Analysis on Baby Care Market

and Online Retail Segment

Author : Suyash Tripathi

Author : Suyash Tripathi

October 2014
October 2014
 Content
 India – Macroeconomic Factors

 Indian E-Commerce Sector Overview

 Indian Baby Care Products Market and Market Categorization

 Overview of Maternity Care and Baby Care Products Market by product type

 Indian Online Baby Care Products Market

 Sourcing (Online Portals)

 Market Analysis

 Known Names
Author : Suyash Tripathi

 The Baby Care online market is growing

 But there is a long way to go

 Looking forward, while looking around, for all factors

October 2014

 Observations & Suggestions

 India – Macroeconomic Factors

India’s Demographic
Dividend
• In the near future India will be the largest individual contributor to the global demographic transition
Author : Suyash Tripathi

• India’s young and burgeoning working age population is a competitive edge that sets Asia’s third largest economy apart from other
countries across the world
• Its workforce, those between 15 and 64, is expected to rise from almost 64 percent of its population in 2009 to 67 percent in 2020.
Meanwhile, China's is expected to start declining from 2014 resulting in a labor shortfall by 2050
• India’s long term growth relies on two factors: demographics and rising wealth. Its population of 1.2billion will reach 1.7billion in
October 2014

2050
 India – Macroeconomic Factors
GDP Growth Rate of India and other major economies

India’s Demographic
Dividend

• Its population of 1.2billion will reach 1.7billion in 2050India’s per capita income has risen to INR 5,729 per month in FY’2013 from
INR 2,200 per month in FY’2001, recording a CAGR of 8.3% during the period.
• There are 50 Million babies in the age group of 0-2 years and 304.8 Million children are in the age group of 0-12 years
• The spending power of Y generation who spend a considerable proportion of their income on discretionary items, constitute a large
part of maternity and baby care products’ consumer base in the country.
Author : Suyash Tripathi

• The western countries are struggling to overcome from the declining birth rates and the baby care industry has reached a saturation
point in these countries.
• India has 25% more baby population when compared to China, thus highlighting the massive growth potential in baby care industry
in India
• Product innovation and development, deeper penetration in urban and rural areas and key focus on individual baby care product
October 2014

segments shall remain focal point of growth for existing and potential new players in this industry in the coming few years
 Indian E-Commerce Sector Overview

E-Commerce Industry
Segmentation

C2C B2C B2B

• Online Travel
• Online Classifieds
• Online retail • Online Classifieds
• Online Retail
• Online Classifieds

504
Online retail market size and growth (INR Billion)
Author : Suyash Tripathi

Rs Billions 334

224
CAGR ~56%
139
91
58
24 38
15
October 2014

2008 2009 2010 2011 2012 2013 2014 2015 2016

 Indian Baby Care Products Market

Market Overview India Baby Care Products Industry Market Size on

Basis of revenue in percentage, 2008-2013

The market has grown from INR 34,564.8 Million

in 2008 to INR 60,333.9 Million in 2013
2013P

Registered a CAGR of 11.8% during 2008-2013

2012

Including apparels, Baby and child-specific

products sees value growth of 13% to reach INR 2011
8.8 billion in 2013

Average unit price of baby and child-specific

2010
products continues to increase in 2013

Johnson & Johnson (India) Ltd continues to

dominate with 73% value share in 2013 among 2009
Author : Suyash Tripathi

the CG peers

Baby and child-specific products is expected to 2008

grow by a value CAGR of 2% at constant 2013
prices over the forecast period to reach INR9.5
billion by 2018 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Thousands
October 2014

Highest demand is for baby food & toiletries

 Indian Baby Care Products Market
Revenue Story - Indian Baby Care Product Segemention by Product Categories

100.00% 0.96%

2.11%
0.91%

2.25%
0.84%

2.43%
0.78%

2.60%
0.74%

2.81%
0.72%

3.06%
Growth factors:
95.00% 4.04% 4.39% 4.32% Hair Care
4.24% 4.18% 4.24%

Convenience
90.00% 6.00%
Products Changing attitude of working
6.17% 6.43% 6.69% 6.96% 7.33%
Bath Care mothers towards baby care drives
Toiletries
growth
85.00%
6.17%
6.38% 6.52% Skin Care
7.03%
7.69%
7.92%
80.00% Baby Food
80.71% 79.90% 79.46% Population of 0-4 years is growing,
78.65%
75.00%
77.62% 76.73% providing tremendous opportunities
2008 2009 2010 2011 2012 2013P

Demand driven by working couples ,

India Baby Care Products Industry Market Size Revenue (INR Hundred Millions)
Hundreds
owing to their changing lifestyles
Author : Suyash Tripathi

