Germany’s Samwer Brothers – Alexander, Oliver and Marc – famous for creating replicas of well-established sites across the world, have turned their attention towards India. They are said to be the money and expertise, behind 3 recent players in the Indian e-tailing space, Jabong, FabFurnish and HeavenandHome.
The Samwer Brothers are not new to this business and have created and sold replica sites and companies since the 90’s. In the late 90’s they created Alando, a supposed clone of eBay and sold it to eBay for over $50 million. Then again, in the early part of last decade, they sold the astrology site Viversum to Questico for an undisclosed sum, and then in 2010, sold CityDeal, a European clone of Groupon, to Groupon itself for over $125 million. Other companies which they have cloned, include Zappos, OneKingsLane and Pinterest, among others.
Speaking with Wired.co.uk earlier, Oliver Samwer, had said, “We are builders of companies, we are not innovators. Someone else is the architect and we are the builders.” The table below give details of their companies, stakes and sell-outs in the global space.
In 2007, the brothers decided it was time to formalize and streamline operations, and thus Rocket Internet was born. Based out of Berlin, Germany, the Incubator/PE Company/Active Investor Company, became the parent corporation for their on-going operations in various companies all over the world. Cut to 2012, the company has stakes in a large number of e-tailers and sites across the world such as Wimdu, TOPTARIFF, Zalando, eDarling, and BillPay, among others. As per Rocket Internet GmbH’s corporate site, they are active investors, who not only invest money in the companies, but also their time and expertise to ensure the company’s success.
While many may debate their methods and scoff at the mention of their name, there are three key reasons behind the success of the Samwer Brothers and their company, Rocket Internet:
- Execution and Expertise – One of their biggest strengths is the ability to execute and execute properly and clinically. They are known for their execution skills and over the past decade and a half, built capabilities and expertise in a diverse range of roles and functions. This helps them in easily rolling out clones of a successful business model at a fast pace. Their clones have had the potential to make a successful dent in the leaders business, thereby prompting them to buy the clone.
- Large pool of Money – The money that the Samwer Brothers earned in late 90’s and early 2000’s has been well invested in building capabilities and creating a fund, which is now used to kickstart new ventures across the globe.
- Cross Linkages – The Samwer Brothers have now developed a world of knowledge about how to and how not to operate internet businesses and have funded and established companies using various business models, thereby utilising the synergies in their businesses the world over. Thus, a newly launched player, such as Jabong, has the learnings and backing of the entire group behind them, and on the back of money power, has been able to propel itself into the top sites in India.
The Samwer Brothers, though a seemingly late entrant into a rapidly expanding Indian e-tailing market, have pumped in close to $50 million into their 3 Indian ventures, and have plans of setting-up more sites, most interestingly, a replica of e-bay for the Indian consumer. This has created quite a buzz in the market with leading players already feeling the heat, what with rising customer acquisition costs, fleeting customer loyalties and rising operational costs and other issues.
In what is now being celebrated as the most well-known secret in the industry, Xerion Retail Private Limited is the parent company of both Jabong and FabFurnish, which in turn is funded by the Samwer Brothers Group. Xerion Retail was established in September 2011 with an authorised and paid-up capital of Rs. 1,00,000 and is based out of Gurgaon, Haryana.
Jabong – the company’s flagship venture in the Indian e-tailing space – which was started in late 2011-early 2012, and manages over 15,000 SKU’s has already established itself as a player to be reckoned with. The company is going all out to woo customers and has been marketing itself with gusto. The results are very clear.
Within 4 months of launch of operations, the company already has over a million page views daily with over 160,000 unique visitors, which has taken the company to Rank 58 in Alexa Rankings for India. This rapid growth is also translating into growing business for the company, while the industry is still trying to understand the origins and funding of the company.
While the company will face increasing competition from leading category players such as Myntra, Fashion & You, and others, it has its sights clearly set on becoming the market leader in a short span of time, from where it can launch itself to take on even larger players in the Indian space such as Flipkart, Amazon, eBay for a share of the customers wallet.
The company’s other site, FabFurnish has over 10,000 page views daily with over 1,500 unique visitors, and an Alexa ranking of 1,541 at last count. The third venture, heavenandhome.com, has over 33,000 page views and about 10,000 unique visitors, with an Alexa Rank of 1,441 in India. Interestingly, while data and site for the first two ventures (Jabong and FabFurnish) is hosted on a server in Mumbai, India, HeavenandHome’s servers are located in Rocket internet’s parent country, Germany. Given the synergies and learnings that exist within the Samwer Brother’s Group, the traffic and popularity for all three sites is all set to grow further in the coming months, along with a rise in business.
While the company’s senior management roles in Rocket Internet are populated by graduates of leading schools such as, IIM’s, Ivy League Colleges, Oxford etc. their choice for heading operations in each country are generally young entrepreneurs from the host country.
Speaking with Bloomberg Businessweek earlier, Oliver Samwer, the de-facto operations head, had said, “I think the most admirable entrepreneurs are those with original ideas. It’s a unique gift that you either have or you don’t. Just as we might have a very good gift of execution, others have a unique gift for the purest form of innovation.”