Every parent knows that raising children is expensive. Especially at a young age when clothes and toys outgrow them so quickly that parents end up in a never-ending cycle of buying new ones when the old ones are hardly worn or used anymore. .
Enter Kidsy, a new e-commerce startup based in Chicago. Kidsy aims to give consumers more access to discounted baby and children's products by partnering with leading brands, retailers, and clearing companies for excess and returned inventory. It also says it can prevent excess inventory and disposal items (such as children's clothing) from ending up in landfills, which is clearly bad for the environment.
Kidsy doesn't just focus on clothes. We also sell new and opened products (also known as new but returned products), including strollers, car seats, toys, travel gear, nursery furniture, and other “other baby essentials.”
Kidsy is founded by Shraysi Tandon, an Indian-born former business journalist, and Sinan Sari, a Turkish-born software engineer who co-founded Y Combinator-backed SaaS startup Cuboh, a startup that just sold to competitor ChowNow. Also the founder. The two partnered to form the company in April 2022 and recently closed $1 million in pre-seed funding, which Tandon described as “oversubscribed.”
“Almost all major retailers, including Amazon, Macy's, Target, Kohl's, Walmart, and Bloomingdales, do not replenish customer returns because it is too capital and labor intensive,” said Tandon, CEO of Kidsy. he told TechCrunch. . “These products are typically sent to other countries that purchase U.S. products or disposed of in landfills.”
Image credit: Kissy
Investors were attracted to the company's early success. According to Tandon, since Kidsy exited its beta phase in September 2023, just four months later he had managed to reach $1 million in annual revenue by January.
New York-based Impellent Ventures led Kidsy's funding, with participation from Hustle Fund, Everywhere VC, The Fund Midwest, and Responsibly Ventures. Additionally, Jenny Fleiss, Initialized partner and co-founder of Rent the Runway, Jason Robins, founder and CEO of DraftKings, Mike Salguero, founder of Butcherbox, Reilly Brennan, Trucks VC managing partner, and Sanuk, co-founder of Kalibbr. Angel investors such as Tandon also contributed to the round. They included “a combination of movie investors” and wealthy individuals like Mark and Jane Wilf, owners of the Minnesota Vikings. Christina Weiss Lurie, co-owner of the Philadelphia Eagles, and Todd Dagles, co-founder of Spark Capital.
Children's clothing: a huge market
Tandon's path to founding Kidsy began after working as a journalist at Bloomberg TV and ABC News before starting his own media production company. Through her company, she spent three years directing an award-winning feature-length documentary about child labor in global supply chains. During that time, she learned about the overstock that exists in the U.S. and “all the supply chain issues that retailers face.”
She also learned that clearing and returns is a $761 billion annual industry in the United States.
But it wasn't until she was pregnant with her first child that Tandon decided to become a “smart” consumer and buy liquid baby products instead of paying full price. That's when she noticed a gap in the market and asked herself, “Where can I find a TJ Maxx or Burlington for baby and children's products?”
There are many liquidation and overstock e-commerce companies out there, but very few that specialize solely in children's gear. Alternatively, very few companies actually focus on it as a used goods market for parents.
Tandon started the company while still pregnant.
When Tandon started raising money as an expectant mother, she said, “I realized how difficult it was for female founders, the dominant 'boys' club' that existed in the VC world, and how difficult it was for women in general to be a female founder.” “I was nervous because I was constantly reading the statistics about how difficult it was for founders.” More companies will raise funding in 2024 compared to just two years ago. ”
“I hid my pregnancy because I didn't want to become a statistic,” Tandon told TechCrunch.
She then decided to “never do that again” and now tells VC in advance that she is the baby's mother. Venture capitalists who think that's a problem are “not the right investors for me,” she says.
Tandon said investors are betting on TJ Maxx for kids, noting that TJ Maxx has outperformed the S&P 500 for the past five years and that the used baby and children's products market is expected to reach $12.8 billion by 2030. He is excited to help.
“We ship these items directly to our warehouse in Nebraska, where they are inspected and graded before sale, rather than through consignment sales or third-party logistics providers,” she said. .
Most of the products are new and unused. Approximately 10% is gently used and is also sold at Kidsy.
Tandon said Kidsy already has tens of thousands of customers. The company gets a “take rate” for every item it sells. According to Tandon, the percentage varies depending on the brand and category you sell, but on average he says it's 35%.
Tandon recognizes that there are many competitors selling children's products.
But investors like David Brown, managing partner at Impellent Ventures, believe that Kidsy is “solving some very serious pain points for parents and injecting innovation into a stagnant market.” .
“Yes, this product is cheaper and better for the environment than others, but how we respond to the evolving needs of parents is what has and will continue to set Kidsy apart. There is.”
Kidy plans to use the new funding to support its classic growth needs of recruiting, expanding its team of 12 people and adding more partners. It also plans to incorporate artificial intelligence and machine learning into its services “to improve operational efficiency.”
For now, the startup is focused on the U.S. market, but Tandon said that if Kidsy is a country where “retail return policies are lax and brands struggle to manage both returns and excess inventory,” I think we can expand anywhere.