700.0 and convenience, and ‘no

600.0 compromise’ attitude towards
500.0
quality
400.0

300.0
Metropolitan cities see large
200.0 spending due to dynamic, time
October 2014

100.0 pressured lifestyles and increasing

0.0
disposable incomes
2008 2009 2010 2011 2012 2013P
 Baby Care Products Market Categorization

• Indian Maternity & Baby Care Market ~INR 710 Million (USD 11.12 Bn)

• India Toy Industry is estimated to be growing at a CAGR of ~20%, catering to about 40 million kids across the country

• 50 Million babies in the age group of 0-2 years

• 304.8 Million children are in the age group of 0-12 years

• Change in spending pattern of the parents due to high disposable income and change in lifestyle

• Increase in proportion of working women

• The major product categories include:

• Baby Food

• Skin Care

• Toiletries
Author : Suyash Tripathi

• Bath Care

• Convenience Products

• Hair Care

• Maternity Products are overlaps with the Baby Care as well as Mother Care category.
October 2014
 Maternity Care Category
Matrnity Care Products Market Size on Basis of Revenue in INR
Key Points Million, 2008-2013
12,000.00 11,184.40
9897
• Alongwith quality of life for the baby, the new generation is also 10,000.00 8451.9
beginning to understand and spend on quality life for expecting 8,000.00 7070.3
mother 5943.5
6,000.00 5323.6
• Preference of Indian consumers is from low quality–low price to
‘value for money’ and superior quality goods in the domestic 4,000.00
market
2,000.00
• New age maternity benefits from employers
0.00
• Grew from INR 5,328.6 million in 2008 to INR 11,184.4 million in
2008 2009 2010 2011 2012 2013
2013
• Recorded a CAGR of 16.0% from 2008-2013
• A tremendous growth of nearly 19.0% from 2009-2010 Segmentation by Product Category
• Few prominent BM retailers are enjoying a major share -
Mothercare, Mom & Me, Nine etc
Pillows &
• Majorly divided into Maternity Apparels, Pillows and Cushions, Maternity Cushions
Books and CD’s, Creams &Lotions, Maternity Belts etc Apparels 5%
91%
Growth obstacles Books & CDs
Others 3%
• Unorganised sector working population has no access to 1%
maternity benefits
• Concentrated in Tier-I Cities
Author : Suyash Tripathi

• Low penetration in Tier – II Cities Indian Maternity Products Market Future Projections (INR
Millions)
Growth Drivers 30
Thousands 24.7863
• Expected to remain niche segment, but huge growth potential 25 20.759
• Market majorly driven by mothers/women between 24-49 years 20 17.498
14.9493
• Women are becoming more fashion and quality conscious 15 12.9708
• The products are now spreading through all channels – special 10
October 2014

retail stores, MBOs, E-Commerce

5
0
2014 2015 2016 2017 2018
 Baby Food Category
Key Points
Indian Baby Food Market Size on Basis of
Revenue in INR Million

46291.9
• Market size reached INR 46,291.9 Million in

42068.2
50000
2013, compared to 27, 898.4 Million in 2008

37759.8
45000

33965.9
• Baby food industry saw a CAGR of 10.7% from 40000

30699.4
27898.4
35000
2008 - 2013
30000
• Slow growth rate in 2009 and 2010
25000
2008 2009 2010 2011 2012 2013P
• Parents do not compromise on the spending on
babies’ nutrition diet

• Sale of high-end baby food products continued

to appreciate during recessionary periods also Percentage contribution of different segments to the Baby
Food Category

Segments Speciality
Food
Author : Suyash Tripathi

2% Dried baby
• Dried baby food segment contributes to 61.3% of Food
Infant Milk 61%
total baby food market, Formula
37%
• Infant milk formula contributes 36.8%

• Prepared baby food - slowly establishing. Eg

October 2014

Puree and Snacks.

 Baby Food Category
Growth Drivers
Indian Dried Baby Food Market Size on Basis of

28,375.00
• Increasing Baby Nutrition awareness combined with Revenue in INR Million, 2008-2013

25,000.00
rising personal disposable income 30,000.00

21,815.00
18,936.60
25,000.00
• Rising of Working Women population - from 9% in

16,267.20
13,890.50
2011 to 14% in 2012. Inadequate time to breastfeed 20,000.00

babies, hence substitutes are welcomed 15,000.00

• Aggressive baby food awareness campaigns in rural 10,000.00

2008 2009 2010 2011 2012 2013P
areas by companies

Key Points
Indian Infant Milk Formula Market Size on Basis of
Revenue in INR Million, 2008-2013

