Nebo.ru (‘sky’ in Russian), the largest Russian online jewelry store to date, has attracted a $2 million investment from Moscow-based fund AddVenture. The transaction, which terms have not been disclosed, was negotiated in October but only made public in late November.
Founded in 2008, Nebo.ru claims to be the largest online retailer in its segment. Its catalog contains more than 70,000 products. In a month, the company handles more than 6,000 orders and has a monthly turnover of $1.1 million and an average order value ranging from 1,000 rubles to 800,000 rubles per customer.
The company works with the dropshipping model, which allows them to save considerable amounts and to forecast the demand for bestsellers and avoid unavailability of popular products.
“The benefits of an online jewelry retail compared to offline retail are obvious. In particular, jewelry e-stores offer a huge assortment. A large percentage of our audience is in the regions, and, for them, our store offers almost the only opportunity to buy something beautiful, original and of quality since there is rarely a thriving jewelry business in small towns,” said Olga Suvorova, founder of Nebo.ru.
“In a relatively short time not only has the company built an impressive network of partners and suppliers and established excellent call center and courier services, but it has also became profitable,” AddVenture’s managing partner Maxim Medvedev stated.
The fund’s money will be used on an aggressive marketing strategy, opening a network of showrooms in Moscow and other big Russian cities and changing its IT infrastructure and its website to make it more user-friendly.
According to the AddVenture, the potential online jewelry market is huge. In 2012, the total volume of this segment amounted to $8 billion, while the share of online sales is less than 1%. According to analysts at AddVenture, by 2016 the market will grow to $11 billion, with the share of online sales rising to 10% and thus amounting to $1.1 billion. The online consumer audience is also expected to increase to two million people.
Venture money to serve Russian gourmets
AddVenture has also invested in Chefmarket.ru, a startup that offers home delivery of food products based on recipes from renowned Russian and West-European chefs. Along with groceries, customers receive step-by-step photo instructions. The concept is close to that of Western startups Hellofresh, Blueapron, and Plated.
Launched in summer 2012, the startup claims to serve thousands of active users in the Russian capital and its surrounding areas – delivering hundreds of lunches and dinners daily – with a monthly growth of 20-30%.
The project was launched by Sergey Ashin, an ex McKInsey consultant and alumni of the London Business School MBA program, in a bid to “revolutionize the notion of preparing food at home.”
Chefmarket.ru has several competitors in Moscow and other Russian cities. However, “all of our competitors, taken together, deliver in a month what we normally deliver in a day,” Ashin claims.
“AddVenture with its experience in implementing successful projects in the field of e-commerce is a valuable ingredient in the Chefmarket team,” adds Ashin. “Together we will revolutionize the world.”
The invested amount has not been disclosed, but AddVenture’s co-founder and partner Max Medvedev told East-West Digital News that it ranges “in the hundreds of thousands of dollars.”
The funds will be dedicated to developing required software, to further increasing the efficiency of business processes and to preparing the project for scaling in other cities.
“We will develop through franchise and have already begun preliminary selection of potential partners,” continues Ashin.
The focus of the project is Russian cities with over one million inhabitants, the ‘city-milionniki,’ while the deployment of the project in Western countries at a later stage is not excluded.
An important player on the Russian venture scene, AddVenture was launched in 2008. Its third fund AddVenture III focuses on e-commerce and lead generation or booking business models. Nebo.ru is its first portfolio company dealing with physical goods.
Last year AddVenture invested several million US dollars in Delivery Club, a startup that delivers food orders to more than 18 Russian cities.
- RUSSIAN E-COMMERCE REPORT – The total volume of Russian online retail is expected to exceed $16 billion this year, up from $13 billion in 2012, not including cross border sales. In partnership leading universities and consultancies, EWDN has published an in-depth research on this industry. To receive free insights or to order the full version (2013 edition), please contact us at [email protected].
