The Predictive Theory on Rocket Internet

E-commerce in emerging markets is one of the keys to commerce maturation that will be seen globally in the next 10 years. The fastest growing ecommerce markets are not saturated like what is seen in the UK, US or South Korea. Thus investors such as Naspers, Tiger Global Management and Rakuten are competing against one another in emerging markets as every business wants to ensure that they have their share of the long term returns that will be seen in these markets.

However an online venture builder and accelerator from Germany entered into this race about 18 months ago and have in a very short period of time created quite a few market changing moments across the globe.

I want to define what is an emerging market in my own mind before we continue with the fascinating race seen in emerging market ecommerce.

An emerging market is one that geographic area which is inhabited by customers whom have means to pay for products but are unsure of new technology to ensure a transaction occurs on the Internet between the customer and a commerce business. The markets also faces barriers for foreign businesses which deem the market to be heavy for investment thus the investment is taken to another country or region. Barriers are: credit card penetration, Internet connectivity and logistics to deliver the bought item to the user.

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Rocket Internet to IPO?

Earlier today I read Thomas Baldwin’s post on Rocket Internet preparing to go public and I must say it is at the moment a rumor. What is the ramifications if they do go public?

Preface

The last 18 months – I have been reading and observing a German accelerator going through the gears and starting businesses faster than I have ever seen any company do. They are a controversial topic and have 3 brothers that are the commanders in chief of this business.

They are not everyone’s cup of tea nor are they without any controversy. Blitzkrieg and all of the other things that have gone into the public domain makes going public a interesting move, if true for Rocket Internet.

Driven by success

The Samwers are some very clever business people and what they have achieved should not be discredited. They have started a lot of businesses, hired a lot of staff, closed businesses and retrenched staff on a scale I have never seen. They are obsessed with execution and ROI. Whatever they do it is with one thing in mind – success.

I am not going to debate their way of operation. They do take ideas from first world markets (Amazon, Zappos, IKEA, Square and Groupon) and then create businesses based on these concepts in emerging markets. Call it cloning, copying or whatever it is, it has made them handsome returns. The results seems to be good for their investors which is the prime focus for a startup accelerator. Ultimately, it boils down to culture and personal beliefs. You either like it or hate it. There is no in the middle with the way in which Rocket Internet operates.

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What is under the hood at Zalando.de?

Amazon.com is well known for creating custom software for their platform due to  scale. Millions of products, transactions and real time pricing and data that is used by Amazon internally ensured that off the shelf software would be totally inadequate. I for one, can only imagine that petabytes of data is consumed in Seattle.

Generally, technology companies like to keep the opposition guessing. What is under the hood and successful is not shared with the public. Yes, legal will most probably have a heart attack if you share technologies used. Employment contracts ensures that Intellectual Property is protected to the T and any disclosure could lead to immediate termination.

However, Zalando (the fashion business inside the Rocket Internet Empire) thought they would share their technology by means of an Infographic. To be clear, it provides an idea of the technologies used by the Zalando technology team.

Big Sales need Big Software. Discover Zalando’s E-Commerce Platform.

While Zalando is well-known for it’s massive and unique growth as a retailer since 2008, little was known about our technical platform yet. Time to give some insights into how Zalando uses technology and mindset to produce and run excellent, fail-safe and scaling E-Commerce APIs and applications for millions of demanding customers.

The entire image can be seen here: Zalando Technology (The image is interactive, so when visiting the Zalando Technology website, expect that every division has a roll over)

Why is this a big deal? Why do you share this kind of information on the same day that investment from J.P. Morgan Asset Management and Quadrant Capital Advisors is announced?

“The company has quickly established itself as a leading online fashion retailer in Europe. We are impressed with Zalando’s large, growing, and loyal customer base as well as the breadth of products offered on the company’s eCommerce platform. Zalando’s world-class fulfillment resources and dedication to superior customer service should enable the company to expand upon its leading market position.”

I would think that you keep as much of this inhouse to ensure that you retain the competitive advantage of the technologies used..

Hat Tip to Exciting Commerce for the highlighting this information on Zalando.