17,055.00
• Tier I and Tier II cities are preferred locations for

15,000.00
20,000

13,227.50
product launches

11,747.30
Author : Suyash Tripathi

10,475.60
15,000

9,375.00
• Baby Food products are affordable by only 1/4th of
population, hence pricing is a growth deterrent 10,000

• Dried Baby Food CAGR – 15.4% (2008-2013)

5,000
2008 2009 2010 2011 2012 2013P
• Infant Milk Formula CAGR – 12.7% (2008-2013)
October 2014
 Baby Skin Care Market
Key Points Baby skin care market size on the basis of revenue in INR
million 2008-13
6000
• Baby Skin is extremely delicate and fragile, 5000
4777.7
4167.9
hence a big issue of concern among parents 4000 3376
2789
3000 2450
2134
and caretakers 2000
1000
• Parents’ product buying decisions depend on 0
2008 2009 2010 2011 2012 2013P
peers, family members, marketing initiatives
by product makers
India Baby Skin Care Market Segementation - Revenue in
• One of the fastest growing segment in baby INR million 2008-13

care products Massage Oil Cream and Moisturizer Baby Powder

2,350.60
• Market valued at INR 4,777.7 million in 2013,

2,083.90
in contrast to INR 2,134 million in 2008

1,728.50
Author : Suyash Tripathi

1,447.50
• Massage oils – approx 50%, creams and

1,281.40

1,261.30
1,165.70
1,151.70

1,075.30
1,008.60
moisturizers – 25%

850.80
796.70
688.90
652.60
585.30
583.30
500.00
482.30

• CG players with largest share – J&J, Dabur,

Emami, Wipro, Himalaya, Doux
October 2014

2008 2009 2010 2011 2012 2013P

 Baby Diaper Market
Key Points India Baby Diaper Market Size on the Basis of Revenue
• Largest contributory segment after Baby Food in INR million 2008-13
• Low penetration rate ~ 3%, due to low consumption
• Growth potential of ~99.5 Billion Units/year, among highest in 2013P 4425.2
the world
2012 3772.2
Growth Obstacles 2011 3210.1
• Current purchasing power prohibits a large consumer base 2010 2749.3
• Cultural resistance to accept disposable diapers
• Consumers have a harder time in getting rid of things and 2009 2371.9
putting them in waste
2008 2072.8
Growth Drivers 0 1000 2000 3000 4000 5000
• Rising disposable incomes of the households
• Increasing attention to baby’s health
• Surging population of babies in India. India Baby Diaper Market Size Potential
• Increase in median age of expecting women ,as higher aged
parents are viewed as financially more stable and can afford 120
premium baby utility brands 2.5
100 12.1
• Changing lifestyle brands
80
Author : Suyash Tripathi

• Mother’s going back early to work after delivery

60
22.3
Therefore… 40
99.5
75.7
• The segment demands more marketing efforts by diaper
20
companies than other regions 22.4
• Lower diaper prices can act as a major driver, and market 0
acquirer in this segment India China US
• Online retailers like babyoye and firstcry buy in bulk, and pass on
Billion units/year Present Market potential
October 2014

the margins to the end consumers (Mothers), keeping the prices

lower and thereby drawing traffic and sales Billion Units/year Maximum market potential
 Baby Bath Care Market
Baby Bath Care Market Size on the Basis of Revenue in
Key Points INR million 2008-13
3000
2556.4
•Category includes soaps, shower gels, 2500 2263.1
2034.5
body wash, bubble bath foams and other 2000 1686
1847.2

1396.3
bathing additives such as bath oil 1500

1000
•Baby bath products except soap is
500
relatively low in India 0
2008 2009 2010 2011 2012 2013P
•Valued at INR 2,556.4 million in 2013

•Segment has witnessed CAGR of 12.9%

India Baby Bath Care Products Segmentation by Soaps and
over the period 2008-2013 Other on Basis of their Revenue in INR Million, 2008-13
Soaps Others
•Growth Obstacles and Drivers are akin to
Author : Suyash Tripathi

other categories 41.90 60.70 70.20 81.40 110.90 148.30

•This segment is witnessing a good growth

1354.40 1625.30 1777.00 1953.10 2152.20 2408.20
rate, but due to lower starting figures,
the penetration in market will take time
October 2014

2008 2009 2010 2011 2012 2013P

 Baby Convenience Products Market
India Baby Convenience Product Market Size on the
Key Points Basis of Revenue in INR million 2008-13 Size
• Another one of the fastest growing segments 2000
• Grew in size from INR 730.8 million in 2008 to INR 1800
1,846.7 million in 2013 1600
1400
• Witnessed a CAGR of 20.4% from 2008-2013 1200

