12. June 2012–
Berlin's Samwer brothers are closing down online shopping club Bamarang after just six months in favour of fellow Rocket Internet portfolio company Westwing, which last week announced a new $50 million funding deal.
Bamarang, inspired by New York-based Fab and active in several European countries plus Australia, India and Brazil, specialises in daily discounted "flash" sales of designer home products and prompted an outraged blog post from Fab founder Jason Goldberg when it launched in January.
Now, sources close to the company have told Gründerszene that the bulk of Bamarang employees will be moved to Westwing, a more exclusive, high-end version of the same model. Westwing managing director Stephen Smalia confirmed the news:
With the recent funding of $US50 million, we have reviewed with our investors how to focus our activities on the most winning business model / markets. We have decided to concentrate on the WestWing business model (ie, home & living shopping club targeted mainly at 25 to 55 year old women), where we have established clear number one positions in key markets such as Germany, Brazil, Italy and Russia.
"As a consequence, we will phase out Bamarang and focus our resources (people and money) 100 per cent on WestWing, which we see as the stronger business model of the two. This will allow us to build unassailable market positions in the emerging home and living e-commerce market and deploy our substantial new funding on the largest growth opportunities."
Westwing was founded in 2011 by Smalia, Delia Fischer, George Biersack, Matthias Siepe and Tim Schafer. It is now present in over a dozen countries worldwide, including France, UK, India, Turkey and Brazil (sometimes trading as Dalani).
Fierce competition to blame?
One factor in Bamarang's closure may be high competition within home base Germany and wider Europe. Curated designer shopping site Monoqi, backed by leading Berlin investor Chrisopher Maire, started up at almost the same time. Other rivals in Germany include Flavs and Casacanda, with the latter acquired by Fab in February as part of its major bid for the European market. Rocket Internet-backed platforms Home24 (non-designer furniture) and Westwing will have added to the pressure on Bamarang, even if both aim at different market niches.
Home24 also recently secured fresh funding - an unknown amount by existing investors Rocket Internet, Kinnevik Holtzbrinck Ventures - and is now active in France, Russia, Turkey, Brazil, South Africa, India, Australia and Singapore and Malaysia.
It makes sense for Rocket Internet to focus on the strongest among similar players in its portfolios. But, as this recent anonymous employee review suggests, backing competitors within the same market is not always the best recipe for team morale. Will this "survival of the fittest" approach pay off long-term?