Zalora, a Zappos-style fashion e-commerce site in South East Asia backed by the Samwer brothers’ Rocket Internet incubator in Germany, is today announcing its latest investment — $100 million, led by Rocket Internet itself, along with regular Samwer investing partners Summit Partners, Investment AB Kinnevik, Verlinvest and Tengelmann Group. The is the largest investment in Zalora to date, and one of the biggest in an e-commerce startup in the region.
Zalora has operations in Singapore, Indonesia, Malaysia, Brunei, the Philippines, Thailand, Vietnam, Taiwan and Hong Kong, and this round comes amid a new flush of money for fashion e-commerce companies: just yesterday it was reported that Fab is raising $250 million at a $1 billion valuation (a deal that only one month ago appeared to be for a $100 million raise).
This is not the first flush of money to come to Zalora. The startup had raised at least two other rounds since launching in March 2012, a “significant double-digit million” investment from JP Morgan in September 2012, and $26 million from Tengelmann in March 2013. It’s been using the funds to build out its footprint into more countries, invest in its logistics and also in R&D, out of its HQ in Singapore, and new platforms — among those, the launch of a iOS app.
As seems to be par for the course with Rocket Internet portfolio companies, Zalora has been no stranger to being subject to the negative rumor mill. In March 2013, Zalora was reported to be shutting down its regional operations in Taiwan, although the company said that it was streamlining and moving some functions to Singapore. That comes after other reports that Oliver Samwer had to go hands-on soon after Zalora’s launch for a little staff motivation. The company appears to already have changed MDs at the company. Today it is being run by Michele Farrario; in September 2012 the MD was Mato Peric.
But any signs of turmoil seem to be behind the company, for now at least. The company is claiming “months of steady growth,” recently delivering its one millionth order, although it doesn’t spell out what those revenues are specifically, noting just “double-digit million USD revenues.” It says that mobile sales make up 25% of all of its sales, which cover 500 brands and some 20,000 products per country site.
“Our company is one of the fastest growing e-commerce companies in South-East Asia and has bright prospects,” said Ferrario in a statement. “It is an honor for us that investors of such great repute have invested into an e-commerce company as young as ZALORA. Our goal is to continue serving up world-class products and services, so everyone in South-East Asia can benefit.”
Rocket Internet got its beginnings building out e-commerce startups across Europe. Mimicking the functions of well-funded e-commerce startups in the U.S., some of those Rocket Internet startups even got acquired as part of the Americans’ inorganic growth strategies.
Rocket Internet still has a strong presence in Europe, but the Samwer brothers have been putting a lot more of their efforts lately into emerging markets like those in South East Asia, Eastern Europe, South America and further afield (case in point: Azmalo, a new Amazon-style online marketplace site in Pakistan launched just this week). The idea is to try to reach a swathe of consumers that represent a new middle class who are only starting to go online to shop, and therefore represent a faster growing user base than consumers in more mature, and more penetrated, markets.
Often the Samwers’ movements are in countries that Rocket’s U.S. counterparts have yet to tackle, making companies like Zalora into potential acquisition targets. In the meantime, adding more Rocket Internet e-commerce startups in each country to bolster existing ones means that they can share backend systems, logistics and get faster economies of scale, essential in getting e-commerce businesses to profit. You can see the full extent of the Rocket Internet empire here.
Windows Blue will be called Windows 8.1 and will launch as a public preview on June 26, Microsoft revealed today. While the company remains mum about what exactly we can expect from Windows 8.1 (boot to desktop? the return of the Start menu?), Microsoft says that Windows 8.1 “will help [it] to deliver the next generation of PCs and tablets with our OEM partners and to deliver the experiences customers— both consumers and businesses alike —need and will just expect moving forward.” The update will be available for Windows 8 and the ARM-based Windows RT.
June 26 marks the start of Microsoft’s Build developer conference in San Francisco, so the date is obviously not all that much of a surprise, given that Microsoft will want to get its developer ecosystem to start working with Windows 8.1 as soon as possible. The update, Microsoft says, will be delivered through the Windows Store.
Microsoft, the company’s CFO Tami Reller said at the JP Morgan Technology, Media & Telecom Conference in Boston today, wants to continually update Windows to create “a richer experience” for its customers.
Today’s announcement comes after a few days of build-up, including pieces by Microsoft’s corporate VP of communications Frank X. Shaw about how Windows 8 has been doing far better than the pundits make it seem. This also caps off months of speculation around when we would see the first preview of Windows, though the first day of Build always seemed like a reasonable date.
