Russia’s online retail sales lag well behind those of European competitors like the U.K. and Germany, partly due to the logistical challenges posed by an expansive land mass and unreliable postal service. Internet fashion retailer Lamoda is differentiating its business with a delivery model that provides in-store service at home.
Rocket Internet, an Internet “startup incubator” based in Germany, launched Lamoda three years ago. The company has focused on developing an infrastructure centered on a 215,278-square-foot warehouse in Moscow and 20 satellite centers across Russia. Lamoda is addressing shipping challenges with an innovative take on the direct selling model. The company employs 700 couriers—equipped with a fleet of 400 cars—to deliver products to customers.
Lamoda’s couriers not only provide free delivery, but also wait while the customer tries on the clothing. Furthermore, the couriers receive training to answer questions and provide basic fashion advice to customers, much like a traditional sales associate.
The unique model has attracted investments of over $200 million over the past two years. Mikhail Burmistrov, General Director of researcher Infoline-Analitika, forecasts that the company may cross over into the black in 2014 after seeing exponential sales growth last year.
An increasing number of retailers are vying with Lamoda for a slice of Russia’s online sales, which increased 26 percent last year. ASOS, the U.K.’s largest Web-only fashion retailer, launched a Russian iteration in 2013, and eBay will open its virtual marketplace to Russian merchants this year.