The founders of Hopscotch.com know a thing or two about selling to moms, thanks to their experience at Diapers.com. Now, with the acquisition of Skoolshop.com, they aim to further expand their product mix and reach, and scale up faster
For Rahul Anand, the co-founder of Hopscotch.com, an infant and children’s products e-retailer, the trigger to enter this space was quite simple. When he lived in the U.S., he was often asked to carry baby products for his friends and relatives back in India. “I realised that Indian moms did not have easy access to high quality products and in the U.S., reliable, quality products were available for prices as low as US $10 to US $20. So, I decided to capitalise on this opportunity,” recalls Anand. Thus, he and his co-founder, Lisa Kennedy, both Harvard Business School graduates, kick-started the venture in late 2012.
Unlike traditional e-commerce stores, Hopsctoch.com focuses on offering only hard-to-find products. It operates on a flash business model, wherein, everyday several curated boutiques of sought-after merchandise are released and made available on the website for a fixed period of time; typically, from a few hours to five days. “Our boutiques go live at 9:30 AM every day and our shoppers come to check the boutiques of the day. We usually generate buzz through email and Facebook, but the most important channel is referrals,” notes Anand.
In early 2014, the company launched a new feature called pre-order, which allows users to book select products ahead of time. “The waiting period for receiving products through this route is typically four to five weeks. Since we have established a good credibility among our customers, they are willing to wait,” adds Anand. Of course, the benefit here is, when Hopscotch.com goes to the vendor with a bulk order, it gains an upper hand in negotiating for a better price.
Today, Hopscotch.com has on board, 35 employees, and catalogues products of over 450 international brands. “We are at present targeting only Indian moms. About 60 per cent of our orders come from the metros and about 40 per cent from Tier-II cities,” says Anand. Amongst the metros, New Delhi, Bengaluru and Mumbai lead the table in terms of order volume.
During the first year, Hopscotch.com raised an undisclosed amount from angel investors. In February 2014, it raised US $2 million from Nisaba Godrej, Adi Godrej’s daughter, Singapore-based LionRock Capital, Wei Yan, co-founder of Diapers.com and Toivo Annus, co-founder of Skype. “The funds are being used to improve technology, build our team and also towards marketing initiatives,” indicates Anand.
Finding the right fit
Prior to founding Hopsctoch.com, both Anand and Kennedy worked at Quidsi, the parent company of Diapers.com, the U.S.-based online speciality retailer for baby products. In November 2010, when Quidsi got acquired by Amazon (for US $545 million), Anand and Kennedy decided to move out and turn entrepreneurs. “When we entered this space, we were clear about one thing; success can come only in two ways in India; you either deal with low-priced, mass market merchandise or offer highly differentiated merchandise. We chose to pursue the latter and offer the best possible price points to our customers. That way, when they like something, they can immediately buy it without having to worry about price comparison,” says Anand. Usually, most of the international products sold on Hopscotch are at par or often below the prices quoted abroad. “There’s no trick here. We just negotiate heavily to bring down the prices as much as possible after paying freight and duty fee,” says Anand.
Factoring in the difference
Though a niche player, Hopscotch.com competes with other players in the market such as BabyOye.com and FirstCry.com. But, as Anand puts it, there are two clear differentiating factors for the company. “Firstly, our product mix is the biggest differentiator. We rarely have the same products that you find on other sites. Secondly, we showcase our products in an easy-to-shop, curated format and promote it daily through email, social networking sites and referrals. This is very different from the search-led strategies that e-tailers usually adopt,” he says.
So, what market size is the company looking at? “About 2.5 million moms,” says Anand and justifies that though it’s not a large market, the flash sales model helps the company record a high customer retention rate. And Anand adds that there’s room for the company’s business model to get better. “We are still trying to find ways to tighten the operational process. Today, the end-to-end process, from sourcing to shipment to delivery takes around four to five weeks,” he says. As of now, the company stocks its products in its warehouse in Bhiwandi, Mumbai and uses FedEx for delivery of shipments.
Acquiring partners for growth
In May 2014, Hopscotch.com acquired the online school supplies retailer, SkoolShop.com, for an undisclosed amount. Though the merchandise is varied, Anand indicates that the leverage was in both companies addressing the same customer segment. “Over the last three years, SkoolShop has built a significant business with young parents. This acquisition will help us expand our reach and scale up faster,” he says. As a part of the acquisition, the company has brought on board a large part of SkoolShop’s team, including its co-founder, Anusha Mahalingam.
Today, Hopscotch.com is growing by 20 per cent to 25 per cent month-on-month. Two years from now, continuing its strong focus on retailing children’s products, Anand and his team aim to expand the number of brands and the category of products listed with them.
WHAT HARVARD BUSINESS SCHOOL TAUGHT RAHUL ANAND
A LESSON TO REMEMBER
One of the most impactful courses I took up was international entrepreneurship. A vital lesson I learnt here was that in order for businesses to succeed in international markets they have to understand the specific needs of the market they are operating in. For instance, when building Hopscotch.com, right from the market research stage to the setting up phase, we kept this in mind that a business model that worked in this space in an international market need not necessarily work in India. Day after day, we worked hard to identify what would delight an Indian mom and bring her back to the website.
A LESSON TO UNLEARN
There hasn’t been any specific learning that was wrong or had to be unlearned. One of the best things about being a part of a business school that focuses a lot on business case studies is that it teaches you not to look at a problem from a single perspective. Rather, it teaches you to adapt to the nature of challenges you’re facing and think on your feet.
A FOND MEMORY
During our first class discussion at HBS, we read about a for-profit social enterprise called Lapdesk, which was on a mission to educate children in South Africa. The case handed to us was, Shane Long, the founder and CEP, was at crossroads on an important business decision, which questioned his ethical standards.
As the case unfolded, everyone in the class began contributing to the discussion and the energy in the classroom slowly began to pulsate. In fact, one of my classmates had worked with Long, which led her to share an insider perspective to the problem. After over an hour, just before arriving at a conclusion, a large screen descended behind the professor and Long appeared on the videoconference, from his office at South Africa. What followed was an intense cross-questioning session and a view on how he tackled it.
Over the two years at HBS, there were many such experiences where we sat with the entrepreneur or protagonist and discussed cases. Strangely enough, two years later, it became fairly common.