The FT reports that Rocket Internet is ‘Europe’s largest Technology group’ though the definition is a little vague. It’s also continuing to bleed money:
However, all of them continue to lose money. Mr Samwer said he expected three of the companies to reach break-even in the next 24 months.
We know Rocket is a pure play outfit i.e Zalando in the B2C fashion space and HelloFresh in the nascent food delivery sector all operate as online only services without the typical fixed assets of storefronts. We also know a little more nowaways about their financials given they’re a public company.
First-half revenues at Global Fashion Group, which brings together five of Rocket’s emerging markets fashion retailers, rose from €256.9m to €418.3m, while adjusted ebitda losses grew from €103.5m to €151.2m.
Revenues rising shows how quickly these types of companies can grow as acquiring customers can happen very quickly. But also just as quick we see mounting losses, typically marketing spend acquiring those customers. Rocket hasn’t been shy at spending money on traditional marketing either. The question is, and similar to SAAS type businesses in enterprise software that are also growing fast, can they acquire customers profitably in the long term?
That question is the question mark over ecommerce. We’re only twenty years into ecommerce as we know it but what will it look like in another twenty? And will these guys be giants or perhaps long forgotten?