Less than one year after completing a $12 million Series A round, the multi-category retailer Nomorerack has raised $40 million in Series B financing led by Oak Investment Partners and HTV Industries. Although the company launched as a flash sales site in 2010, Nomorerack has since transitioned to position itself as an online retailer that offers deep discounts across the board in numerous categories.
The financing will go toward customer acquisition and building out the depth of its top categories, which include jewelry, apparel, electronics, home and lifestyle.
“At the end of the day, when we advertise on [sites like] MSN, the broader we are, the more appealing we are,” CEO Deepak Agarwal said.
The company did $9 million in revenue in 2011, north of $100 million in 2012, and is now on track to do close to $300 million, Agarwal said. It’s profitable, and about 70 percent of sales are repeat purchases from consumers. They are currently seeing around 5 million monthly unique visitors to the site.
The site started off featuring sets of nine items that would stay live for 24 hours before they were swapped out for another batch. Today, there are more than 3,000 deals available at any given time, curated by a 16-person buying team, many of which are live for months at a time. How long any given product remains available on the site is determined by an algorithm on the backend that takes into account revenue and sales volume.
“It started out as a daily deal and then over time has evolved to have deep breadth and depth. A lot of products do not get removed from the site. Whereas before, when we launched, they would only last for 24 hours.”
The site is able to offer discounts to consumers by buying directly from manufacturers and disrupting the typical retail pricing chain.
Agarwal said that while Nomorerack is taking market share away from brick-and-mortar stores like TJ Maxx, Target and Walmart, their consumers are shopping on similar sites like eBay and Amazon.
The site recently launched a full-scale jewelry boutique, a mechanism for building depth that they would like to apply to apparel and home, as well. The manufacturing chains for apparel and jewelry are especially ripe for disruption, Agarwal said, as there is a particularly high discrepancy between the manufacture cost and retail price of both. It’s not dissimilar to the recent push Amazon has made in the fashion category.
Home, the site’s biggest category, currently accounts for 30 percent of sales dollars, with electronics coming in second and fashion in third.
Acquiring customers is the company’s biggest expense, Agarwal said. The team is largely based on display advertising, with about 80 percent of marketing dollars going in that direction. That means advertising on sites like AOL, Yahoo, Facebook and Google, as well as running national television commercials, which Agarwal described as an effective driver for them.