Online Fashion & Footwear Retailer Zalando Leaves India; Fires 30

Germany's largest online shoe retailer Zalando has shut down its operations in India after investing in the venture for six months, Techcircle.in has learnt.

Zalando was launched in 2009 by the Samwer brothers, who sold another start-up Citydeal.de to Groupon last year. The company was incubated by Rocket Internet GmbH, a Berlin-based investor who is also known for a slew of sites including online matchmaking site eDarling, payment service provider BillPay.de, children's site Panfu.de and comparison site TopTarif. A list of all its projects is available here.

Zalando.de claims to offer "cutting-edge shoes and fashion items with excellent customer service and the advantages of easy and secure online shopping experience." It works with more than 500 brand manufacturers and offers brands such as Boss Orange, Guess, Timberland and Geox, and fashion labels such as Apepazza, Latitude Femme and Beverly Feldman.

In December, 2010, Zalando received an undisclosed sum in its Series C round of financing, according to TechCrunch, which also reported that the company had a pre-round valuation of €100 million. In March, Zalando expanded its reach into Italy and in April, in the UK.

INDIA: 30 Fired

Zalando arrived in India last year and was planning to launch an online shoe retailing website called Asasa.in. The company had set up an office in Gurgaon which was closed in February.

"They came in with gusto but shut down without launching the website. We have no clue why they entered the Indian market at this stage, when it is still an evolving ecosystem," said an industry expert.

Cultural differences could have been a cause for Zalando to leave the country, said another expert. He added, "It is very hard for international companies to set up a base in India. They have a very different style of operating. One needs to understand the nuances of the local market first. The global model needs to be adapted before it can work."

It is learnt that the company has fired 30 employees.

Some of the employees at Zalando were poached from Yebhi.com, the e-commerce site that began as an online shoe store and has since morphed into a fashion and apparel e-commerce site.

The footwear market in India is a $5 billion industry, according to Manmohan Agarwal, co-founder of Yebhi.com. Sharing his reason for starting an e-commerce venture for shoe retailing, Agarwal said that there was clearly a large opportunity and the company decided to tackle the most complex market first, to build a system.

India's e-commerce sector is currently booming with hundreds of Internet start-ups which are taking advantage of the increased investor interest. Daily deals is a hot category with players such as Groupon India, eBay India, Snapdeal.com, Dealsandyou.com, Mydala.com, Koovs.com, Dailydeal.in, Dealivore.com, Khojguru.com, Thekha.com, Scoopstr.com, 24Hoursloot.com, Masthideals.com, Snatchdeals.com, Lootmore.com, 30Sunday.com and Bindasbargain.com.

NASDAQ-listed Rediff.com India Ltd just launched a group buying sub-site called Deal Ho Jaye. In the fashion segment, sites such as Bagittoday.com, 99labels.com, exclusively.in, Fetise.com and Fashionandyou.com exist.

Online baby products shops are also in the news. Firstcry.com raised $4 million from private equity major SAIF Partners while Babyoye.com, another online retailer of baby products, raised $2.5 million from Accel Partners and Tiger Global. Online gadget sales are also popular with websites like Flipkart.com, Infibeam.com, Buytheprice.com, Futurebazaar.com by Future Group, eBay India, Gadgetsguru.com and Indiaplaza.in offering deals on consumer electronics. One such site Snapdeal.com claims it sold 30,000 deals on a single day. Read about how well some of the sites are faring when it comes to online deals on Techcircle.in.