Samwers’ Online Shopping Mall Lazada Gets $40M From Shareholder Kinnevik To Push The Amazon Model In Asia

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Amazon’s global march has yet to take it into emerging markets like Vietnam and Malaysia, so the Samwer brothers have smelled an opportunity to build out their own version in the absence of Amazon itself. Lazada, an Asia-focused “online shopping mall” that has come out of the bothers’ German incubator Rocket Internet, is today announcing an investment of $40 million to build out its business. Lazada is already operational in Vietnam, Malaysia, Thailand, Indonesia and the Philippines, which cover some 600 million online consumers. The news comes on the back of another, now confirmed, investment in Lazada from JP Morgan back in September, reportedly in the hundreds of millions of dollars.

Although the investment is only being announced today, it looks like it’s part of a bigger financial deal between the Swedish VCs and Rocket.

Earlier this year Kinnevik took a 25% stake in Rocket, following the exercise of warrants during the first quarter of 2012. That deal also included Kinnevik investing directly into at least 15 of Rocket’s e-commerce businesses (clones, if you will) including those in fashion (a 10% stake in shoe site Zalando for $365 million/€287m, Dafiti, Lamoda, Namshi, the Iconic, Zalora and Zando); furniture and home decor (Home24, Westwing); Rocket’s Airbnb clones Wimdu and Airizu; Foodpanda for online food ordering; as well as other online shopping malls on top of Lazada (Kanui and Linio). There are others that are also un-named as yet, the company notes.

What’s notable about today’s news is that Rocket has actually put a $40 million price-tag on it: to date many of the company’s dealings have been vague on actual figures, with numbers more likely to be “double digit millions” rather than actual amounts.

What still remains vague, however, is any idea of how well sites like Lazada are doing in their respective markets. “We have attracted a very broad range of customers from both the bigger cities as well as rural areas but we are unfortunately unable to provide any numbers at this stage,” a spokesperson from Rocket tells TechCrunch.

As Rocket aggressively builds out businesses into new markets based on proven dot-coms from other parts of the world, it has had some very notable successes — for example, the clones CityDeal and Alando were bought respectively by their progenitors Groupon and eBay to spearhead each company’s European growth.

But Rocket has also faced some stumbles – Lamoda in Russia, Zalora in Asia, and Turkey among them. Problems have reportedly ranged from poor execution and management issues to local workers not synching well with Rocket’s work ethic. Although Rocket has denied any problems, there have been management changes in Asia specifically, with brother Marc Samwer taking a stronger role for the company in the region, and placing Mato Peric in charge as MD for Zalora. Peric, as we have noted before, is one of the most important executives in the Samwer empire, responsible for all ecommerce ventures worldwide, including the buildup of Dafiti, Jabong and others.

Rocket notes today in its release (copied below) that Lazada collectively today is serving a market of 600 million consumers, and that it is one of the “fastest growing” online stores in the region. Lazada currently sells books, consumer electronics, household goods, toys and sports equipment (yes, like Amazon), and recently made a move into also offering fashion.

The investment will likely be used to expand the product offerings further. “By focusing on providing superior service to our customers we have grown into a trusted household brand and to broaden our assortment is a natural next step for us,” Maximilian Bittner, Lazada’s regional CEO, said in a statement.

And, since the Amazon model is one of scale, we may also see Rocket continue its move into more markets. Scale has definitely has underscored a number of other investments into Rocket buinesses, such as JP Morgan’s stakes in Zalando, Dafiti and Zando. For starters, Lazada is headquartered in Singapore, where it currently does not offer a local site. “We are continuously monitoring the market for expansion opportunities and will move when we think timing is right,” the spokesperson says.

Release below.

Singapore, 12/11/12.
LAZADA receives $40 million in funding from Kinnevik
Following the announcement of investments in the third quarter results statement of Investment AB Kinnevik (“Kinnevik”), LAZADA, the leading online department store in Southeast Asia, can confirm that Kinnevik has invested north of USD40 million in its German holding company. Together with the recently announced investment by J.P. Morgan Asset Management this provides LAZADA with an exceptionally well-funded balance sheet to continue its fast growth in Southeast Asia.
The investment will allow LAZADA, which has quickly established itself as the preferred online retailer in the region, to continue building out its product offering and expand its reach. “By focusing on providing superior service to our customers we have grown into a trusted household brand and to broaden our assortment is a natural next step for us” Maximilian Bittner, Regional CEO, said. LAZADA recently added fashion to its extensive product offering, which includes a range of products from consumer electronics to household goods, toys and sports equipment.
“Kinnevik has a proven track-record of investing in emerging markets and we are very excited to have such a knowledgeable and experienced investor on board. In addition to capital they will provide us with invaluable strategic insight of operating in such markets. It is also a strong testament to what we have accomplished so far and verifies that we are on the right track to achieve our aggressive strategic goals” Mr. Bittner added.
“We are delighted to invest in LAZADA which has obtained a market leading position in a very short time” Henrik Persson, Head of Investments at Kinnevik commented. “The company is perfectly positioned to become the major eCommerce player in this region which counts more than 600 million inhabitants”.
About LAZADA (lazada.co.id, lazada.com.my, lazada.com.ph, lazada.co.th, lazada.vn)
LAZADA is Southeast Asia’s fastest growing online department store, with operations in Indonesia, Malaysia, Philippines, Thailand and Vietnam. LAZADA is pioneering eCommerce across some of the fastest growing countries in the world by offering a fast, secure and convenient online shopping experience with a broad product offering in categories ranging from consumer electronics to household goods, toys and sports equipment. LAZADA is always striving to offer its customers the best possible offering – including multiple payment options, free returns and extensive customer service and warranty commitments.
About Kinnevik
Kinnevik was founded in 1936 and thus embodies seventy-five years of entrepreneurship under the same group of principal owners. Kinnevik’s objective is to increase shareholder value, primarily through net asset value growth. The company’s holdings of growth companies are focused around seven comprehensive business sectors; Telecom & Services, Online, Media, Micro financing, Paper & Packaging, Agriculture and Renewable energy. Kinnevik has a long history of investing in emerging markets which has resulted in a considerable exposure to consumer sectors in these markets. Kinnevik plays an active role on the Boards of its holdings.
The Kinnevik’s class A and class B shares are listed on the NASDAQ OMX Stockholm’s list for large cap companies, within the financial and real estate sector. The ticker codes are KINV A and KINV B.