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World Bank Group’s IFC invests €10 million in online fashion retailer Lamoda.ru

Lamoda, a leading Russian online fashion retailer, announced January 28 an equity investment of €10 million from IFC, a member of the World Bank Group.

This investment – the first by IFC in Lamoda – aims to “support the company’s expansion as well as enable Lamoda to consolidate its sustainable growth while further raising environmental, social and corporate governance standards. It will also aid the regional development of the company’s express delivery network, Lamoda Express,” the press-release reads.

“Internet companies are speeding up modernization of the retail supply chain in developing countries, which is helping to promote consumer spending — a key component of economic growth,” said Atul Mehta, IFC’s Director of Manufacturing, Agribusiness and Services.

“Their investments in logistics, information technology and marketing are rapidly generating employment, especially for women and young people,” he added.

IFC also announced it would invest up to €15 million in Dafiti, Latin America’s leading fashion e-commerce group.

Launched in 2010 by German incubator Rocket Internet, Lamoda.ru has established itself as Russia’s number one online retailer in the shoe segment. The site has further extended its assortment to other fashion items and started serving neighboring countries such as Kazakhstan.

This rapid expansion has been fueled by substantial capital injections exceeding $200 million in total. The latest round of financing amounted to no less than $130 million – an absolute record on the Russian venture scene. The transaction took place in June of last year, involving Access Industries, Summit Partners and Tengelmann.

Among Lamoda’s other shareholders are Investment AB Kinnevik and JP Morgan.

Russia’s online retail market amounted to $19 billion in 2013, including approximately $3 billion in cross-border sales, a recent study by East-West Digital News revealed.

Lamoda disclosed neither its valuation nor its 2013 figures.

Questions to Niels Tonsen

Why is Lamoda raising €10 million less than 8 months after raising $130 million? Has Lamoda already spent this money?

Lamoda is certainly very well financed, and purely financial considerations have not been the main reasons behind the investment. It is a great accomplishment to be able to welcome an institution like the World Bank/IFC to our shareholder base. Receiving an investment from such a reliable and important partner is a great acknowledgement of our efforts; it underlines the high level of trust from leading global business investors in Lamoda’s development.

Why does Lamoda need to develop an in-house delivery network across Russia? What’s wrong with the existing providers, which now cover virtually all large and medium-sized cities and offer a competitive alternative to the Russian Post?

We feel that with Lamoda Express we are able to deliver a superior customer experience, as all the processes and the training of salesmen come under our rigorous control. In terms of speed, reliability and service level, Lamoda Express is unmatched in the market. This is also reflected in the numbers, which show us consistently outperforming third-party providers.

Could you elaborate on Lamoda’s “environmental, social and corporate governance standards” as they are set today and as IFC’s investment aims to raise further?

As a fast growing company with a headcount of over 2,000 today, it is very important to us to adhere to a high level of social, environmental and governance standards. This starts with basics like safe and friendly working conditions across all our facilities and continues with a genuine interest in the personal and professional needs of our employees. Hence we continuously invest, for example, in mentoring and training programs. Moreover, as a fashion retailer we take great care in the selection of our suppliers with regard to conditions under which goods are being produced. 

2014-02-03, East West Digital News, Adrien Henni.

Keywords: World Bank, fashion, retail sector, investment, e-commerce, online shopping, funding

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