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

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

FirstCry, India’s largest multi-channel retailing platform for newborns, mothers, and kids, 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 solidify its position and replicate the India playbook, the company proposes to utilise an aggregate of Rs 1,556.00 million (Rs 155.6 crore) towards the expansion plans overseas.

Out of this, Rs 726.00 million (Rs 72.6 crore) is proposed to be utilised towards setting up 12 new modern stores in KSA. About Rs 830.00 million (Rs 83 crore) has been proposed to be utilised towards setting up new warehouses in Riyadh, Jeddah, and Dammam in KSA. This is equal to approximately 0.25 million square feet.

FirstCry expanded its international presence in the United Arab Emirates (UAE) in 2019 and KSA in 2022, broadening its reach across these markets.

FirstCry fortified its international presence by becoming the largest retail platform for babies and mothers in the UAE, in terms of gross merchandise value (GMV), for the year ending December 2022. The company then shifted its focus to KSA, rapidly scaling up to become the largest such platform in the region.

The company’s strategy involves addressing customer needs through a variety of channels. These include an online platform, modern stores, and general trade retail distribution in India, and primarily online platforms in the UAE and KSA.

As of December 31, 2023, FirstCry’s platform in India, UAE, and KSA offers a wide range of stock-keeping units (SKUs) from over 7,500 brands. These include third-party Indian brands, global brands, and home brands.

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 apparel, footwear, baby gear, nursery items, diapers, toys, and personal care products. The inventory includes over 262,000 SKUs from more than 3,600 brands. The company also operates its own warehousing and logistics facilities in these regions, ensuring efficient delivery services.

The entire last-mile delivery in UAE is managed in-house, with most of the deliveries being made on the same day or the next day for the nine months ended December 31, 2023.

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

Arabian app

FirstCry Arabia's mobile application has seen significant growth, with downloads exceeding 3.6 million by December 31, 2023. This is a marked increase from previous years, reflecting the platform's growing popularity.

The company has built a unified app for Arabic and English. This enables a parent to choose their country and language of preference to place their respective 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 per cent of total operations.

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

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

Categories such as consumables (excluding diapers) and apparel are expected to grow significantly in the next five years. There is a huge opportunity for childcare-focused e-commerce entrants in the coming years due to a lack of speciality brands and growing demand for childcare products in UAE and KSA.

Competition

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

FirstCry’s future plans include continued selective international expansion, leveraging its strong brand and operational expertise, according to sources. The key criteria for expansion into international markets include favourable demographics, market size and growth potential, and benign competition in relevant product categories. There is also scope for scaling up the business to provide a multi-channel experience to customers in these countries.

According to the updated draft red herring prospectus (DRHP), the Pune-based unicorn’s IPO size remains the same at Rs 1,816 crore, with an offer for sale (OFS) of more than 54 million equity shares from existing investors.

• FirstCry plans to expand its global footprint with the setup of new modern stores and warehouses in the Kingdom of Saudi Arabia (KSA).
   
• FirstCry is rapidly scaling up in KSA and UAE, to become the largest retail platforms for babies and mothers in the region.
   
• The company proposes to utilize an aggregate of Rs 1,556.00 million (Rs 155.6 crore) towards the expansion plans overseas.
   
• FirstCry Arabia's mobile application has seen significant growth, with downloads exceeding 3.6 million by December 31, 2023.
   
• The UAE Childcare is projected to grow at a CAGR of about 4 per cent till CY2028 to reach approximately $3-3.5 billion.
   
• The KSA market, which is the largest in the GCC, is expected to expand from Rs 541 billion (Rs 54,100 crore) in 2023 to Rs 640-680 billion (Rs 68,000 crore) by 2028.