India’s e-commerce baby boom

India is expected to overtake China as the world’s most populous country by 2024. Although its crude birth rate at 19 per 1000 is significantly lower than those of many other countries (a number of African and Asian countries have crude birth rates in the 30s and 40s, for instance), India accounts for 20 per cent of the planet’s live births annually and 20 per cent of the world’s children aged from zero to three years old.

At the same time, India’s per capita disposable income is increasing, resulting in a willingness to consider luxury goods. For example, annual spend per child in 2016 was expected to increase from 6917 rupees to 14,079 rupees, at a compound annual growth rate (CAGR) of 12.6 per cent. The number of working women is increasing (more than two-thirds of baby goods purchases are made by women), and the country is becoming increasingly urbanised.

All of this means there are significant numbers of time-poor, cash-richer (than previously) women who don’t want to deal with the hassle of physical shopping in the traffic-choked metropolises of Mumbai and Delhi, each with populations nearing 20 million.

India isn’t expected to reach peak population until 2061. The forecast CAGR for the baby goods market is 17 per cent for 2014-2019, and $31 billion in sales by 2019.

While 93 per cent of baby goods were sold by independent retailers and pharmacists a few short years ago, e-commerce has since come to represent just over 10 per cent of a 25 billion rupee online market, and is doubling nearly annually. In 2015, e-commerce babycare was growing at 53 per cent (third after apparel and electronics). For comparison, according to IBISWorld’s August 2017 Online Baby Retail Sales in Australia report, annual growth rate of the then-$635 million sector was forecast at 14 per cent for 2013-2018.

Plethora of players

Both product-specific platforms and multi-product platforms and marketplaces are generating healthy returns in baby goods. While the number of e-commerce competitors continues to proliferate, the baby goods e-commerce market is actually somewhat mature.

The online babycare market is generally considered to have kicked off with FirstCry.com in 2010, now India and Asia’s largest baby goods online retailer. BabyOye.com started the same year and is now part of the “Firstcry” family. Then the marketplace players entered: Snapdeal around 2011, Flipkart in 2012 and Amazon India in 2013.

Firstcry, which has Indian corporate conglomerate titan Tata as an investor, also has 150 physical stores with a further 100 stores planned, not including the 100 physical stores it picked up in the joint venture with Mahindra Group’s BabyOye. It’s also planning pop-up stores across 300 franchise outlets. All of this serves as a supplement branding experience for its mammoth website, the premium area of which includes sections for “top international brands”, “top Indian brands”, a specific area for US retailer Carter’s, and interestingly a whole section of “mumpreneur” brands.

MyBabyCart is an online marketplace which also strongly encourages female entrepreneurs as sellers of baby goods on its site. At the other end of the spectrum, Hopscotch provides “exclusive access to global baby and kids brands” and boasts Facebook co-founder Eduardo Saverin as an investor. It has been growing at an astounding 700 per cent year on year for the past several years.

Other players include hoopos.com, LittleShop.in, BabysJoy.com, bonsaii.in, zigy.com, NewBabyClothes.com, mumzworld, babiesbloomstore, babysworld, and Chicco (branded shop).

Time-poor, cash-rich

While still a highly fragmented market, or perhaps because of this, e-commerce is emerging in India as a major channel for baby goods retailing and will only continue to strengthen.

Although Australia is obviously a very different market socioeconomically and structurally, it has the requirements of time-poor, cash-rich working parents in urban centres. Given the physical baby retail situation here, it would not be surprising to see a similar pronounced shift to online baby goods purchasing.

 

Norrelle has 20 years’ experience in retail, category, channel and customer strategy, marketing and research, working in and with global retailers, manufacturers and research houses.

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