Rocket Internet, the German-based e-commerce startup incubator from the Samwer brothers, is today announcing another round of funding for its strategy to build out its footprint into emerging markets. Today it’s the turn of Middle-East-based fashion commerce site Namshi, which is getting $13 million from Summit Partners. This is the second time Summit, a Rocket regular, has invested in Namshi, after a $1 million injection in January. To date, Dubai-based Namshi appears to have raised some $34 million, if you also count the reported $20 million from JP Morgan and Blakeney Management in September 2012. A Rocket Internet spokesperson would not confirm any of the sums apart from the most recent one, except to note that previous funding totals a “high double-digit amount.”
Namshi has been around since 2012 and currently sells products in six places — United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain. As with Amazon-owned Zappos, Namshi sells shoes and other fashion — some 550 brands in all, including well-known labels like Nike, Lacoste, Polo Ralph Lauren and Puma.
The official release from Rocket Internet notes that this will be used to “sustain its accelerated growth target,” although what that target is does not get specified. Namshi also notes that this will be used to improve the company’s fulfilment operations, moving stock to a new centralized Namshi warehouse and distribution center, away from the shared space with Aramex it currently uses.
“We see our partners’ growing support as an encouragement for us to continue serving our customers with world-class products and services,” said Hosam Arab, co-founder and Managing Director of Namshi, in a statement. “Our customers made the company what it is today. Therefore, they will be the ones to see the main benefits coming from this investment. We will further focus on providing a shopping experience like no other in the region.”
Part of Rocket’s pressure to expand comes from other competition on the ground from companies like Souq, another Dubai-based e-commerce operation. Like Namshi, Souq is riding a wave of fast internet growth in emerging markets at a time when more mature/developed regions like the U.S. are slowing down due to saturation.
It also comes at a time when Amazon itself appears to be getting more international in its ambitions for both its own brand and those that it owns, also tapping into these emerging market trends. One recent example: Amazon apparently staffing up for a bigger push into Russia with its Kindle services, which comes alongside resources also being put into a Russian expansion for fashion portal Shopbop.
International expansion makes sense for Amazon, which sells products at narrow margins and makes up for that with economies of scale. Given Rocket’s exit track record — selling portfolio companies to the likes of Groupon and eBay to aid in those giants’ international growth plans — it looks like one idea is for these startups to position themselves as acquisition targets for their U.S. counterparts. But, at the same time, Rocket is also building out businesses that follow that model and grow in their own right. Rocket Internet often rolls out multiple startups in the same region, and the idea is for these to use the same back-end systems, fulfillment operations, customer support and sales, and more to achieve their own economies of scale.
Developing markets have been a big target for Rocket Internet, with operations in Africa, Asia and Latin America in fact outnumbering those in Europe. And Summit has been no stranger to helping fund a number of these, including a recent $26 million for Lazada in Asia; $26.5 million in Linio (the “Amazon of South America”, which is funny since the Amazon runs through South America already); and $26 million in Jumia, another Amazon clone, this time in Africa.
“Namshi and its management team have done an exceptional job of growing the company, and we are happy to support the company’s continued expansion,” said Scott Collins, an MD and head of the Summit Partners London office, in a statement.
Rocket Internet, the Samwer brothers’ Berlin-based incubator that runs a vast global empire of e-commerce startups, is picking up a new, sizeable investor in Brazil. The Cisneros Group, the Latin American media powerhouse that owns TV, digital, and other assets, is investing up to $20 million in Mobly, a Brazil-based home furnishings site. Victor Kong, chief digital officer of the Cisneros Group and head of its Cisneros Interactive division, says that the first $10 million is coming now, with the company reserving the right to bump that up to $20 million within the year, with the door also open for investing in other Rocket Internet operations along the way.
The Cisneros Group becomes the fourth investor in Mobly, which has also had investment from the Samwers, along with regular Rocket Internet backers Kinnevik and JP Morgan. This latest round of investment will see Moby expanding from Brazil to other countries in the region, leveraging the Cisneros TV and advertising networks to help promote it. It looks like before now there was around $25 million invested in the site, and it has a pre-money valuation of $108 million.
“This acquisition is part of our commitment to diversify and strengthen our network of digital businesses in the areas of e-commerce and digital advertising,” Adriana Cisneros de Griffin, cheif strategy office and vice chairperson of Cisneros, noted in a statement. “Mobly is ready to break into the traditional market sales of furniture and home decor and extend its dominance in Latin America because it has the best selection of high quality goods and customer service and delivery that is known for its excellence.”
