FirstCry tops in India baby ecommerce, but SEA players face a fragmented region

Melissa Goh contributed to this report.

Necessity is the mother of invention. That was true for FirstCry, which was co-founded by Supam Maheshwari and Amitava Saha in 2010.

Following the birth of his baby, Maheshwari realized that there was a “dearth of variety and quality [baby care products] in the Indian market.”

Image credit: Timmy Loen

Now, FirstCry has become a leader in India’s thriving baby care ecommerce sector and is all set to raise US$219 million from an IPO that is expected to take place after the April to May general elections in India.

The upcoming listing is expected to value the 14-year-old startup – where Japanese tech investor SoftBank holds a 26% stake – at up to US$3.7 billion.

However, running a profitable baby ecommerce business amid the “fiercely competitive” market is hardly child’s play.

This is even more evident in Southeast Asia, where customers are used to purchasing baby care goods from horizontal platforms like Shopee and Lazada. Operational obstacles, a smaller market size, and lack of access to capital create more hurdles for baby ecommerce companies looking to scale in the region.

Digging deeper

Despite recording revenue of US$691 million for the financial year ending March 2023 (FYE 2023), which was over 3x more than in FYE 2021, FirstCry’s bottom line has deteriorated.

Adjusted EBITDA was 14% lower than two years ago, and the company’s post-tax profit actually became negative.

One reason for this has been FirstCry’s aggressive spending on advertising and sales promotions, which increased more than twofold compared to FYE 2021, though it declined as a percentage of revenue from 10.2% to 7.4% over the two-year period.

Indeed, the company warned in its draft red herring prospectus that it may “incur sustained advertising and promotional expenditures or offer more incentives” than anticipated to attract customers.

Although Maheshwari did not respond to our questions on how the firm intends to narrow losses or its strategy to maintain market leadership, the prospectus offers some clues.

The document mentions that one of FirstCry’s biggest strengths is its omnichannel approach.

Billion-dollar baby

SEA of challenges