The e-commerce craze that started in late 00’s with ThePoint.com and Groupon quickly spread throughout the world, and in the Nordic & Baltic region. Startups such as Cherry Media were quickly established and started fighting for the local market share. However, around the same time a similar e-commerce boom was happening around “members only” shopping.
One of the first and leading players in this space was Vente Privee, a French company that started in 2001 but was expanding internationally starting from 2007 and now has a turnover of over one billion euro. Similarly, there was Gilt from the US, which is now a company with more than 1000 employees and is reportedly looking to IPO.
Which makes our region seem to have been left out, until now. Ooolala, a company based in Estonia decided to introduce this type of members-only flash sales to the Nordic and Baltic region and started in Estonia in 2012.
The concept is simple – you can only shop when you are a registered member. This gives brands the security they need to sell at very large discounts without losing brand value, while customers get a feeling of exclusivity.
The products being sold are usually by established brands who are trying to sell off extra inventory at a discount but can not openly do so as they would otherwise compete with themselves.
We got in touch with founder and CEO, Nadim Taoubi, who told us that since the start of the company, they managed to grow rather quickly in Estonia and are now ready to enter new markets.
To do so, they have raised an EUR 180 000 round from friends and family, an angel investor and another startup – AdCash. This investment allowed them to concentrate on growing the business and to enter a new market in Finland with the launch of Ooolala.fi.
According to Taoubi, “the main advantage [of Ooolala] is that [we] do not have any stock. It is a bit of a B2B2C model. I go to see big clothing brands, a bit of accessories and footwear, and tell them that I will help them get rid of all their left overs in 4-5 days.”
The business was set-up with a help of partners who were working at buyVIP, a Spanish version of the concept that was bought by Amazon for a very impressive $96.5 million. This gave the company a solid understanding of the concept and negotiating power with the brands.
Currently Ooolala boasts over 50 000 members in Estonia and already over 5000 within a month of operations in Finland. The average basket at the site is EUR 90 in Finland and EUR 60 in Estonia and their most successful campaign to date was for Burberry, where they sold 200 pieces in 3 days. The average, however, is about EUR 2000 – 4000 worth of stock to which Ooolala adds a margin of around 30%, depending on the category of the product.
However in this type of business, it is important to scale fast and Taoubi told us that “the larger plan is to raise additional money to go after a bigger markets in 2014, such as Russia or Sweden.”
That being said, this is anything but an easy business. Gilt is barely profitable, others are struggling and Ooolala is yet to break-even. This is understandable, as at 30% margin you would need to sell quite a lot of products in order to be able afford a couple of salaries. Still, as Taoubi told us, the numbers are improving all the time and the company is hoping to become profitable by 2014. It’s a numbers game and with an impressive statistic of 60% recurring customers, all they need to do is scale it up.
Top Image Courtesy of Shutterstock // Secret Shopping