1846.7
• Categories - 1000

1523.2
•Toys 800

1250.3
1036.6
600

865.4
•Baby Strollers

730.8
400
•Baby Cots 200
•Baby Furniture 0
2008 2009 2010 2011 2012 2013P
•Car Seats
•Others (Baby Wipes, Feeding Bottles, Devices,
Health etc) Percentage Contribution of Convenience category subsegments
Others
Growth Drivers 2%
Car Seat
• Increasing population and consumerism 3% Bay Toys
43%
Author : Suyash Tripathi

Furniture
• Increasing count of dual income parents 11%
• Increased spending on safe and branded
convenience products Baby Cot
14%
• Easy accessibility to imported convenience
products
Baby Strollers
• Entry of international convenience product 27%
manufacturers in the Indian market
October 2014

• Increasing marketing spend of toy companies

 Baby Convenience Products Market
Toys’ Sub-segment
India Toys Market Segmentation by Plush Toys, Plastic Toys and
• Convenience products is upheld by the baby toys segment Electronic Toys on Basis of their revenue Contribution %, 2012
- toys’ contribution has increased from 25.7% in 2008 to Electronic Toys
45.9% in 2013 12%
• Toys’ market is pegged at INR 847.6 million in 2013,
recording a CAGR of approximately 24.9% during the Plush Toys
period, 2008-2013 49%

• Caters to approximately 80 million babies in the age

group of 0-3
Plastic Toys
• 15% toys are made in India, rest imported 39%
• Mostly unorganised and with no government support or
assistance

Hard Goods sub-segment

• Includes
Percentage Contribution of Convenience category subsegments
• Baby stroller
Others
• Baby cot 2%
• Baby furniture Car Seat
3% Bay Toys
Author : Suyash Tripathi

• Baby harness Furniture 43%

• Baby car seats 11%
• Baby stroller and baby cots - largest contributors with
Baby Cot
market share of 26.4% and 13.8% respectively. 14%
• Baby car seat and baby furniture are minuscule
contributors to this segment with a market share of 3.3% Baby Strollers
and 11.1% respectively. 27%
October 2014

• Car seats are popular in Bangalore, as the IT crowd has

had exposure to the west
 Baby Haircare Market
India Baby Hair Care Market Size on the Basis of
Revenue in INR million 2008-13
Key Points 500
450
• Smaller segment 400

436
401.5
• Low penetration in Rural and Urban areas 350

376.3
357
349
300

332.4
• Expected to grow at a CAGR of 11.8% from 250
2013-2018 as compared to moderate 200
growth of 5.6% during 2008-2013 150
100
Growth Drivers 50
0
• Marketing and advertising getting 2008 2009 2010 2011 2012 2013P
aggressive
• Educated and vigilant parents India Baby Hair Care Products Sub-
• Advent of shopping mall culture segmentation by Revenue in INR Million,
2013
• Increasing penetration of CG companies in
rural areas Baby Shampoo
83%
Author : Suyash Tripathi

Growth Obstacles
• Orthodox beliefs in traditional, homemade
oils
Baby Hair Oil
• Use of massage oil as hair oil 12%
• Low sales of shampoo leads to lower sales Baby
of other haircare products
October 2014

Conditioners
5%
 Indian Online Baby Care Products Market
Excitement Ahead! India Online Baby Care Market Size, INR Million 2008-13
2000
• Internet Penetration is rising
1800
• Population growth is huge 1600
• Ease of transactions is growing 1400
• Last mile delivery methods are evolving are 1200

1846.7
improving 1000

1523.2
800

1250.3
• Household incomes are rising

1036.6
600

865.4
• Consumer attitude are changing

730.8
400
• The E-retail of baby Care in India is expected 200
to transpire as one of the world’s fastest 0
2008 2009 2010 2011 2012 2013
growing baby care markets
• Strategic product innovation and
development shall remain key focus areas Product Categories - Contribution Percentage to Online Retail of Baby
Care Products
• Penetrating deep into urban areas, especially
rural areas shall remain the focal growth Other Toiletries
2% 33%
point of these companies
Author : Suyash Tripathi

Hair Care
• The online baby care products market was 2%
valued at INR 605 million in 2008, growing to Bath
Care Baby Apparels
INR 1,879.0 million in 2013 2%
Skin
32%
Care Convenience
• CAGR of 25.4% for the review period, 2008- 4% Products
2013! Baby Food 21%
• Toiletries – highest contribution (33.5%) 4%
October 2014

• Baby Apparels – second largest (32.3%)

 Indian Online Baby Care Products Market
Prominent League

• Firstcry.com
• Babyoye.com
• Hopscotch.com
• Redlily.com
• Flipkart.com
• Snapdeal.com
• Amazon.com
• Momandmeshop.in
• Healthkart.com
• Ebay.in
• Shopclues.com
• Sunbabyindia.com
• Kidloo.com
• Myntra.com (apparels)
Author : Suyash Tripathi

