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Billionaires behind Rocket Internet return to Asia's e-commerce market

September 15, 2015 11:34 AM
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(Bloomberg)—Germany’s Samwer brothers built a multibillion-dollar fortune copying Silicon Valley ideas to create some of Europe’s hottest startups. After stumbling in China, their Rocket Internet SE startup factory is trying again in Asia.

A new online business has been promised every three months as Rocket leverages the rise of cheap Chinese smartphones and a venture with Qatar’s Ooredoo QSC to access new speedy Internet-enabled wireless networks.

Rocket helps develop the applications meant to attract users to networks Ooredoo is building in countries including Myanmar, Pakistan, Indonesia and the Philippines. The venture has about 200 million euros ($226 million) committed for investments, and more could be raised by individual companies, with a portfolio already including auto market Carmudi and the Daraz marketplace that resembles Amazon.com Inc., No. 1 in the Internet Retailer 2015 Top 500 Guide.

“If you identify opportunities and business models that you think are working, every second you lose, you pass your opportunity,” said Hanno Stegmann, the head of Asia Pacific Internet Group, the one-year-old partnership between Rocket and Ooredoo.

Tapping into the growing consumer class of emerging economies in Asia, Rocket says it’s expanding quickly with 14 companies operating in 15 countries. For example, Carmudi had 2 million visits a month by May.

Zappos clone

The Samwers found early success in Europe, where they created shoe and clothing portal Zalando SE, No. 8 in the Internet Retailer 2015 Europe 500 Guide, that mimics Amazon-owned Zappos.com Inc. Rocket also developed Lazada, the Amazon of Indonesia.

Rocket typically starts the companies, hires staff and provides initial marketing, design and management know-how—a formula that has turned its founders, the brothers Oliver, Marc and Alexander Samwer into billionaires. Last year, the company sold shares in Germany’s biggest initial public offering since 2007.

The renewed push into Asia follows disappointment with previous efforts, including an Uber Technologies Inc. rival in Hong Kong and Singapore.

A foray into group discounts with the firm Gaopeng, a joint venture with Groupon and Chinese gaming and chat giant Tencent Holdings Ltd., has struggled to gain traction. Three years ago it merged with a rival.

Earlier missteps

“It is fair to say that Groupon’s expansion to China was extremely challenging and that Asia Pacific Internet Group and Rocket learned from that quite a lot,” Stegmann said.

Rocket’s Uber-like car hailing service, Easy Taxi, pulled out of Hong Kong, Taiwan and Singapore where it competed with Uber and Didi Kuaidi Joint Co., which have raised billions of dollars in a costly battle for customers and drivers.

Since then, Rocket has decided to avoid China to focus on countries where it can have an advantage, Stegmann said. Rocket’s home page mission statement says it clearly: “To Become the World’s Largest Internet Platform Outside the United States and China.”

“The Germans say the smarter player sometimes steps back to allocate resources somewhere else,” Stegmann said. “So even if it looks like someone’s a loser, sometimes the loser comes back with another approach and these other guys have spent all this money on getting customers.”

That means moving into markets where Rocket can be among the first to introduce the whole idea of online shopping. In some countries the company is running ads educating customers about how e-commerce works.

Rocket’s African experience is helping it expand in places such as Myanmar, where shoppers pay cash on delivery instead of using bank or credit cards. After buying an item online, customers get a call to reconfirm their address and the purchase. That extra step helps deter many from reneging on paying, Stegmann said.

“At first people were super-surprised,” Stegmann said. “This is a real company? You will actually deliver the product to our home? In some markets you have to tell them we are a company that aggregates shops and we will get it to your home.”

 

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