Lamoda, a Western-founded and managed Russian e-commerce leader in the fashion segment, saw its sales surge by 23.5% year-on-year in Q1 2019. During this quarter, the platform’s sales exceeded €111 million, including Lamoda’s business in Russia, Belarus, Ukraine, and Kazakhstan.
Also included in this number are Lamoda’s marketplace sales. These grew more than threefold in a year, now accounting for 22.2% of total sales through the platform. More than 2,000 partners are involved in this marketplace.
“While keeping inventory-based retail as a business model, the Lamoda platform is now articulated around the concept of connecting buyers and sellers of goods and services,” said Florian Jansen, co-founder and CEO of Lamoda Group, in an exchange with East-West Digital News.
Lamoda has also diversified its offer, which now encompasses such products as accessories, jewellery, cosmetics and perfumes. These categories have recorded spectacular growth rates: watches sales, for example, grew by 35% and earrings by 200%, says Lamoda. However, unlike Russian e-commerce leader Wildberries, Lamoda is keeping its focus on fashion, integrating other products as complements to the core categories: clothing, accessories, and shoes.
Sales grew the most through mobile apps. “Mobile orders doubled, now reaching almost 70% of total sales,” notes Julia Nikitina, Director for Marketing and Product.
Lamoda’s growth translated into a 3.3% gross profit year-on-year growth in Q1 2019. “This revenue and profitability surge illustrates that the re-positioning of the company into a fashion, beauty and lifestyle expert has been successful and will continue to be so,” the company stated.
A promising development cycle
Russian e-commerce is entering a promising development cycle: although the size of this market reached just a bit more than $18 billion last year (taking into account only domestic orders of physical goods, according to Data Insight), growth in this sector is accelerating.
In October last year Morgan Stanley predicted that the market could exceed $50 billion by 2023. But Boris Ovchinnikov, the Data Insight analyst who conducted the ranking, believes online retailers could do even better.
“Over the past year or two, the performance of many players, including both large and medium-sized sites, has been so impressive that forecasts may have to be revised upwards,” he told East-West Digital News.
Growth will be pushed by massive investments made by big players. Sberbank, the state-controlled financial giant, has put half a billion US dollars in an e-commerce joint venture with Yandex, while Mail.Ru Group has teamed up with Alibaba to develop an “ecosystem” that would encompass e-commerce, social communications and gaming. (Yandex and Mail.Ru Group are listed on Western stock exchanges LSE and NASDAQ, respectively.)
The fashion segment was worth an estimated 500 billion rubles (nearly $8 billion) last year, including sales via marketplaces and social networks – up 30% from 2017, according to data from the AITC (AKIT) association cited by Lamoda.
“There’s a huge growth potential in this segment. Only 6% to 7% of fashion goods are purchased online in Russia vs. 25% or 30% in Europe,” notes Jansen.
- East-West Digital News is conducting an international study on Russian e-commerce in partnership with Data Insight, ECommerce Foundation and InternetRetailer.com. Foreign brands and online retailers selling to Russia or considering to do so are invited to participate in an online survey; they will receive the research report free of charge upon release.
