Babyoye’s Booming Growth in India’s Niche e-Commerce Sector

According to market research by Rajesh Thambala, India’s child-oriented retail sector was estimated to be worth Rs 23,000 crores (~$3.8 billion) last year. The sector is projected to grow 20% annually to Rs 80,000 crores (~$13.1 billion) by 2016, translating to a 20% annual growth rate. There is potentially an immense opportunity for growth for online retailers. Last year, a mere Rs 200 crores (~$32.7 million) was currently contributed through e-tailing channels [sm: what kind of english is this? what are you trying to say?]. The children’s e-tailing segment is projected to be worth Rs. 1,500 crores (~$246 million) by the year 2016.

Babyoye’s Offerings
Mumbai-based Nest Childcare Services is the parent company for kid retailing site, Babyoye.com, that is among the few online retailers that have made an impressive mark within the market segment. Babyoye.com was founded in 2010 when Sanjay Nadkarni and Arunima Singhdeo realized the need for an online portal that gave young parents access to information and products needed for their infant and mother care requirements. What began as a baby-oriented site soon expanded to cater to the older children’s segment through their sister site, Kidsoye.com. Kidsoye caters to products for children 6-14 years of age.

Today the company offers more than 13,000 products offered by 120 Indian and international brands for babies and new mothers across several categories ranging from diapers to baby gear like strollers. Brand partners include Johnson & Johnson, Graco, Avent, and Chico, to name a few. Like other Indian e-commerce sites, Babyoye also offers facilities such as cash on delivery, EMI based payments and free home delivery options. They have seen nearly 50%-60% of their consumers come from the urban markets of the country and the balance from tier 2 and tier 3 cities.

Babyoye’s Financials
Babyoye’s detailed financials are not known. Two years ago, they were generating 300 to 350 transactions daily at an average transaction size of Rs 2,000 (~$33). That translates to revenues of at least Rs. 23.7 crores (~$3.9 million). Since then they have seen revenues grow 100 times each year and have already turned profitable. They have received $2.5 million in venture funding from Accel Partners and Tiger Global and an additional undisclosed amount in funding from the Bollywood actress, Karishma Kapoor.

According to market reports, Babyoye is now targeting to grow to average revenues of Rs 250 crores (~$40 million) within the next two years. Earlier this year, Babyoye announced the acquisition of their competitor, Hoopos, for an undisclosed sum. Hoopos set up operations in 2011 and had received $12 million in funding from Helion Ventures. At the time of they acquisition, Hoopos was getting an average of 4,000 orders daily at an average order value of Rs. 1,200 (~$20). While Hoopos has seen revenues grow 50% annually, they were yet to turn profitable.

As you know, I am a big believer of niche e-commerce. In America, it is a booming category. I see no reason why niche e-commerce will not generate thousands of entrepreneurs in India as well.