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13 August 2018

Analysis: Uptick in e-commerce last week

Last week, Global Corporate Venturing reported several interesting and sizeable transactions in the e-commerce space from around the globe.

Author: Kaloyan Andonov, reporter, GCV Analytics

South Africa-based media and e-commerce group Naspers committed $500m in funding to US-based e-commerce app developer Letgo. The investment was made through its online marketplace subsidiary OLX.

Letgo has developed an app, which enables users to list, sell or buy second-hand items. The platform employs an artificial intelligence system that sets a category, title and price for each item based only on a photo. To date, the app hosts some 400 million listings and has been downloaded over 100 million times. The company plans to support further development of the app and to expand into real estate listings.

South of the US border, Mexico-based department store operator Falabella purchased for $138m online marketplace Linio, gaving exits to retail group Tengelmann and diversified conglomerate Access Industries.

Launched in 2012, after having been incubated by Rocket Internet, Linio runs an e-commerce platform that allows businesses to sell a wide variety of consumer goods like electronics, toys, cosmetics and automobiles. While keeping offices in the US and China, Linio operates primarily in Latin American countries: Argentina, Mexico, Chile, Peru, Colombia, Venezuela, Ecuador  and Panama.

Also within the broader e-commerce ecosystem, China-based online grocery delivery service Dada-JD Daojia raised $500m by big-box retailer Walmart and e-commerce firm JD.com. Walmart provided $320m of the investment, while JD.com supplied the rest. Walmart had committed $50m to Dada-JD Daojia in 2016 as part of a cooperation agreement.

Founded in 2014 and previously known as New Dada, Dada-JD Daojia runs two companies – its  crowdsourced last-mile delivery service Dada as well as JD Daojia, which offers one-hour delivery of items which can be ordered online from over 100,000 partner retailers. The platform’s partners include 200 Chinese branches of Walmart across 30 cities. Walmart recently opened a specialist store in Shenzhen to meet demand from customers on JD Daojia.

Corporate venturers have been investing actively in e-commerce enterprises and tangential technologies and services, as illustrated by the historical bar chart from GCV Analytics here.  Deals in this space peaked in 2015 at 216 transactions but began to drop in 2016 (182 rounds) and went down to 92 last year. The dollar amounts invested in such businesses in corporate-backed rounds, however, remained relatively stable and above $12bn between 2015 and 2017, indicating that the average rounds size was growing.

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