• Littlesindia.com (Only
listing)
• In.pamper.com (Only
listing)
• Huggies.co.in (Only
listing)
October 2014
 Indian Online Baby Care Products Market
Popular Brands in India

New Entrants in India

Author : Suyash Tripathi
October 2014
 Sourcing (Online Portals)

# of
Players Best Sellers Average Order Size/day Sourcing Methods
Orders/day

Sourcing from vendor

Babyoye.com Diapers, Clothes, Toys INR 2000-3000 500-5220 contracts and own
warehouse

Sourcing from vendor

Diapers - Huggies, Pampers,
Firstcry.com INR 500-1000 120-150 contracts and own
Mamy Poko Pants
warehouse

Sourcing from vendor

Jabong.com Baby Apparels INR 1500-3000 50-100 contracts and jabong
partners

Sourcing from vendor

Baby rockers, Car Seats,
Author : Suyash Tripathi

Momandmeshop.com INR 3000 - 5000 100-110 contracts and Mom&Me

Baby Cots, Baby Swings
warehouse

Sourcing from vendor

Baby Bed Sheets, Diaper 30-40 bulk
LittlePipal INR 2000-3000 contracts and own
Bags, baby Bath Towels orders
warehouse
October 2014

What's Good
• Large scale of operations
• Product Innovations
• High standard quality
products at competitive
prices
• Increase in personal
disposable income
• Increase in dual income
parents
• 3
• Increased expenditure
on baby care products
• Expansive portfolio of
products
• Growing market
• Increasing awareness
towards baby care and
Author : Suyash Tripathi
maternity products
quality
• Few online retailers in
this space
October 2014
Market Analysis
What’s Bad Optimistic view Deterrents
• Low customer • Preference of branded • Monopoly of CG players
concentration baby care products such as J&J, P&G
especially in Tier III over local products • Highly unorganized
cities such as Trichy • Lack of domestic market with local players
and rural areas. players in the Indian
• Strategic joint ventures
• Low Research and baby care industry between big players such
Development as the partnership deal
• Low competition from
investment between Kimberly Clark
cheaper substitutes and HUL
• Local manufactures • Having strong brand
produce low quality • Regulations by Govt IMS
image and customer Act 1992, prohibiting the
duplicate products loyalty helps advertisement of baby
• Low awareness about • Increasing internet and
food products
baby care products ecommerce • Rigid Societal norms
• Short shelf life of baby penetration which is acting as a
care products deterrent to changing
• Population, internet consumer behavior
• Low government penetration and • s
• Customers in online
regulations on safety conversion rates of
Baby Care are not loyal,
and security online purchase are and repeat purchases
regulations on steadily increasing are seen in few
products • Working women have consumer goods only eg
• Low trust of less time, more Diapers, Shampoos etc
consumers in online concern about their
space babies and access to
technology - all factors
together
 Known Names

• Founded in 2010, part of Pune based BrainBees Solution Pvt. Ltd.

• Round A+B funding of $18 Million;
• Round C of $15 Million by Vertex Venture Holdings and existing investors SAIF Partners and IDG Ventures
• 70000+ Items, 400+ Brands, 150+ Vendors
• Hybrid Model – Online+Offline presence : 70 stores in 21 States from 26 stores in 11 states in Aug 2013.
• Plan to reach 100 stores by end of 2014, 400 stores by end of 2017
• Ships 6000-10000 orders per day, Avg Ticket Size of Rs 1000.
• 30% viewers from Mobile, 25% Sales from Mobile
• Free of Cost ‘Next Day Delivery’ in 10-12 cities
• ‘Subscribe and Save’ – an unconventional Subscription model added in Aug 2013
• Target $250 Mn in 2015
• Positives -
o Early mover
o Big assortment range
Author : Suyash Tripathi

o Hybrid model – scope for efficient operations

o The offline stores give way for easier omnichannel access , the current buzz in retail
o Healthy order size and ticket size
o Operations and Subscription model
o Innovative marketing ideas like ‘First Cry Boxes’ for the ‘Happiest Cry Ever’
• Negatives –
October 2014

