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!