Kids apparel online brand Hopscotch in the news with reports claiming both Amazon and Flipkart are keen on acquiring at least a minority stake in the startup, as per an Economic Times report. The company has had a very successful run with its key brand Hopscotch, as well other private labels it sells. Flipkart has its Flipkart Fashion, apart from owning the online fashion leaders in India, Myntra and Jabong. Amazon too has its work cut out in establishing a strong presence in the fashion segment.
Kids fashion has now become very attractive since parents are willing to spend more on their children. And with the children growing rapidly, the repeat purchase opportunity too is quite substantial. It therefore makes sense for both Amazon and Flipkart to be showing interest in Hopscotch. However, both the companies have so far not acknowledged that there talks for a possible deal with Hopscotch.
Meanwhile, it is learnt that Hopscotch is looking to induct funds for which it has mandated Barclays to help raise $60 million. The funds will be used for expansion of the business as well as to increase the headcount. The founder of Hopscotch has confirmed that they are indeed looking to raise funds but no final decisions have been made yet.
The overall market for the kids clothing business in India is estimated at Rs 95,000 crore. Hopscotch has just reached the level of Rs 500 crore so far. But observers indicate the company has managed to keep its expenses under control and its margins are quite reasonable. Firstcry is its major competitor. Hopscotch has worked out an efficient O2O model as well. However, the leader in this category is said to be Lilliput.
With many positives, there are challenges too, in the kids clothing business, mainly to do with distribution. Hopscotch claims it doesn’t fall for the discounting strategy and keeps its margins at comfortable levels.
Hopscotch has a galaxy of personalities as investors: Facebook cofounder Eduardo Saverin, Godrej Consumer chairperson Nisaba Godrej, Singapore-based Lion Rock Capital, RPG Ventures, Diapers.com chief technology officer Wei Yan and skype founding member Toivo Annus are all early investors in the company besides others.