Another new chapter is opening up for Rocket Internet, the incubator started and run by the Samwer Brothers in Germany. The company is today announcing that PPR, luxury and sport & lifestyle group, is taking a €10 million investment in Bigfoot I, the Rocket holding company that controls Russian fashion commerce site Lamoda, South American fashion site Dafiti and also has a stake in Namshi, the Samwer’s fashion effort in the Middle East. It’s the first strategic investment made in a Rocket e-commerce startup by a fashion operation.
The move is a sign of how established fashion businesses in developed markets are continuing to look for ways of better penetrating emerging markets, and are riding the wave of continued Internet and smartphone growth to do it.
It is also a sign of how Rocket continues to pick up big-name backers who support its idea of building e-commerce operations out into markets where other established global players like Amazon or Ebay have yet to make significant moves. This has proven to be an effective formula for Rocket in Europe — notable exits have includes sales to Ebay and Groupon that have in turn served as the basis for those companies’ expansions into Europe.
The Samwer brothers still focus on Europe with sites like fashion/shoe site Zalando, Square competitor Payleven, and many more. But it has also been putting a major effort into replicating that model in less crowded, fast-growing markets in regions like Asia, South America and Eastern Europe.
The cash-for-equity investment appears to be the first made by a fashion company in a Rocket operation, but for now it will not see PPR pushing its brands directly on the site. Those brands include iconic names like Gucci, Yves Saint Laurent and Alexander McQueen, as well as Puma, Tretorn and the French audiovisual chain FNAC.
Although PPR has made its own investments into online business, you can see how leveraging another company’s networks in developing markets can be useful to PPR. Russia is already the fastest growing Internet population in Europe and it has a burgeoning middle class, but also a sizable population of wealthy, fashion-conscious shopaholics.
“We have come a long way since we launched our site last year, and the fact that we continue to attract significant investment means that we will be able to project that success to coming years,” says Malte Huffmann, Founder & Managing Director Dafiti in an interview with me.
The news comes just two days after Dafiti raised some $65 million from a consortium of investors to build up its operations in South America, which are based in Brazil but extending elsewhere.
Both Dafiti and Lamoda, along with other Rocket e-commerce ventures in regions like South Asia (where Lazada last week raised another $26 million), have been amassing double-digit millions investments from the likes of JP Morgan and Summit Partners as they continue to aggressively build out their operations in their markets.
Yesterday, another Rocket portfolio company, HelloFresh, also received a “high seven-figure” dollars investment. HelloFresh is another e-commerce site, but this time focused on food: it’s based on recipes and the ability to buy the ingredients directly on the site to make the recipes (think Fresh Dish; Blue Apron ‘clone’ here). Along with new investor Vorwerk Ventures, existing investors Rocket Internet, Holtzbrinck Ventures and Rocket shareholder Kinnevik AB all participated in the round.
Lamoda, struggling when it first opened for business (read about the leaked, embarrassing email related to that here), is currently considered to be the fashion e-commerce site to beat in the fast-growing market of Russia.
Going from zero to hero was a status achieved through very bullish persistence and patience, according to Niels Tonsen, the MD of Lamoda and one of the four people that Rocket transplanted to Russia to open and run the operation there. In a market that mainly has been built by local entrepreneurs, Lamoda is run by Rocket expats, although the rest of the operation is built on local people.
One of the key assets for Rocket in its various operations — and Lamoda and Dafiti are included here — is that it has put some investment into the back end and logistics of the ecommerce operation as much as the front end. It works with local companies for the last-mile of the delivery chain, but it has also invested in warehouses and distribution/fulfillment operations, and it is this that can prove attractive to strategic partners.
“It’s too early to say what PPR will do,” says Tonsen. “But potentially I can see how our platform could be used for third-party brands, giving them the possibility of using our traffic, our brand and our operations to access consumers in these interesting markets.”
He adds that the plan is to expand its footprint to more geographies over time.