o Lack of marketing and sales initiatives

o The company seems to be in slow growth mode in online space
 Known Names

• Founded in 2012, brainchild of ex Diaper.com executives Rahul Anand and Lisa Kennedy
• Model – Flash Boutique Sales, International Brands, Pre-booking on flash sales
• Raised seed investment from unknown investors; received $2Million in Feb 2014 from Lionrock, Nisa Godrej, Skype co-founder Toivo Annus and
Diapers CTO Wei Yan
• 400 odd niche brands – domestic and international
• Premise – Access to modern Indian mom to international brands and products
• Store everything in Mumbai warehouse, ship and deliver within 2-5 business days
• Acquired school supplies e-tailer SkoolShop, in a stock and cash deal in May 2014
• Target revenue goal for 2014 is $3.5-4 million (Rs 25 crore)
• Price range – Rs 79 to Rs 15000.
• Average Ticket Size – Rs 1500 – Rs 2000.
• Positives –
o Flash Sales model – attractive for high ticket value customers
o Flash Sales models help in keeping inventory low, hence low carrying cost
o Chirpy UI on the website
o Pre-order – plus point in inventory and order management
Author : Suyash Tripathi

o Big names associated with the venture

o Imported brands attract high value customers
• Negatives –
o Flash Sales – Missing a sale may spoil customer experience
o Category and product assortment is not streamlined
o Low marketing and sales initiatives
October 2014

o Low funding
 Known Names
• Founded in 2010, by husband-wife duo of Sanjay Nadkarni and Arunima Singhdeo under Nest Childcare Services Pvt Ltd.
• Range of 4,000 products including Pampers diapers, Chicco food, Johnson’s skin care range and cycle-maker BSA’s prams and walkers. Babyoye.com
delivers to 20,000 cities and towns in India.
• Targeting about Rs 250 crore in revenue in two years – CY 2013 and 2014
• Undisclosed funding by actress Karishma Kapoor in Dec 2011; $2.5 Million from Accel Partners and Tiger Global in April 2011;
• Acquired hoopos in an all stock deal in Apr 2013,; merged entity has raised $12 Million from Helion , Accel and Tiger Global.
• Has joined hands with Umang Foundation who will help them to donate clothes to needy babies and children
• TVC Campaign - http://www.adforum.com/creative-work/ad/player/34481051
• Positives –
o Huge product assortment
o Easy and simple to use category assortment on website
o Lesser clicks to reach the product page
• Negatives -
o Reportedly running low on funding
o Poor customer reviews on products, delivery as well as returns
o Zero marketing after initial TVC
Author : Suyash Tripathi

Feature Comparison
Firstcry.com Momandmeshop.in Hopscotch.in Babyoye.com Amazon.in Flipkart.com Snapdeal.com
Brands 550+ 70+ 400+ 400+ 500+ 400+ ~400
Shops/ Stores Yes No No Yes No Yes Yes

USP •Offline Stores •Flash Sales

•Offline •Large •Global •Indian E-Retail •Indian E-Retail
•Established Name •Imported
October 2014

Stores Assortment Brandname Giant Giant

•Online Chat for help Products
Categories* 10 8 10 12 8 14 12

*Categories taken by the count of categories on the website serving babycare/babywear produts, subject to individual opinion
 The Baby Care online market is growing
30.00%
25.40% 24.90%
25.00% CAGR
20.40%
20.00% 16.40%
15.30% 16%
15.00% 11.80% 12.90% 11.80%
10.00%

5.00%

0.00%
Baby Food Skin Care Toiletries/Diaper Bath Care Convenience Hair Care Maternity Care Online Baby Care Toys
Products Market

• The online baby care products market was grew to INR 1,879.0 million in 2013 with a CAGR of 25.4% from 2008-2013.

• Accel estimates predict that the Annualized GMV of online shopping in India (including all categories) will reach $8.52 Bn in 2016!

9000 8519
8000
Author : Suyash Tripathi

7000
6000
5000 Annualised Online Shopping GMV (USD Mn)
4000
3000
1983
2000
816
1000
October 2014

0
CY 2012 CY 2013 CY 2016P
 … but there is a long way to go

Others Mobile, Tablets &

Jewellery 4% Accessories Jewellery
1% 35% 2% Others
Fashion, 2%
Mobile, Tablets Footwear & Health & Personal
& Accessories Accessories Fashion,
Care
9% 35% Footwear &
2%
Books Accessories
Health & 21% 28%
Personal
Care Computers,
4% Computers, Cameras, Books
Cameras, Home Décor
Electronics & 7%
Electronics & Home Décor 3%
Appliances
Appliances BabyCare 8% 18%
BabyCare
10%
8% 3%
Author : Suyash Tripathi

Current estimates
suggest that But the category
although Baby Care accounts to only 3%
contributes to 8% of the GMV
online retail
October 2014

transactions
 Looking Forward – Take 1
Opportunity for Snapdeal

The online baby care products market grew to INR 1,879.0 million in 2013 with a CAGR of 25.4% from 2008-2013
Considering 2 growth rates – 10% (conservative) and 20% (aggressive), within which Snapdeal’s share to be assumed 5% (conservative), 25%
(aggressive) to 40% (overpowering)

