Glorious story but modest exit for online fashion pioneer KupiVIP

Glorious story but modest exit for online fashion pioneer KupiVIP
KupiVIP was a pioneer of Russias' e-commerce business, selling last season's designer names online and founder Oskar Hartmann is a legend. The company has been sold to Yandex.
By Adrien Henni in Moscow for East West Digital News July 8, 2021

Yandex.Market is in the process of acquiring KupiVIP, one of the most established e-commerce brands in Russia, founded back in 2008 by German entrepreneur Oskar Hartmann.

Also included in the acquisition deal are KupiVIP’s five offline outlets in Moscow, the Mamsy e-commerce site and a 20,000 sq. m logistic center in the Moscow region. 

The transaction is likely to be completed in the third quarter of 2021, after receiving approval from the antimonopoly authority.

The terms of the deal were not disclosed, but Mikhail Burmistrov of Infoline Analytics told Vedomosti that the assets might have been valued at around 1 billion rubles ($14 million at the current exchange rate). 

East-West Digital News heard rumors that mention an even lower amount, taking into account the company’s debt. 

“Gradual integration” for “accelerated penetration”

Through this acquisition, Yandex aims to “leverage KupiVIP’s scalable warehouse facilities, its supplier base and qualified team with the necessary expertise.”  

Under plans, Yandex.Market will “gradually integrate KupiVIP into its platform,” the Yandex press service told East-West Digital News. 

While the KupiVIP assortment will become available via the Yandex.Market marketplace, KupiVIP’s customers will receive access to the Yandex.Plus subscription program, and benefit from Yandex.Market’s last-mile delivery infrastructure.

The acquisition will allow Yandex.Market to “accelerate its penetration into the online fashion market,” as the company is pursuing the goal of “becoming a multicategory marketplace in the full sense.” 

As part of the same strategy, Yandex recently integrated its e-grocery services with Yandex.Market, the press service said.

A bevy of top-tier VCs

Once in the top 10 e-commerce sites in Russia, KupiVIP fell to the 68th place in 2020, according to Data Insight’s ranking. Its sales revenues decreased to 4.5 billion rubles (around $62 million at the average exchange rate of 2020) — far behind such fashion leaders as Wildberries and Lamoda

In the years following its inception, KupiVIP raised some $120 million, mostly from Western investors. These included such big names as Accel Ventures, Balderton Capital, Bessemer Venture Partners and Mangrove Capital Partners, as well as the EBRD.

“KupiVIP will continue its life as part of the Yandex ecosystem, and that is a positive outcome,” said David Waroquier of Mangrove Capital Partners in an exchange with East-West Digital News. 

“But it is true that the initial business model turned out no longer unique. A commercial innovation introduced in Russia by KupiVIP, discounts progressively became the norm both online and offline.”

“KupiVIP attempted to become omnichannel, involving operating across its websites, mobile app and brick-and-mortar retail stores. All this required significant capital, given the size of the Russian market,” Waroquier explained. 

“While the international context was less favorable, not all local players were able or willing to invest in the company.” 

KupiVIP was not the only company affected by such issues. Waroquier cited the examples of Wikimart and Ulmart — which went bankrupt in 2017 and in 2020, respectively.

The beacon of Russian e-commerce entrepreneurship

Regardless of the outcome, KupiVIP had a considerable impact on Russian entrepreneurship and e-commerce, said Waroquier: 

  • It pioneered online fashion sales at a time when few people believed it could be possible in Russia;
  • It inspired a generation of e-commerce startups — perhaps more than any other Russian e-commerce venture;
  • It developed modern last-mile delivery methods in a country where such services barely existed at a satisfactory level at that time;
  • It pioneered online advertising, including via social networks, in Russia;
  • It helped a variety of international fashion brands, and even Russian companies, to enter the market [via KupiVip’s B2B offer ‘Private Trade E-commerce Services’];
  • It legitimized Russia as an investment target in the eyes of Western investors, attracting a bevy of prestigious VCs;
  • It created up to 1,200 jobs on the payroll (5,000 employees in total along the years), some of them became entrepreneurs (Oleg Naumov, Vladimir Kholyaznikov…)

As for Hartmann, he became an inspiring figure for the new generation of startup entrepreneurs. “He has been a poster child of the Russian scene, setting the example to many aspiring entrepreneurs,” said Waroquier. 


This article first appeared in East-West Digital News (EWDN), a bne IntelliNews partner publication.