Amid reports of 10 percent employee layoffs and financial losses, Australian online retailer THE ICONIC has received $26 million in funding.
The fashion site, a venture by German-born incubator Rocket Internet, lined its pockets with capital from Verlinvest and previous-round investors Summit Partners and Kinnevik earlier this week. With $46 million already in hand, reports are calling Iconic’s new funding total Australia’s largest investment in an e-commerce site, ever.
ICONIC competes for consumers who prioritize convenience. Their clothes aren’t cheap but delivery is; when shoppers spend $50 AUD, shipping’s free. Plus, depending where you live, your order could land on your doorstep in three or four hours.
Yet its rise to prominence from founding in 2011 has yet to translate into profits. And emerging reports that the company’s deep in the red aren’t encouraging for a financially viable future. Site co-founder Adam Jacobs, however, insists that its losses in the millions are typical of a startup experiencing growing pains.
Rocket Internet, run by the Samwer brothers, is famous for both its successful ventures and infamously aggressive business tactics. Company correspondences from 2011 got brother Oliver in trouble when it was leaked he used the term “Blitzkrieg” in an e-mail in reference to sales strategy.
In 2012, ICONIC experienced tremendous growth (30 percent month-on-month) as it showed shoppers an alternative to traditional clothing stores existed in an emergent online retail space. Jacobs claims the site receives 4 million visits a month and has acceded the number one spot in Australia’s fashion e-commerce industry. ICONIC rep LJ Loch had this to say in an e-mail on the subject of funding:
“Key points from our end are that this is the conclusion of a round of funding that has been underway for some time; that the funding is a massive vote of confidence on THE ICONIC’s business strategy (which has seen an aggressive and highly successful market entry phase and which now involves a transition to a focus on profitability); and to reinforce the fact that typically ecommerce start ups take several years to reach profitability (and that we’re looking to accelerate that process).”
Time will tell if sinking more money into ICONIC will create a market champion or a company that could have been a contender.