How do you see overall e-commerce market in India? How much growth you have scaled in last couple of your years?
With a surge in internet penetration and availability of different and east payment options, e-commerce market has grown at a staggering 88 per cent in 2013 to $ 16 billion. A focus on m-commerce, increased marketing spends, faster delivery of products, improved customer service, affordability and a focus on better user interface are some key elements attributed to the growth of e-commerce in India. Today, the trend is that customers’ want fast, economical, and easy order placing process with applicable customer service. Online shopping is growing by leaps and bound with an enormous potential to target a market of 1.2 billion people. According to Crisil’s assessment, with India witnessing over 50% growth in online sales, this industry is nearing to reach $8.3 bn by 2016.
We continue to grow more than 100% every year and we expect that trend to remain the same for many more years.
What is rational behind going offline? Are you doubtful about e-commerce growth in India?
E-commerce is looking promising as it has picked up very well with the Indian audience. Therefore, it continues to be a big focus for us. Even in developed nations like US, Japan, UK, more than 90% of sales happen offline even in today’s highly internet and smart phone penetrated economies. So we cannot ignore that and India will take time to reach even 5% of its sales online. Secondly, there are hardly good baby stores available in India in any city within a distance of 5 Km.
Third, parenting is an experience and at times, parents wants to go out and shop and have enjoy the fun of touch & feel. So with this insight of parents’ exhibit hybrid pattern of shopping online and offline plus above insights, we decided right at our inception that it was not only important to attain leadership in online e-commerce but also build a large number of stores across the country. Today with a footprint in over 20 states with more than 70 stores, we are in a great position to offer the right variety of brands and products to parents.
Elaborate your strategy for offline growth, and how would you ensure a seamless integration between your online and offline presence?
We at FirstCry believe in creating a seamless experience for the customer by integrating both formats: online and offline.
There is a huge opportunity in integrating the online model with offline, what is termed as O2O – online to offline – and is seen as a trillion dollar opportunity globally. It makes sense for a country like India where the consumer wants the variety and deals of online but the touch and feel of offline. China, with an estimated $100bn O2O market, already has businesses that have made a success of this model. While the earliest starter was Alibaba, a more relevant example would be that of Babies’r’Us in the US which follows a ship from store model. Orders placed online are fulfilled from the local store making deliveries faster and cost efficient. As of now FirstCry’s stores double as experience centers and sales points, where customers can touch, feel and buy products. It is a challenge to move to a fulfilment model with the current scale of stores, possibilities may open in the future. We have recently innovated to provide a 32 inch touch screen kiosk at our stores where a parent themselves can order any product which is not available at store at that moment but available online. This gives a parent a huge range of product to order from and not facing any barrier of buying online. This fulfilment is done by the store only and any service like assembly of a stroller or walker comes quite handy.
Can you give us a sense about how many orders you processed every day and what is your average bill size?
No. of orders vary from store to store depending upon the footfalls due to catchment area of the location. But conversion is very high and goes upto 90%. In fact most of the stores breakeven operationally within 3-4 months of starting.
How you utilizing the capital you raised from Vertex (VC Arm)? Are you still looking for more funding? If yes, what kind of investors will fetch your attention?
As far as capital utilization is considered, we are focusing on using it for strengthening our technology, marketing and supply chain network. We depend heavily on technology and it allows us to scale our operations in a very capital efficient fashion. With the vigorous offline expansion plans we want to leave no loose ends in equipping our self with the necessary requirements.
No, we are not looking out for raising new funds as of now. If any long term deep pocketed investor comes that aligns with our vision, we will certainly like to consider but nothing in particular as of now.
What is the ratio of international brands on your e-commerce site? Which retail category is working best for you?
Our biggest strength is the width and depth of categories on our platform. Our category mix maps to the average buying behavior of the Indian parent. Amongst all the categories, we are seeing a spurt in the demand for clothes and shoes as we manage to bring the largest variety in India in the baby and kids fashion space. Currently we have 700 plus brands on our portal, out of which 350 brands are international which almost accounts for 50 percent.
Whom do you see as your major competition?
For different categories, there are different competitors but in general there are hardly any organized baby specialist stores in the country barring 1-2 large ones like Mom& me.