Lamoda – Rocket Internet’s online fashion retailer in Russia and a sister company to Zalando – has announced a $130m funding round lead by Access Industries with Summit Partners and Tengelmann also taking part. The company claims the investment is the largest ever made in a Russian eCommerce company. The investors will take a stake in Lamoda in an all cash-for-equity deal.
The news comes less than a month after Zalora, another Rocket Zalando clone operating in South-East Asia, received $100m funding – with Summit Partners and Tengelmann also involved in that financing, plus Investment AB Kinnevik and Verlinvest.
Lamoda launched two years ago and has attracted more than a million clients with around 800 brands, providing a courier service to ten cities. It faces competition from online women’s clothing store, Wildberries, shopping club KupiVIP and online retailer Ozon, among others.
Lamoda cofounder and CEO Niels Tonsen said the investment will be used to “continue building out our position” including by expanding the company’s next-day delivery service, Lamoda Express, to a greater number of customers.
The company’s last funding round took place in September last year and was led by JP Morgan, which has invested in a number of Rocket companies including Zalora, Namshi, Linio and Lazada.
Russia is a notoriously difficult market for foreign companies to crack but fits with Rocket’s focus on emerging markets where its companies have less competition. This focus doesn’t come without challenges: eCommerce sites in Russia face problems on the logistics front due to an ineffective postal service, meaning a lot (including Lamoda) hire or build their own delivery fleets. Payment comes with challenges too: a lack of credit card distribution means that customers often want to pay for their goods with cash when they are delivered.
This hasn’t stopped the Samwer brothers, who are behind Rocket Internet, making big plans for Lamoda – according to information from investor documents leaked from Rocket Internet, they have predicted a large jump in revenue for the eCommerce site over the next few years. Revenue in 2016 is predicted at being around €1.5b, increasing from last year’s €45m – obviously enough to convince the investors that a $130m funding round will pay off in the long run.
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