In the same week that Fab snapped up UK design site Llustre and set its sights on more European expansion, some growth news from another big online fashion commerce player: KupiVIP, the Gilt Groupe of Russia, has raised another $ 38 million in funding to help fuel a business that is on track to make $ 200 million in net sales this year.
The round was led by Intel Capital, with participation from new investors Acton Capital Partners and the European Bank of Reconstruction, as well as existing investors Balderton Capital and Accel Partners, and will be used to expand the company’s logistics operations, with the opening of a 20,000 square-meter warehouse. It will also be used to launch more websites to complement KupiVIP’s flash sales site, luxury goods site, full-price sales site, and white-label business.
“We have only just started to exploit the enormous opportunity the Russian consumer market offers to international brands. With this new investment, we are delighted to get the support we need to build a world class e-commerce company,” said Oskar Hartmann in a statement.
This newest round comes about 14 months after the company announced a $ 55 million round, which still holds the record as the largest-ever investment in a Russian e-commerce company; with the total now raised by the company a whopping $ 104 million.
KupiVIP’s CEO Oskar Hartmann in April said the company was eyeing up an IPO possibly in the next two years, although those plans may be put on hold in the current climate of other Russian companies like Vkontakte (the Russian Facebook) delaying IPO plans in the wake of Facebook’s lackluster performance. This newest raise could help KupiVIP continue to grow in the meantime, and shore up against competitors like Ozon, known as the “Amazon of Russia” for the range of products it offers and sheer size.
KupiVIP, which, like Gilt, started as a flash-sales site selling finite numbers of fashion pieces for a reduced price, has expanded over the years catering to a rising middle class of Russians with disposable income, internet connections, and a strong appetite for shopping and fashion. Its properties now also include KupiLuxe, dedicated to high-end luxury goods; ShopTime, a full-priced e-commerce fashion site; and a white-label e-commerce service for specific brands — which has worked with companies like Adidas and Mexx, which had been trying to crack the Russian market with their own e-commerce endeavors but less successfully.
Oskar Hartmann, the CEO and co-founder of KupiVIP, told me earlier this year that the company plans to have 23 such white-label sites on the books by the end of this year.
The other big area that KupiVIP is pushing, like Amazon and other big e-commerce players, is the logistics that underpins the online sales. This is especially important in a country like Russia, which doesn’t have as reliable a postal service and a generally poor logistics operation compared to more developed countries, and similarly much less developed non-cash payment services. KupiVIP not only owns and manages its own warehouses and fleet of vehicles but it operates on a cash-on-delivery basis with its driver-employees collecting payment for goods only when the recipient tries on and accepts the items.
The company is on track to make revenues this year of $ 300 million, and projects that it will be pulling in $ 1 billion annually within the next five years. As I’ve pointed out before, that’s a far way from Amazon’s $ 48 billion in 2011 but in a fast-growing market like Russia it’s one to watch.