Rocket Internet’s Australian online retail platform The Iconic has announced a AU$28m (around €19.8m) funding led by Verlinvest. Existing investors AB Kinnevik (Rocket’s biggest investor) and Summit Partners also participated in the funding round, which the company says is the largest ever in an Australian eCommerce business.
It’s not all good news for the company though, the announcement comes shortly after cofounder Adam Jacobs revealed that around ten per cent of its 300-person staff had been let go amidst too-high costs. Rumours were also circling that Oliver Samwer, one of three brothers behind Rocket Internet, had to fly to Sydney for crisis talks. Additionally, two of the original managing directors – Ryan Touhy and Cameron Votan – left the company.
According to The Sydney Morning Herald, in the period from August 2011 to December 2012, the company made a definite loss. The business burned through AU$44.7m to make AU$30.6m in revenue, though this isn’t uncommon for early-stage eCommerce ventures. For instance, Zalando – The Iconic’s German counterpart founded in 2008 – took until 2012 to reach break-even in its home region.
Launched in 2011, The Iconic offers customers a choice of over 500 brands and over 45,000 products, with an emphasis on footwear. The company offers free returns and delivery, plus three-hour delivery in Sydney for some items – a high-cost model that is in part to blame for the company not yet being profitable.
In the company’s favour, however, is relatively little local competition – meaning consumers have less choice when shopping online. However, The Iconic does compete with well-established UK online retailer Asos, which is putting more effort into cornering the Australian market, it set up a local warehouse in late 2011. Asos also offers free shipping and returns.
On the funding, Jacobs said: “This investment will allow us to further enhance our top range of local and international fashion brands, reinforce the convenience of our website, and build on our market-leading shipping and customer service… In only 18 months The Iconic has become Australia’s number one fashion website with over four million visitors per month.”
Another investor in The Iconic is JP Morgan. The latest funding round brings the total investment up to AU$78m to date.
Image credit: Flickr user Skazama
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