Conservative Growth Aggressive Growth

Baby Care in 2013 Baby Care in 2014 @ 10% Growth Baby Care in 2014 @ 20% Growth

E-tail Category Size – INR Bn. 1.89 2.08 2.08 2.08 2.27 2.27 2.27
E-tail Category share in
5% 5% 25% 40% 5% 25% 40%
Market
Market Share – INR Bn 94,500,000 103,950,000 520,000,000 832,000,000 113,400,000 567,000,000 907,200,000
USD Mn (@60 INR /USD) 1.89 2.079 10.4 16.640 2,268 11,340 18,144
Author : Suyash Tripathi

• Under the assumption of Conservative or Aggressive growth of the market, Snapdeal can look towards its future steps and determine
the extent of involvement in this category using promotions, sales, category and product catalogue expansion , strategic tie-ups and
new avenues to target a Conservative, Aggressive or Overpowering share in the online baby care industry market

• Revenue targets can be anywhere between INR 100 Million to INR 500 Million, with superpowered growth coming from Aggressive
estimates pointing to INR 900 Million
October 2014

• This converts to ~$2 million to $10 Million in moderate estimates and 2.25 to 18.14 Mn in superpowered growth
 Looking Forward – Take 2
Taking the market estimates from Accel reports, the current E-Retail industry revenues were estimated to be $1.983 Bn in 2013
The predicted E-Retail revenue in 2014 is ~$2.5 Bn, and for 2016 the revenues are predicted to be $8.519 Bn, owing to growing internet
penetration, increasing adoption of technology by Generation Y , higher conversion rates for online shoppers and increase in the organised
retail sector in India

All Figures in USD Mn

E Retail - 2013 Predicted E Retail - 2014 Predicted E Retail - 2016

E-Retail Industry Size 1,983 2,500 8,519

Baby care category size (@3%) 59.490 75.000 255.570
Snapdeal’s share @5% of Category Size 2.975 3.750 12.779
Snapdeal’s share @25% of Category Size 14.873 18.750 63.893
Snapdeal’s share @40% of Category Size 23.796 30.000 102.228
Baby care category size (@5%) 75 425.95
Snapdeal’s share @5% of Category Size 3.8 21.30
Snapdeal’s share @25% of Category Size 18.8 106.49
Snapdeal’s share @40% of Category Size 30.0 170.38
Author : Suyash Tripathi

• Under the assumptions of this alternate methodology, the market to target in 2014 is approx 75 Million, and at 5% to 40% share of
market in 2014, the revenues can touch the tune of ~$3.8 Mn to ~$30 Mn.

• For a future outlook, the same methodology gives an estimated revenue of ~$12 Mn to ~ $102 Mn , for 5% to 40% market share
when the predicted Market Size is $8.5 Billion

• If we consider the category to grow at 5%, there is a potential of growing the revenues from this category to the tune of 3-10 times
October 2014

the current revenues (taking estimation of 5% Market Share currently).

 .... while looking around
Attractiveness for Entrants and
Existing Players

• With the modern day access to corporate funding, the entry barriers (in financial context) are low

• Capital requirements are moderate

• However, more than the expertise in website, technology, and financial management, the online baby care segment needs expertise

in product knowledge and strategic sourcing

• Government policies prohibit foreign retailers to start e-shops, however this rule is easily circumvented by using a marketplace model

• Cost disadvantages are independent of size, and in the long run only the horse with large feed can keep on running

• A new competitor might not achieve the economies of scale and scope, both of which are important to have in this segment

• Product, delivery and service levels differentiation matters a lot, and its difficult to achieve all these at the entry level

• A sensitive category, hence the brand equity matters. A new mother will trust a known brand over a new one, and same goes for the

online seller.

• The category has lesser players, and hence there is usually no threat of retaliation to a new entrant
Author : Suyash Tripathi

• Access to distribution and operational efficiency is important, and it grows with experience

• The customers tend to switch between websites for their requirements, hence there is low loyalty and easy switching, making the

category attractive to enter

• Industry profitability is moderate to low, esp. since ticket sizes are smaller, there are more CG products involved (which usually have
October 2014

lower margins) and fixed delivery costs per product are higher than other bigger products
 .... for all factors
Competition and available sources of
access to end customers

• The Indian Baby care products market is still in nascent stage, with low points of sale of good
quality, reliable products

• The population still considers some primitive products (cloth nappy, home made oils) to be better
for baby care

• The major web players are not big enough. Competing is relatively easier as compared to categories
like Books, Mobiles etc

• It is easy for consumers to switch to another website if they have a bad experience

• There is a high propensity of the customer to substitute and switch, with almost no switching cost

