Declining birth rates won’t stop this M’sian baby brand from scaling with new US$4.2M funds

Some of the best businesses begin with the simplest desires.  

For Applecrumby’s co-founders Sean and Jesmine Tan, the objective was to provide the best, most eco-friendly care for their daughter.

This desire led them to create their own premium, 100% chlorine-free diapers and wipes. From that foundation, their baby care ecommerce platform Applecrumby & Fish (yes, it’s a pun on Abercrombie & Fitch) continued to grow.

12 years in now, Applecrumby has established itself as a go-to platform for safe, natural, and organic products for families in Malaysia and beyond.

It was recently announced that Applecrumby bagged a Series A funding of US$4.2 million (RM19.9 million at the time of writing), secured entirely from 500 Global, a renowned venture capital firm.

This comes nine years after Applecrumby’s last round, whereby 500 Global had invested US$400K (RM1.89 million) into the business.

“While the financial resources are undeniably valuable, allowing us to ramp up our strategies and recruit top talent, the true strength of this partnership lies in the broader support 500 Global provides,” Sean and Jesmine said about the investor.

Specifically, 500 Global is able to provide governance expertise and elevated visibility, which is particularly important as Applecrumby is launching and growing PureBasics, a new sub-brand focusing on affordability.

Growing globally to serve more families

Making use of the fresh funds, Applecrumby aims to expand its reach regionally through strategic partnerships and channel diversification.

Aside from this, the funds will also help the team invest in innovation, attract and retain top talent, and scale the business overall.

“We’re exploring experiential retail concepts—think pop-up stores or partnerships with baby boutiques—to complement our robust online presence,” the co-founders shared.

They’re also looking into innovative virtual concepts that might enhance the online shopping experience for parents.

And of course, the team will be working to grow PureBasics as their affordable line.

To achieve affordability for PureBasics, the team is leveraging economies of scale. By expanding their overall production volume, they are able to have lower per-unit costs for raw materials and manufacturing processes.

They added, “We have a close working relationship with our diaper manufacturer. Together, we continuously identify and implement efficiency improvements in production. This collaborative approach helps to streamline processes and reduce unnecessary costs that can inflate the final price.”

There’s also the matter of logistics optimisation and strategic partnerships with distributors and retailers to further manage costs and keep prices low.

“It’s important to clarify that lowering costs isn’t solely about reduced profit margins,” they said.

“While some adjustments are necessary, our primary focus is on optimising the entire value chain. This ensures PureBasics remains an attractive option for families without compromising on quality or our commitment to sustainability.”

Tackling decreased birth rates

As much as the company is poised for growth, the fact of the matter is that birth rates are declining in the country, which may affect the market size.

This is something that Applecrumby does not deny or ignore, but rather tackles head-on.

“While the birth rate might be dropping, the trend we’re seeing is that parents are actually investing more per child,” they shared. “They’re prioritising quality and are willing to spend on premium products that ensure their baby’s well-being.”

This, the co-founders believe, aligns perfectly with Applecrumby’s core strength of offering superior, eco-friendly baby essentials.

“By offering a more affordable line, we’re building volume and ensuring more babies benefit from chlorine-free diapers,” they said.

With now a broader, regional focus, the company is also able to diversify its customer base, mitigating the risk of relying solely on a single market with a declining birth rate.

Furthermore, the team is constantly exploring new revenue channels, rather than falling back on product sales.

The co-founders revealed that new revenue channels could involve strategic partnerships, subscriptions, or even venturing into complementary baby care services.  

Sustaining a business for 12 years

… Is no easy feat. Sean and Jesmine believe that they owe the longevity of their company to a few things, starting with a solid foundation.

Applecrumby also joins a roster of companies that go against the “growth at all costs” mindset that at times was all the rage in the startup world.

In contrast, the team focuses on financial discipline.

The co-founders shared, “From the beginning, we’ve meticulously tracked numbers and prioritised healthy margins. This financial discipline ensured we had the resources to invest in innovation and weather any market fluctuations.”

Naturally, the business has evolved a lot over the years, and we don’t just mean in terms of offerings.

Starting out as a bootstrapped ecommerce venture, the team has nurtured a scrappy, resourceful spirit, which had been a valuable mindset as a small business.

But now, as it aims to scale, it’s time to adopt a broader mindset.

Winning Sidec’s Malaysian Top E-Commerce Merchant Award was a turning point for them to do so, the co-founders said. In particular, this taught the team the power of partnerships. As such, Applecrumby has since strategically outsourced non-core functions to optimise efficiency.

As the business changes though, so does the entire industry.

“The baby care market has absolutely boomed in recent years,” the co-founders recognised. “There’s a growing awareness of premium materials, sustainability, and transparency, which is fantastic for parents and the industry as a whole.”

Of course, it also means heightened competition. Not one to just mirror competitors, Applecrumby’s strategy of staying relevant is by staying “obsessed” with customers’ evolving needs.  

“It all boils down to truly listening to parents,” they explained. “We constantly gather feedback through surveys, focus groups, and social media engagement to understand their concerns, preferences, and aspirations.”

They believe this allows the team to not just follow trends, but rather anticipate them to solve real problems faced by their consumers.

For the budding entrepreneurs out there, here’s Sean and Jesmine’s top advice on making it:

“There’s a whole community out there cheering you on, ready to offer support and guidance,” the couple assured.

Featured Image Credit: Applecrumby