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Summary:

Germany’s notorious clone merchants have sold their stake in furniture operation Fashion For Home, but that still leaves them with good alternatives in the space. Whether they can produce strong players in less traditional e-commerce markets is another question.

Fashion For Home

When you have a sprawling portfolio of startups, some of which do the same thing, it makes sense to trim it down from time to time. That seems to be the lesson from Rocket Internet’s decision to divest itself of its stake in Fashion For Home.

While pulling out may look like a signal, it doesn’t seem that Fashion For Home is a failure. Indeed, it was one of the few Rocket ventures that was active in the U.S. market, and the sale of shares to Holtzbrinck Ventures and new investor Acton Capital was announced along with a new “lower double-digit millions” funding round for the site.

So why pull out?

Fashion For Home is a designer furniture company. So, to some extent, was Bamarang, the Fab.com clone that Rocket culled last month. Ironically, Ollie Samwer’s infamous ‘Blitzkrieg’ email from December highlighted furniture retail as one of the few e-commerce areas worth focusing on.

So what does Rocket still have in the way of furniture retailers? Lots.

Most relevantly, there’s Home24, which reportedly got major new financing in May (hello again, Rocket regulars Holtzbrinck and Kinnevik). Then we have Westwing/Dalani/Heaven and Home – the same store with different names for different territories – which, like Bamarang, is mainly a flash sale operation, but one that often deals in furniture (and is yet again financed with the assistance of Holtzbrinck and Kinnevik). Also don’t forget Mobly, Rocket’s Brazilian furniture venture.

While a big portfolio is impressive in its own way, redundancy makes little sense. In the cases of both Fashions For Home and Bamarang, Rocket’s withdrawal came in the context of having potentially stronger alternatives to concentrate on instead.

This approach stands in sharp contrast to some other Rocket plays, such as Pinterest copycat Pinspire that are not so much about e-commerce and more about chasing and ripping off the latest fad. That particular experiment is reportedly failing, raising the question of how good Rocket is at doing stuff that falls outside of its core competencies.

I’m talking about businesses that can’t simply be tacked onto Rocket’s international distribution network, which works so well for straight e-commerce. Yes, in the past it’s done well with CityDeal, but how much of that was to do with selling it to clonee Groupon within half a year of launch? There is also eDarling, but that business has also benefited from a partnership with the site it copied, eHarmony.

In other words, let’s see how plays such as Square clone Payleven pan out. In that kind of territory, the Samwers are yet to prove themselves.

  1. Matt Sharper Tuesday, July 3, 2012

    like silicon valley does not copy LOLZ

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  2. One thing that confuses me about a Rocket ‘exit’ is based on what you cite as “Rocket’s international distribution network, which works so well for straight e-commerce”.

    There’s no way this is a standalone startup growing, having a set of calculable assets, and exiting to someone who can take it to the next level. It’s Rocket’s international infrastructure and distribution network that can take one of their “startups” and make them a powerhouse in no time at all. When Holtzbrink buys a stake in Fashion for Home, do they effectively lose the overall Rocket distribution network?

    What assets does the buyer get on a Rocket ‘exit’?

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