This is Cisneros’ first investment not just in a Rocket Internet company, but in a home furnishings site. It’s a lateral move for a company better known as the largest privately-held media company in Latin America, which includes TV assets and RedMas, an online ad network that is Yahoo’s partner in the region. Kong says this is because of a new strategy on the part of the company, spearheaded by Cisneros scion Adriana.
“Adriana is a third-generation Cisneros taking control of the company and I can see her pushing the company forward more here,” says Kong. Other non-media assets include Tropicalia, an eco-friendly real estate operation in the Dominican Republic, where Adriana is CEO. Cisneros’ other e-commerce investments include daily deals site Cuponidad, Latin American-focused crowdfunding site Idea.me.
Kong notes that when a media company in today’s world is thinking about the move to digital and how that will affect its future, e-commerce inevitably will come into the equation. That’s something that others like Conde Nast have also been exploring with their e-commerce investments. And companies like Fab underscore how big the online furniture and home fashion space can be.
“Adriana’s big question is, what is this company going to look like in 10 years? We all know what is happening with the move to tablets and phones, so we need to be more innovative and move into new spaces,” Kong says.
While the idea of a media company becoming a furniture site investor seems like a leap in one regard, in another it’s actually a no-brainer investment.
Like other countries in the BRIC bloc, Brazil is seeing a rapid growth of its middle class, and a big boom in e-commerce. Brazil, says Kong, accounts for 65% of all e-commerce in the region. Sales in the country grew by 20% in 2012, with home decorating the fastest-growing category.
A site like Mobly, with its emphasis on cost-friendly home furnishings, plays right into that. The site was founded 18 months ago and in 2012, its total revenue was $89.5 million. Now, it sees over $8 million dollars in sales each month, with that number growing rapidly, Kong notes. Like other e-commerce sites, Mobly’s strength comes in the ability to offer consumers a large range of stock, with more than 45,000 SKUs, according to Kong, on offer at any time. Unlike some of Rocket’s other investments into new markets, this one is led by a local team rather than transplants from the Samwers’ German HQ. The three Brazilian co-founders, Victor Noda, Marcelo Marques and Mario Fernandes, as also all co-presidents.
“This is our biggest move into ecommerce so far, but hopefully there will be more to come,” Kong says. He says that Brazil, being the largest e-commerce market in the region, will remain a key focus. As for what may come next for Cisneros, other Rocket holdings in Brazil include sporting goods site Kanui, private shopping club for home goods Westwing, fashion site Dafiti, and discount site CupoNation, among several others.
Zalora, Rocket Internet‘s pan-Asian fashion retail site, has launched an iOS app, as it seeks to capture the growing base of consumers in Asia who are using smartphones as their primary, and sometimes only, way of getting online.
The Zalora app was quietly released to the Apple App Store on the 17th of April before the wider announcement today, and was built by the company’s Singapore operations. It said last month it started building a regional software development center here to work on its Web platform and mobile apps, so it’s likely we’ll see more apps coming out for the store.
The iOS app allows you to browse and buy items on the store organized by brand or category, and rate favorites as well. Zalora says the app’s catalog is pulled from the store’s various collections across its inventory for different countries, so it sounds like you might be able to view more items in the app than on its country-specific sites.
Zalora is Singapore-based, and is barely a year old. It’s gone through an aggressive expansion in the region, and is in now eight markets in Asia: Singapore, Hong Kong, Malaysia, Thailand, Vietnam, Taiwan, Indonesia and the Philippines. It’s most recent round of funding was $26 million in March led by German retail conglomerate Tengelmann, just six months after an undisclosed, double-digit million sum from JP Morgan.
Update: While Android phones are more popular in Asia, Zalora said it decided to debut on the iPhone because it enjoys more than traffic coming from iOS devices compared to Android phones. “The iPhone segment is particularly inclined to online shopping with high basket sizes,” the company has found.
It has plans to work on an Android app, but would not say when that is coming out. Zalora attracts about 4 million visits weekly in Southeast Asia, and about 30 percent of that comes from mobile phones. This underscores the company’s decision to divert some resources to mobile efforts. This is its first native app, but it already launched a mobile site in January.
Still, Android traffic is likely to keep going up for Zalora. According to a consumer study done in Southeast Asia by Ericsson, by the third quarter last year 31 percent of phones here were Android-based. The iPhone had about 19 percent of the overall handset market.
One country does buck that trend, however. Zalora’s headquarters of Singapore has a 46 percent adoption of iOS, and just 29 percent for Android. Singapore has a smartphone penetration of around 90 to 92 percent, depending on who you ask, so those numbers are generally higher than neighboring countries.