IPO-bound FirstCry plans to scale up its operations in global markets

The IPO-bound company plans to set up new modern stores and warehouses in the Kingdom of Saudi Arabia (KSA), according to sources.

To further strengthen its position and replicate the Indian playbook, the company proposes to use a total of Rs 1,556.00 million (Rs 155.6 crore) for the expansion plans abroad.

Of this, it is proposed that Rs 726.00 million (Rs 72.6 crore) will be used for setting up 12 new modern stores in KSA. About Rs 830.00 million (Rs 83 crore) has been proposed to be used for setting up new warehouses in Riyadh, Jeddah and Dammam in KSA. This corresponds to approximately 0.25 million square meters.

FirstCry expanded its international footprint into the United Arab Emirates (UAE) in 2019 and KSA in 2022, expanding its reach in these markets.

The company’s strategy involves meeting customer needs through various channels. These include an online platform, modern stores and general retail distribution in India, and mainly online platforms in the UAE and KSA.

As of December 31, 2023, FirstCry’s platform in India, UAE and KSA will offer a wide range of stockholding units (SKUs) from over 7,500 brands. These include Indian third-party brands, global brands and private labels.

During the nine months ending December 31, 2023, the platform added 842 new brands, bringing the total to 7,516.

In the UAE and KSA markets, FirstCry offers an extensive product range. These include clothing, shoes, baby equipment, children’s items, diapers, toys and personal care products. Inventory includes more than 262,000 SKUs from more than 3,600 brands. The company also has its own warehousing and logistics facilities in these regions, ensuring efficient delivery services.

All last-mile delivery in the UAE is managed in-house, with most same-day or next-day deliveries during the nine months ending December 31, 2023.

At KSA, the majority of shipments are managed and delivered through their own logistics network, ensuring a better customer experience. They offer ‘Vrooom Delivery’ services for selected products via the online platform. Items ordered through this service are stored in their warehouses, allowing for faster pickup and shipping to the customer.

Arabic app

FirstCry Arabia’s mobile application has seen significant growth, with over 3.6 million downloads as of December 31, 2023. This is a marked increase from previous years and reflects the growing popularity of the platform.

The company has built a unified app for Arabic and English. This allows a parent to choose their preferred country and language to place their orders. As of December 31, 2023, the company reported 0.41 million “annual unique transacting customers” in international markets. For the nine months ended December 31, 2023, FirstCry reported international revenue of Rs 5,690.56 million (Rs 569,056 crore), accounting for 11.82 percent of total business.

The UAE childcare products market is estimated to be worth $2.6 billion in CY2023 and is expected to grow at a compound annual growth rate (CAGR) of approximately 4 percent to approximately $3-3.5 billion through CY2028. The KSA market, the largest in the Gulf Cooperation Council (GCC), is expected to grow from Rs 541 billion (Rs 54,100 crore) in 2023 to Rs 640-680 billion (Rs 64,000-68,000 crore) in 2028.

The growth of the childcare products market in the region is anchored by resilient consumer demand, an increasing number of international brands and the increasing penetration of e-commerce. Other reasons include a growing expat population, robust tourist spending, a strong shopping mall culture and higher employment rates. There is also growing concern among parents about the health and safety of children.

Categories such as consumables (excluding diapers) and clothing are expected to grow significantly over the next five years. There are huge opportunities for childcare-focused e-commerce newcomers in the coming years due to a lack of specialty brands and growing demand for childcare products in the UAE and KSA.

Competition

In the UAE childcare products market, FirstCry competes with organized horizontal online players such as Amazon and Noon and vertical players such as Namshi and Mumzworld. In KSA, FirstCry competes with major players such as Amazon and Noon, but holds a unique position as the largest online product-focused retail platform for mothers, babies and children. Since starting operations, the company has leveraged its successful India model to capture significant market share in the UAE and KSA, according to sources.

FirstCry’s future plans include continued selective international expansion, leveraging its strong brand and operational expertise, sources said. Key criteria for expansion into international markets include favorable demographics, market size and growth potential, and favorable competition in relevant product categories. There is also room to scale the business to provide a multi-channel experience to customers in these countries.

First print: June 9, 2024 | 5:50 PM IST