Blog Post

Letter From France:Vive Zlio, Vive La Vente!

[qi:046] Zlio, the 10-month-old “social e-commerce” startup founded by serial entrepreneur Jeremie Berrebi just raised $4 million in from Luxembourg-based Mangrove Capital Partners. This is the same VC firm that funded Skype.

Zlio is revolutionary, too. It lets users create and personalize a virtual “storefront” on Zlio’s site. Users fill their stores with goods aggregated off other ecommerce sites, and then sell them there, earning commissions while they do it—as if they were operating their very own Web-based bazaar! The service is gaining momentum: 100,000 shops have already been created, largely in France, generating a monthly turnover of $700,000 to Zlio partners, and $80,000 to Zlio and its shopkeepers. Top sellers making up to $750 per month!

Large e-commerce companies, such as Amazon, love “long tail aggregators” like Zlio because the combination of a user-generated (read:free!) sales force, plus multiple points-of-sale makes it easier to get more out of even small, disparate transactions. Amazon, a merchant partner of Zlio, even has its own “long tail aggregator,” called aStores. But this strategy endorsement comes with a hitch: Amazon is now barring Zlio users from selling their products in the US.

Talking about niche content, Glowria, the France’s Netflix clone, has just raised another $8.3 million (this on top of $5.5 million raised last year) to develop its VOD business. Glowria is the clear DVD rental leader in France and Germany with its library of 13,000 titles and 35,000 subscribers. But VOD is where the market is going, particularly among 15-25 olds. Separately, Glowria’s founder, Mihai Crasneanu, just vacated the CEO post, we think to start something new—which isn’t bad news: it means France is about to baptise another serial entrepreneur!

Meanwhile, France’s Web 2.0 heavyweight Netvibes made headlines this month for a different reason: co-CEO Pierre Chappaz left the company after disagreement over how to evolve Netvibes’ business model. The challenge: to gain an edge over iGoogle and others. Tariq believes this can best be done by focusing on innovation—bringing the newest applications, third party feeds and widgets to Netvibes’ users. Pierre wanted to focus on growing revenues immediately through such things as branded services. It’s not surprising that the founder won out, but like most Web 2.0 companies, Netvibes has only so much time to prove a correlation between the strength of its community and its ability to generate cash flow.

One Web2.0 company that needn’t face questions about its business model is Vente-Privée, which introduced French consumers to the concept of private sales via the Internet. The site’s discounted auctions quickly became a social phenomenon here: Earlier this year Vente-Privée sold 100 Peugeot cars at a 30% discount in minutes.

The site now has 2 million active users and has doubled its revenues to $330 million in 2006. Their projections for 2007 are $480 million. This explain why US-based venture fund, Summit Partners, recently acquired a 20% stake in Vente-Privée, valuing the company at $1.1 billion. Just think what will happen when Vente-Privée expands beyond France!

16 Responses to “Letter From France:Vive Zlio, Vive La Vente!”

  1. I love vente privee!!!

    vente-privee organises prestigious designer brand sales in all product categories: fashion, fashion accesories, homeware, sports products and electronics at up to 70% off.

    Would you like a privileged member of vente privee???

    You can use my email as “referrer´s email” :

  2. I have been a member of Zlio for a few months now and have a few shops online. I promote them through a blog of mine. They have been giving me a fair return for the time I spent updating my shop with new products. I am quite happy with my Zlio Shops.

    It was bad when amazon pulled out ’cause that meant a lot of the products from the shops that got me sales had to be removed. Only some alternatives have been good.

    Zlio is still a very good option to start with.

  3. Is Zlio that revolutionary ?
    I know Jeremy is very well connected in the webmediasphere but what is the big difference with traditional cash-back stores like for instance ?

    Jerome, you say that Amazon loves so much those sites bringing trafic and purchases, that they ban them, is that right ?

    “Large e-commerce companies, such as Amazon, love “long tail aggregators” like Zlio because the combination of a user-generated (read:free!) sales force, plus multiple points-of-sale makes it easier to get more out of even small, disparate transactions.”

    To me, the major hitch is the cash-back model itself : it is okay to bring trafic/purchases to a merchant, but I think one of the major hindrances come from the fact that those sites repel later their subscriber bases from buying directly from the e-merchant.
    Therefore, generating additional revenues for them and their subscribers, but becoming more expensive for the merchant which has to pay subscriber acquisition cost aka SAC, for every transaction.

    Isn’t Zlio after all a price comparison engine within affiliated e-merchants?

    What do you think ?

  4. “…Large e-commerce companies, such as Amazon, love “long tail aggregators” like Zlio…”

    except Zlio recently ended up in hot water with Amazon in US. This was, allegedly, due to the way Zlio distributes earned commisions, but looks more like Amazon protecting their own aShops from competition.