Last year, amid the crisis that hit hardly some segments of the Russian e-commerce market, KupiVIP Group saw its gross revenue reach 16.5 billion rubles including VAT (approximately $265 million at the average 2015 exchange rate), up 50% in rubles from the previous year.
Average market growth reached 16% in rubles (-28% in USD), just above the inflation rate (13%), according to a report by East-West Digital News.
KupiVIP reports a 45% increase in number of orders in 2015, while the average purchase value varied between 8,500 and 10,000 rubles ($137 and $161, respectively), depending on the season.
The business model of KupiVIP, which was established during the 2008 crisis, consists in buying surplus stocks of goods from global fashion brands at special prices, and selling them via web and mobile platforms with discounts from 30 to 90%.
In crisis periods, traditional fashion retailers need to adjust their warehouse surpluses. KupiVIP comes to their rescue to sell off their collections within a short time, the company explains. Meanwhile, consumers show growing interest in discounted sales. According to a survey conducted in mid-2015 by KupiVIP and FCG, Russians made 46% of their purchases with discounts.
A year of expansion
In 2015, the company expanded its assortment to new product categories (including household appliances) and significantly increased its pool of suppliers. Considerable amounts were invested in the in-house delivery system across Russia’s regions. KupiVIP also made its first steps in offline retail. Its first shop was opened in August 2015 in the Gagarinsky Trade and Amusement Center in Moscow.
KupiVIP also developed actively its mobile sales channel, which accounted to 40% of total sales. The KupiVIP application was downloaded by about 300,000 people, half of which were active buyers.
The company also got its share of the thriving cross-border market, with deliveries from abroad accounting for 25% of the group’s turnover in early 2015. In June, KupiVIP made available this offer to its Kazakhstani customers.
In April 2015, KupiVIP announced the acquisition of footwear retailer Sapato.ru from the Ozon group, gaining a 6-million client base.
From marketing excesses to profitability
Launched in 2008 by Oskar Hartmann, a Soviet-born German entrepreneur, KupiVIP was inspired by such successful Western models as Gilt and Venteprivee. As a result of its aggressive marketing strategy, the site quickly asserted itself as the number one flash sales site — but was also criticized for neglecting profitability considerations.
Generously funded by Western venture investors, the site became an important Internet holding with the launch of Kupiluxe.ru, which focused on high-end products, and ShopTime, a more classic e-commerce site. In 2014, the holding consolidated these properties into a single online platform under the KupiVIP brand.
The holding also includes a business unit for B2B services.
With an EBITDA ratio of +1% in 2015, the group claims that it has become “a fully profitable business.”
