How FirstCry capitalized the online babycare segment

Back in the day, if you were a parent in India looking to buy the best stuff for your baby, you'd have a tough time. Good baby products were hard to find, and shopping online for them wasn't as easy or reliable as it is today. This was the big headache that led to the birth of FirstCry.

Supam Maheshwari, a dad himself, felt this pain personally. He had to buy baby products from other countries because the options in India just didn't cut it. He teamed up with Amitava Saha, and together, they thought, "Why not create a place where parents in India can easily find and buy the best baby products?" And just like that, FirstCry was born.

Who are the founders?

Supam Maheshwari and Amitava Saha, the brains behind FirstCry, brought their personal experiences and professional expertise to the table. Maheshwari, an IIM Ahmedabad graduate and an engineer from Delhi College of Engineering, was a first-generation entrepreneur who previously co-founded Brainvisa Technologies. 

Saha, with a master's degree from IIM Lucknow and a BTech from IIT Varanasi, had a strong background that complemented Maheshwari's vision. Their shared ambition led to the creation of FirstCry, aiming to fill the gap in the Indian market for baby care products.

The beginning 

The journey began in 2010 when Maheshwari and Saha recognised the potential for an online platform that could offer parents in India access to the best baby care brands globally. The duo started with an inventory-based model, shipping products from their warehouses across major Indian cities. 

Over time, FirstCry emerged as an omnichannel retailer, blending the online shopping experience with offline stores to offer an extensive range of baby care products. From diapers and feeding essentials to toys and clothing, FirstCry provided parents with over 90,000 items from around 1,200 brands, including both international and Indian names. 

The platform focuses on providing a seamless shopping experience backed by fast delivery and responsive customer service.

Today, It has a physical presence in over 350 franchised stores across India.

Revenue model and financials 

FirstCry's revenue model is multifaceted, combining product sales through its online platform and physical stores with franchise fees. The company also introduced innovative marketing strategies like the 'FirstCry Box' to engage new parents. 

Despite its significant revenue growth, with operations soaring to Rs 5,632 crore in FY23, FirstCry faced challenges in balancing its rapid expansion with rising expenses, leading to increased net losses.

FirstCry Growth and Acquisitions

FirstCry's growth trajectory is marked by strategic acquisitions, including BabyOye and Oi Playschool, which broadened its market presence and product offerings. 

Despite facing competition from online portals like Myntra and Amazon, as well as local vendors, FirstCry maintained a strong position in the baby care market through its extensive product range and omnichannel approach.

Financial growth 

In FY21, FirstCry saw a significant leap in its financial performance. The company's operating revenue doubled to Rs 1,603 crore from Rs 815 crore in the previous year, showcasing a strong growth trajectory. This was a remarkable year for FirstCry as it managed to turn a profit of Rs 216 crore, a notable recovery from a loss of Rs 191 crore in FY20. 

The improvement in cash flow was also evident, with the deficit-reducing to Rs 67 crore from a substantial Rs 300 crore deficit in FY20. This financial year marked a period of strategic growth and operational efficiency for FirstCry, reflected in its improved profitability and cash management.

Moving into FY22, FirstCry continued its growth momentum, with operating revenue climbing further to Rs 2,401 crore. However, this year presented a set of challenges, as total expenses surged to Rs 2,568 crore, leading the company back into a loss of Rs 79 crore after the previous year's profit. 

The cash from operations deficit widened again to Rs 142 crore. The increase in expenses was primarily due to higher costs in materials consumed, which rose to Rs 1,572 crore, and significant investments in employee benefits and advertising, indicating FirstCry's focus on expansion and market penetration despite the financial setbacks.

In FY23, FirstCry's financial landscape saw dramatic changes. The company's revenue from operations soared to Rs 5,632 crore, more than doubling from the previous year, driven largely by product sales which accounted for 98% of the revenue. 

Despite this impressive revenue growth, the company faced a staggering six-fold increase in net losses, reaching Rs 486 crore. This was attributed to a significant rise in expenses, especially in the cost of procurement of materials which increased 2.5 times to Rs 3,935 crore, alongside substantial growth in employee benefits and advertising expenses. 

Shareholders and IPO

In December last year, Brainbees Solutions, the parent company of FirstCry, an omnichannel retailer of childcare products, filed its DRHP with the Securities and Exchange Board of India (SEBI) to raise funds via an initial public offering (IPO). 

It includes a fresh issue of shares worth up to Rs 1,816 crore and an Offer for Sale (OFS) of up to 54,391,592 equity shares by existing investors. 

Major shareholders like SoftBank, Mahindra & Mahindra (M&M), and US private equity fund TPG are part of the offer for sale (OFS). SoftBank, holding a 25.5% stake, is set to sell 2.03 crore shares, while M&M plans to offload up to 28.06 lakh shares. Other notable sellers include Ratan Tata, Tata Sons Chairman Emeritus, who will sell his entire stake of 77,900 shares, and FirstCry Co-Founder and CEO Supam Maheshwari, divesting 18.24 lakh shares. 

According to the company, the raised capital from the IPO will be utilised towards setting up new modern stores and a warehouse, lease payments for existing stores, sales and marketing, technology and data science costs, funding acquisitions, and strategic initiatives.

Additionally, A portion of the funds will be used for the market expansion in Saudi Arabia. 

Major shareholders like SoftBank, Mahindra & Mahindra (M&M), and US private equity fund TPG are part of the offer for sale (OFS).

SoftBank, holding a 25.5% stake, is set to sell 2.03 crore shares, while M&M plans to offload up to 28.06 lakh shares. Other notable sellers include Ratan Tata, Tata Sons Chairman Emeritus, who will sell his entire stake of 77,900 shares, and FirstCry Co-Founder and CEO Supam Maheshwari, divesting 18.24 lakh shares.