The luxury market in emerging markets is growing very rapidly and luxury online shopping is becoming more popular every day. The first movers stand to gain a huge advantage. Private flash sales sites have become so successful in the US markets that the space has been overcrowded by me-too players joining in every other day.
But Russia is a virgin market for the concept and the demand and the potential is enormous. Venture capital firms from the west are betting big on the first of its kind site in Russia. KupiVIP, founded by 28 year old German entrepreneur Oskar Hartmann in October 2008 is the Russian flash sale site that has got the consumers hooked to luxury online shopping.
Inspired by sites in the west like Gilt Groupe, KupiVIP follows the same philosophy of affordable luxury. The kind of growth and momentum the site achieved attracted the attention VC funds who are always on the lookout for fast movers. The Moscow based site has quadrupled its user base to 7 million in Russia and their sales figure has grown by 600% in 2010. The company buys wholesale from reputed designer labels such as Dolce & Gabbana and makes it affordable for a large number of consumers but only for a limited period of time.
A group of Western venture capital firms have come forward to cash in on the sites success and support it in becoming bigger, better and consolidate its leadership position in the Russian Market. The total funding made available to the site is $55 million from a group of VC funds which includes London’s Balderton Capital which has entered the Russian market for the first time with an investment.
Other investors include Bessemer Venture Partners, Accel Partners and Mangrove Capital Partners, which is based in Luxembourg. This is the largest ever funding that Russia has witnessed in the field of e-commerce. Jeremy Levine, of Bessemer explained that they were looking for a suitable e-commerce opportunity for some time and are very happy to be part of the fastest growing luxury online shopping site in Russia. Hartmann is obviously very excited and is confident that they are now in a position to exploit the opportunities fully and make KupiVIP into a world-class e-commerce powerhouse.