TechCrunch reports Rocket Internet – perhaps the most ambitious ecommerce play in terms of global operations and reach – has written down the valuation of it’s GFG fashion businesses.
On the heels of Alibaba investing in its Amazon clone Lazada, today the Berlin-based incubator announced that Global Fashion Group, the company’s unprofitable merged fashion businesses, raised €300 million ($340 million) “at least” (indicating there is actually a higher number that isn’t being disclosed).
What we learn with this news and previous Rocket Internet releases since they IPO’d that once again, ecommerce is a bear. Andy Dunn’s prescient essay correctly suggests that Rocket and indeed almost every other ecommerce bar Amazon and Ebay (and Alibaba) is struggling to generate cash.
It’s obvious that the economics of price are having a downward effect on pricing, regardless of the top line growth of most pure play ecommerce websites. Dunn’s remedy is still obvious; own your own proprietary brand or at least have some of proprietary merchandising in place.
So what’s the strategy for ecommerce in 2016 and beyond? Personally I still see ecommerce at the high-end (read luxury goods) doing well. But what I don’t see is low price/commodity ecommerce doing well despite the ongoing success of dollar stores and the like offline.
And what about the middle? Perhaps the toughest place to be in all of retail and it’s playing out right now with numerous established retailers biting the dust as well as employees being laid off everywhere.
What’s your ecommerce strategy? What do you think is working? Share in the comments.