, therefore, struggle to find a balance of all three in the mass marketed products. This opens up a good opportunity for us. Hopscotch brings a curated selection of products, a large part of this is from overseas. Our offerings in apparel include well known and loved International brands like Carter’s, OshKosh B’Gosh, Juicy Couture Baby, Ralph Lauren Kids.
Q. What do you do with the inventory that does not get sold out during the stipulated flash sale period?
Anand: We do not experience this problem very often, largely because we are very mindful of demand at the time of sourcing merchandise. If for a particular brand, we are left with say 20 percent stock at the end of the boutique, we top it up with fresh inventory and re-feature it in a few weeks’ time. Any non-moving units beyond this are marked down and liquidated in sale events.
Q. What are the key technical elements to make an e-commerce website a success?
Yan: Technology is a key enabler for any successful e-commerce company. Today’s e-commerce websites should provide optimal customer experiences for both desktop computers and mobile devices with varying capabilities and sizes. Mobile technology has become very important in creating customer engagements. Good design is also critical to the success of an ecommerce business. It should allow you the ability to showcase your products, at the same time engage the customer from the first click itself. Simple, clean design is usually the key to enhancing customer experience.
Q. What are the technical differences between flash sales ecommerce platform and normal ecommerce platform?
Yan: Traditional ecommerce platform is structured around cataloging products by brand and category. Flash sales ecommerce platforms essentially do catalogue products also but have a layer built for creating boutiques or selections. They offer limited time, limited inventory boutiques or sales events to their customers.
Q. What are the latest technological innovations being used by e-commerce players globally?
Yan: Big data analytics is one of the latest technology innovations. With ever increasing data collected from customer interactions, such as browsing history and patterns, purchasing pattern, product data etc., analyzing big data quickly and efficiently gives a competitive advantage and aids in faster data-driven decision making.
Cloud computing is another innovation gives a young e-commerce company level playing field with established ones on low capital. It also allows e-commerce players access to services and capabilities that are traditionally only available to larger players with deep pockets.
Q. Please share details about the technological innovations that you plan to introduce in India?
Anand: The innovations I mentioned are the ones we have been deploying at Hopscotch.in already. The next big push will be in the area of mobile. With the aggressive penetration of smart phones in India, this is a very important frontier.
Q. How does the inventory size for a flash sale model differ from other ecommerce players?
Anand: Flash sale sites work on limited time and limited inventory sale events. Inventory size at a flash business is, therefore, much lower than that at a traditional catalogue site. We buy inventory for a boutique, rather than for the full season. As a result, we buy very frequently but in smaller quantities.
Q. Why do you think the flash sale concept is gaining ground in India?
Anand: The flash sale concept is focussed on getting customers something they really care about – it could be pricing deals, selections, exclusivity. They do not have to dig through
thousands of products to find what they want. We play the role of curators and bring them the most sought-after, otherwise inaccessible merchandise at compelling prices.
From a customer’s perspective, this makes it very it very exciting and interesting as shoppers can get a peek into the upcoming boutiques. The anticipation makes it compelling for the target audience to visit the site every day.
From a business perspective, the excitement and engagement results in a lot of free traffic in an otherwise expensive marketing ecosystem. The flash concept also allows to test a lot of concepts and brands and get quick results. At Hopscotch.in, this helps us improve our buying and merchandising efforts in an ongoing way and limit our inventory risks.
Q. Which new brands, products, or categories do you plan to add this fiscal?
Anand and Yan: Given that our customers are primarily moms, a logical extension from the kids and baby space is into the categories of Mom and Home. We have been testing these categories in small ways and are looking to build them out further this year.
There are hundreds of brands lined up in our prospect list. More recently, we have started featuring brands from South Africa and have seen a really strong response.
Q. What are the top selling items and the top brands on your website?
Anand: We do great business with some of the established brands in the kids’ space such as Carter’s and OshKosh B’Gosh in apparel and Melissa & Doug in toys. Shoe brands like Pediped, See Kai Run, Robeez are in huge demand.Brands like Crocodile Creek, Green Sprouts, Stephen Joseph, Itzy Ritzy have a unique demand in the category of backpacks and feeding supplies. Moms are looking for safe, BPA free feeding products and these are not readily available in the Indian market.
Q. What are the price points for your offerings across categories?
Anand: We have offerings starting at as low as Rs 79 for a return gift and as high as Rs 15,000 for designer handbags. This is category driven. Typical orders on Hopscotch.in are in Rs 1,500 to Rs 2,000 range.
Q. Which model fares better in terms of average ticket value in your opinion: Flash sales model or regular online marketplace model? Why?
Anand: In a flash business, the sale events have limited inventory and are offered for a limited time. Because there is a tendency to lose out, people tend to shop more frequently and also add more items to their cart in a single order. This results in bigger cart sizes and, therefore, higher ticket value than in online marketplaces.
Q. What is your targeted turnover this fiscal (from India)?
Anand: Our revenue goal for 2014 is $3.5-4 million, which is about Rs 25 crore.