Lamoda.ru, one of Russia’s four leading online fashion retailers, has just secured $130 million from Access Industries, Summit Partners and Tengelmann. The transaction marks the most significant investment volume in the history of Russian e-commerce, topping a $100 million funding deal completed in September 2011 for Ozon.ru.

Lamoda offers more than 1,000,000 products and 800 international brands. It claims to have attracted more than 1 million clients within two years with over 20 million visits every month on its platforms from Russia and Kazakhstan.

The company, which employs over 1,200 people with offices in the two countries, has recently focused on regional expansion and improving its logistics system. Built on a self-managed distribution center, Lamoda offers next day delivery to major Russian regions through its company-owned Lamoda Express courier service.

“Russian e-commerce is pivoting right now with customers catching on in waves to service offerings that often times already beat western counterparts such as next day delivery to regions. Based on our approach to pair the biggest offering of brands with the best customer experience possible, we will continue to invest in additional inventory and infrastructure”, Lamoda Co-founder and CEO Niels Tonsen told East-West Digital News.

From “fuck-up” to success

As was recounted in EWDN’s e-commerce report, Lamoda’s road to success has not been a bed of roses. When it appeared in early 2011 – backed by the famous German incubator Rocket Internet – the site had to conduct a giant marketing battle against Sapato.ru, the first mover on Russia’s online footwear market.

Virtually all means were used, from gradually growing email marketing to massive display advertising campaign connected with context advertising on search engines and social media. The campaign also included little successful offline advertising campaigns, which involved glossy magazines as well as backside metro tickets in Moscow.

During the first year, Sapato resisted the assault and remained the most recognized brand in its market segment by the end of 2011. “Our team fucked up in Russia,” wrote Rocket Internet co-founder Oliver Samwer in an email that became infamous, blaming unsatisfactory reporting procedures, while Sapato was acquired by e-commerce leader Ozon.ru.

Last year saw Lamoda – which benefited from a capital injection of nearly $60 million from JP Morgan in September 2012 – outperform its competitor decisively. In addition to continued investments in marketing, Lamoda has adopted a free shipping and 365-day return policy.

While it arguably makes little sense from an economic standpoint, taking into account Russia’s immensity and the high return rates – 40% or more according to rumors, – such a generous approach has undoubtedly contributed to the site’s impressive commercial success.

According to Data Insight, Lamoda’s traffic figures run about four times higher than those of Sapato but twice lower than those of Wildberries, another leading Russian fashion retailer.

Lamoda’s net sales (not including returns) for 2012 have been estimated by Data Insight at approximately $150 million – which puts the site at roughly the same level as Wildberries, online fashion shopping club KupiVip.ru and Otto Group subsidiary Bonprix.ru.

  • RUSSIAN E-COMMERCE REPORT – The total volume of Russian online retail reached approximately $13 billion in 2012, up 27% from the previous year, not including cross border sales. EWDN, in partnership with leading universities and consultancies, has published an in-depth research on this industry, including a detailed review of the major players and their sales figures.  To receive free insights or to order the full version (2013 edition), please contact us at report@ewdn.com.