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E‑retail startup Lamoda breaks the record for Russian e‑commerce investment

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.

Growth plans

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.

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