No Child Play This

Two generations of Mayank’s family were into the retail and manufacturing of wears for children, and when the pull from home to join the family business grew soon after he completed his formal education, he did head back to Kolkata from Mumbai and looked into the manufacturing of private labels for some of the top kidswear brands and retailers across the country. But the urge to do “something different” got stronger than ever, more so as “I realised the pain points of the industry. I was struggling to understand the business flow. As in, say if I am manufacturing a line in January, I was selling it in March-April, and getting the payment in June-July — which meant that one business rotation was happening for six months and therefore poor cash flow, though in a volume set up this could still be compensated”.

How many successful kidswear players do you see with a national footprint and the few that had till about a decade back have all but disappeared, he makes a point. This industry requires at least 4–5 rotations in a year to have a positive and strong cash flow.

An MSME manufacturer with a turnover of ₹5–10 crore is still struggling to expand business. “I could see all of this and I was not too happy. The industry was definitely not in a happy situation when the rate of inflation and the rate of growth were almost at par at 7–10%!  So, I told my father I want to start kidswear retail in small towns, give premium products at value prices—open a chain of 500 stores in the 800–100 sqft range in the next 3–5 years. This was the initial plan of KidCity. My recce in the small towns of West Bengal and Bihar told me that there’s an acute demand for good stores that can sell quality products in the ₹99–500 price range”.

August-September 2019 saw Mayank cough up around ₹3.50–4lakh to set up each store in the towns of Malda, Asansol and Contai in West Bengal and Sitamarhi in Bihar. And then COVID-19 struck. “I had to rework on the entire idea.  I realised I had to go digital. Initially I thought I will make an app for the pain points that the industry goes through—long supply chain issues, credit and business issues, the middlemen in the form of wholesalers, agents and the distributors who dictate the terms as to which brand will work or not, and so on and so forth. For manufacturers and retailers there was no other alternative. The thought for an app was for our products, and when I pitched this to my father, he suggested why not do this for the entire industry”.

The father, Jay Varma, Co-Founder at KidCity and secretary of the Eastern India Garments Manufacturers & Exporters Federation, has been in the business of retail, exports and manufacturing of kidswear since 1986.

“Why not create an aggregator platform for all the players?” he questioned his son.  Kidswear is one sector that has 15–20 product categories. Plus, we are the only sector in the industry with 16 age groups, and a short shelf life of each, and not every brand deals with all the categories.

“To create a robust application which fits everyone’s requirements was a challenging task. Plus, Kolkata self-invites hurdles. And in such a scenario stitching up a tech team was another daunting task. From August to December, we kept looking for the right tech resources. It did not help that I have no tech background and so I knew I needed a core team I could trust. With help from a seasoned IT professional, I got connected to some more techs from his industry and we built an inhouse 6-member team. From December 2020 to January 2022, we worked on the app and it was in February 22 that we finally launched it. It took about 17 months from ideation to application, concept, prototype, where we began our initial POC in January 2022.”

February 2022 saw Mayank travel “to 24 cities in 38 days. Every 24 hours I was heading to a new city to meet retailers. I met about 160–170 retailers and was pleasantly surprised to learn that there were many young, second generation retailers, in the 23–26 age group, in towns like Amravati, Latur, Akola (Maharashtra), Hoshiarpur (Punjab), and many of them did not want to carry on with their father’s business.

“When I met these retailers in these small towns, their excitement was astonishing”. They wanted a platform like KidCity. They were excited to know that they could do a small order purchase, where a minimum order value is as small as ₹5,000. This was unlike what they had seen their fathers do—seasonal buying for ₹15–20 lakh. This meant that they would come to Kolkata in January every year and place an order for the next 5–6 months. Having stocked up, there were always chances that anything could go wrong—from recession, to local political issues to weather that could keep the shoppers at bay and the stock thus gets stuck with the retailer.  And when that happens it is demoralising for the young entrepreneur who would have just joined the family business.

“So, when I told them that they can purchase for as less as ₹5,000—one brand, one design, one box—this is what they wanted, a change in the way they could purchase.” In KidCity, the buying pattern changes which frees up capital to further expand their business. Plus, with this direct selling KidCity is passing on the middleman’s margin of 15–25% to the retailer. Again, it does away with the entire business of sales execs travelling with a suitcase full of clothes from showing to selling and buying in a two-month cycle.

Within the first four months, the KidCity app onboarded around 3,000 retailers with about 42% repeat orders and an average order value of ₹17,800. The process to onboard brands from Delhi has also begun. It is evident that brands need tech-enabled platforms to get access to the farthest market in every corner of the country. Seamless connectivity will boost prosperity for both the primary stakeholders.

To ensure that this change does not eliminate the role of the distributor, wholesaler, agent and the sales executive, KidCity has created channel partners. “We have 88 channel partners on board. They are the conventional distributors, wholesalers, agents for a specific commission. They send their voice to the market, download the KidCity app, and whoever buys from their network they get a commission in a 30-day cycle. And this continues for all purchases as in this line of business, retailers who have onboarded the app seek service.

“We also have a robust application for the channel partners to track the commission, retailers, who can even hire people thus giving them the scope vyapar wahi, soch nayee (the business is the same, the thought is new).

KidCity onboards both brands and retailers, providing access to 80–90 brands digitally in one go. In fact, our primary stakeholder, the manufacturer, has never had the opportunity to connect with such a large number of retailers in an easy and seamless way. Once a collection is live, the retailers begin their purchase and the billing begins immediately and after a gap of about 10 days, the brands get their payment in 10-15 days. This period of a fortnight or so is to allow for the retailer to get the stock.

In the offline mode, the payment would have come in three-four months.  

KidCity works on two models. The much-anticipated marketplace model, introduced this July, allows brands to keep stocks at their warehouse and the orders by the retailers to be executed in JIT (Just-in-Time) wherein as soon as there is an order, there is a pick-up from the manufacturer/brand and sent to the retailer. “This model will help us to scale up our business as more and more brands/manufacturers will want to come on board.” For this, KidCity has tied up with UniCommerce, a unicorn startup that deals with inventory management.

Express model: KidCity keeps stock of designs in its integrated warehouse. Brands send a few boxes of each style to their warehouse on SOR basis (sale or return).  

KidCity has begun its journey with the apparel category but will venture into toys, shoes, school uniforms, school essentials, mother-care products and everything to do with kids. “We intend to be a one-stop solution for retailers to procure goods for every need of the kids. We will also explore the offline model to connect brands with retailers through digitisation. The aim is that in about 3–5 years parents, retailers—whosover thinks of kids, should think of KidCity. Think kids. Think KidCity could well be our tagline.”