U.S. e‑commerce managers and e‑commerce analysts might not have heard of it, but one of Russia’s hottest online fashion startups, Lamoda, has just made history by scooping the country’s biggest ever round of capital funding for an e‑commerce site.
Smashing the record
The cash came from a group led by the somewhat oligarchic Len Blavatnik — and it dwarfs the amounts raised by Russia’s previous record holders. Russia’s version of Amazon, Ozon, raised a mere $100 million in 2011, while online classified site Avito mustered a comparatively modest $75 million. Quite a few e‑commerce managers would chew through wood for that kind of money, but Lamoda’s $130 million is enough to induce a swoon.
Mr. Blavatnik can certainly afford it; in March, he sold his stake in the TKN-BP oil group and ended up with £7 billion extra in his already generously laden bank accounts. Not that he’s reckless with his money – the scale of the funding reflects the fast-rising interest in Russian e‑commerce, which is steadily catching up with the U.S. and western European e-retail sectors. Lamoda’s sales, it claims, are in the hundreds of millions of euros and its growth rate has hit triple digit figures.
It’s planning to use the funding to beef up its next-day delivery service (no mean feat in a country of massive size and meager infrastructure) as well as to expand rapidly. Lamoda employs couriers directly instead of relying on intermediary logistics companies and currently offers next-day delivery in 10 Russian cities. Its founder and chief executive, Neils Tonsen, said:
“We believe that it’s really crucial to own a vast majority of the infrastructure yourself if you want to grow fast and cover the country with the best delivery service. We really see that there is a huge difference in the market when you run even the couriers on the local level yourself.”
Tonsen has his eye on provincial areas, where bricks-and-mortar fashion competitors offer a much more restricted range than Lamoda. He explained:
“You have a huge territory and a lot of the time there is not enough local supply in the regions to match consumer demands.”
This baby looks set to grow huge. A Lamoda e‑commerce manager is almost certainly a very happy one right now.