The internet is a big place and there are millions of recommendations for products tailored for babies. How do you find the right products? And why would you trust someone in their twenties with no kids to help you?
Well, Zarina Bahadur actually got her inspiration from a grocery store mom when she was a student at the University of California Irvine where she was studying business.
“I was at Target and saw a mom in her work clothes and she had a crying baby in one hand, a toddler in the other, and her cart was filled to the brim with baby products,” Bahadur told businessupdates.org. “I thought to myself, we live in the 21st century, why can’t all these things come to her and be boxed up. That’s where the idea actually came from.”
She started doing some research and discovered that new parents were dealing with something Bahadur called “analysis paralysis.” She explained that there is an “overload of baby products” including some that are not needed, but it is difficult to find the basic products that will help the baby as it ages and reaches developmental stages.
Bahadur started 123 Baby box, a monthly subscription box for babies, in March 2021 to create products for parents based on a quiz about their child’s age and development. Subscriptions are $59.99 per month or $49.99 per month for six months and $39.99 per month for an annual subscription.
In addition to other preferences they offer, members receive a box of products from six categories: health and wellness; development; playtime; useful items, such as clothing and beds; “Mama’s goodies,” such as a lipstick, face mask, or bath balm; and special spotlights, maybe baby tech.
For manufacturers, the company can provide them with customer insights related to their products, including demographics about where their products are popular. 123 Baby Box also partners with them to launch new products through its boxes, as well as advertising opportunities.
Baby products is a huge market — $29 billion in the US alone – as you can imagine, 123 Baby Box isn’t the only company making subscription boxes for parents. Bahadur said the company’s closest competitor is baby subscription company Lovevery, which has raised $126 million in venture capital backed funding since its foundation in 2015.
Explaining the differences between 123 Baby Box and Lovevery, Bahadur explained that Lovevery ships wooden toys every two months, while her company’s boxes are tailored to the baby’s age and stage of development.
“Our niche is always green,” added Bahadur. “Our convenient subscription service not only brings the trendiest and most unique products, but also the useful and must-haves.”
Bahadur learned early on how important 123 Baby Box was to parents. Not only did she win first place in one of UC Irvine’s startup competitions, she received a takeover bid eight months after starting the company. She turned it down.
The past year was also filled with activity as the company grew 245%, tripled its revenue and saw its monthly recurring revenue increase fivefold from 2021. The company entered XRC Labs’ accelerator program and also signed a deal with a major US Breast pump distributor sends 123 Baby Box to 1 million of its customers.
123 Baby Box added five employees for a total of nine and now partners with well-known baby and children’s brands, including Fisher-Price, Mattel, Nuby and Goddess Garden.
Although Bahadur had started the business since its launch, after closing the distribution deal, she knew she needed more money to deliver those boxes she was packing from her parents’ garage.
She decided to go after venture capital and raised $1.2 million in pre-seed funding from an investor group, XRC Labs, Sunstone Fund, Salt Lake City Angels, VC California Crescent Fund, and angel investors such as former Steve Madden- director Mark Friedman and Demos Parneros. former CEO of Barnes and Noble.
The money will be used to get out of her parent’s garage and into a warehouse, marketing, rental, and inventory. The round will also help 123 Baby Box reach its Series A stats of $100,000 monthly recurring revenue and hit the $1 million annual recurring revenue mark, which Bahadur expects to take about two years given the challenging economy.
Next, the company will build out its four revenue streams: the box itself, an e-commerce store to sell individual products and a loyalty program, product placement fees for manufacturers and suppliers, and business-to-business sales so that 123 Baby Box can be part of packages for employee benefits. Bahadur said the company already landed its first business customer in January.
“With this capital, we have a 12-month runway, but we’re really trying to expand it to a 20-month runway, just to let the money go a little bit further and so that we can become sustainable and profitable,” said Bahadur. said. “We’ll be really profitable by the time we raise our next round, which I’m happy about.”