• Product differentiation matters, since its easy to substitute between lower end, easily available
Author : Suyash Tripathi

products

• Long tail of the category can serve as a profitable business, esp. with rare items like bassinets, baby
care devices, training materials for mothers etc

• Customers have more buying power, esp. in the Indian e-retail scenario, where all players are
October 2014

focused towards improving the service level and outpacing the competition at any cost
Author : Suyash Tripathi
October 2014

Observations/Suggestions
 Marketing
Strategies

• Put the marketing spend on TV and Digital, but also reach out to customers through traditional channels

• Employ sales force to set up app and website demo camps in malls, RWA Society campus, Fairs, Events

• Pamphlets/Brochures help retrieve information when needed

• Easier to target tier-II and III cities with traditional methods

• Market Snapdeal to Analysts by more frequent interactions and highlight the baby care category

• Traffic increases with app install count increase, so educate the customers and let the sales force do it for them through

outdoor interactions in malls, fairs etc

• Content marketing will be the new SEO, grab on to it – Snapdeal should work more on Content Marketing.

• More content for the new and expecting mothers

Author : Suyash Tripathi

• Make Snapdeal their trusted destination for baby care tips

• Learn from global Retailers like Williams Sonoma, and Woolworths’ websites

• Helps in increasing traffic, conversion of viewers into customers and retention/repeat visit to website

• Contests like ‘Smart SD Kid ‘should have more Social Media buzz and Home page presence on the website
October 2014

• Personalize the delivery boxes to appeal to the customer

 Category &
Website
Specific
• Localize the merchandise displayed on the home page and landing page

• Survey the users, reward them for completion, use the data

• Make/Offer weekly/monthly baskets for them to fill in, and send mail/SMS reminders – helps in retention/loyalty

• More emphasis on predictive analysis for to give out tailored deals and alerts to customers

• Pre-order is the buzz word – ask the users to register and then pre-order exclusive merchandise

• Bundle the pre delivery and post delivery products, either as a combo, on in a phased sale/discount (a part of the discount can be

availed on products before child delivery and a part to be availed for post delivery products). This will increase reach, repeated

purchase and retention

• Add a dedicated ‘Services ‘catalogue – Nannies on call, Exercise trainers and Yoga teachers, Caretakers etc

• Make ‘Baby Gifting’ a more prominent category – Gifts for Baby Showers, Post delivery celebrations, 1st birthdays - potentially big market
Author : Suyash Tripathi

for online gifting.

• Customers should be able to see on the website how the gift will look in packed condition

• Products missing from the catalog –Devices for Baby lights n music, CDs n Media (mostly longtail products)

• Make the UI more colorful and use rich content – 85% product decisions are made at the visual appearance and colours are the best way
October 2014

for brand recognition

 Strategic
Tie-Ups
• Strategic tie ups lead to increased traffic and increased customer conversion, loyalty transfer and higher market attention

• Tie ups with Yoga practitioners – Yoga and exercises for expecting mothers and new mothers to keep them healthy.

• This can also be sold as content on CDs etc.

• Tie ups with Hospitals, Fertility Clinics –

• To connect straight with the customers

• To be a helping hand and guide when they might be looking for advice

• To market specialty products and give them a bundle of products+services (for pre delivery or post delivery care)

• Tie-ups for exclusive merchandise and pre-ordering them will lead to increased traffic and sales

Growth
Planning
Author : Suyash Tripathi

• Strategic Tie Ups for exclusive offers and products (with emphasis on a long term relationship)

• More imported brands and goods

• Market is expanding and hence its advised to keep a foresight into the consolidation that should happen after a boom
October 2014

• Improving the catalog seen

• More visibility to sales on the home page

 Pitfalls
• Should pay heed when comparing or mapping the growth of this category to China's Baby Care growth and observations, the stark

difference being 'One Child' policy

• Important to remember that end customer doesn't look at only the product, price or delivery, but also looks at the facts like

product quality, usage and convenience related to it. Hence product landing page should have more informational features

• In strategic partnerships with trainers/maternity and infant care advisors, it is important to have a thorough background and

eligibility check. Same goes for domestic baby care products suppliers, esp. for non-branded items

Technology

• Alt texts important for features like 'Register your baby' - The customer has to know about the feature and what to expect from it
Author : Suyash Tripathi

• Use ‘Gamification’ to help attract the customer and keep their interest in the product profile
• Use of mobile technology in portable kiosks, pop-up stores etc should be incorporated
• Use clickable videos on kiosks and pop-up stores
• Adopt SMAC for competitive advantage over peers
• Bring in shopping assistance. For a category like Baby Care, customers welcome suggestions and help
October 2014

• Look for niche social networks in India

• Overcome SEO difficulties and costs with Content Marketing
Author : Suyash Tripathi
October 2014

Thanks