Rocket Internet: mCommerce in emerging markets, the gift that keeps giving

Author: Michael Newlands
Published: 2015-03-22

Founded in 2007, but really starting to gain traction since 2011, German start-up incubator Rocket Internet is well on its way to fulfilling its mission statement of becoming the leading Internet platform outside of the US and China.

It is growing so fast facts and figures are hard to pin down, but as of end 2014 Rocket employed about 25,000 people in 75 ventures in more than 100 countries, most of them in the developing world.

Its CEO and founder Oliver Samwer has referred to its business model as “blitzkrieg” (the “lightning war” Adolf Hitler’s tank-led armies used to quickly overrun Europe in the Second World War) because of the speed with which Rocket identifies opportunities and gets them off the ground. Its modus operandi seems simple: it identifies successful Internet ventures in the developed world, mainly the US, and replicates them, with localised twists, in emerging markets. Samwer does not claim to be an inventor or innovator so much as a doer and has described himself as “Bob the Builder.”

Rocket’s three focus sectors are what Samwer describes as eCommerce (and particularly mCommerce), marketplace and financial technology. And the drivers for its business model are booming smartphone penetration, younger populations of “digital natives” in emerging compared to developed markets, a growing global middle class, and the ability of Internet technology to leapfrog traditional retail infrastructure in emerging markets.

Unlike many American and European firms which cautiously dip into emerging markets, Rocket submerges itself and in some cases has become a key part of the local economies. Sometimes it will launch a new platform in one country, sometimes simultaneously in multiple countries, but the aim is always for new ventures to leap rapidly from country to country.

Recent examples of new businesses include Kamyu, a general consumer-to- consumer and business-to-consumer marketplace which initially specialised in garments and accessories but has since widened its scope to general merchandise. It is accessible via fixed Internet or a smartphone app, and has both a payment platform and a cash-on-delivery choice. It launched last year in eight countries, four in Africa and four in Southeast Asia, and is now in 30 countries with some of the latest additions being Albania, Ethiopia and Bangladesh.

Lamudi, a real estate vertical for emerging markets in 13 countries in Latin America, the Middle East, Africa, South Asia and Southeast Asia and an auto vertical for emerging markets, Carmudi, are other new ventures.

These are not yet identified by the company as being among its “proven winners” which bring in large profits and continue to grow strongly—13 ventures which launched between 2009 and 2012, including several online fashion retailers, a company that home delivers healthy foods, online retailers of home and living products and e-commerce department stores.

Its latest launch is of online jobs platform Everjobs, which was created for the Myanmar market and has just opened in Sri Lanka, with Cameroon next. Rocket’s risk/reward balance can be seen by the speed with which it went into Myanmar, at the first signs of an economic boom and how it adapted to local conditions by, for example, having to drive to customers to collect payment as almost all business is conducted in cash.

Rocket attracted $2bn in investment in 2012, another $2bn in 2013, had a €6.5 bn IPO on the Frankfurt Stock Exchange last October and last month placed another €580 million worth of shares. The founders Oliver Samwer and his two brothers Marc and Oliver, the subject of a recent book, The Godfathers of the Internet, still control more than 40% of the company.

Pretty much anywhere in the developing world you live, there will probably be a Rocket Internet venture available to you via a mobile app in the near future if, that is, there are not several there already.

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