Businessmodel of Rocket Internet

Customer Segments

Rocket Internet has a niche market business model, with a specialized customer segment. The firm markets its services to new businesses with offerings falling within its areas of interest (Food, Fashion, Travel, Home, General Merchandise) and that are seeking funding assistance and personalized support.

Value Proposition

Rocket Internet offers five primary value propositions: accessibility, cost reduction, performance, risk reduction, and brand/status.

The company creates accessibility by offering new businesses more than just funding assistance. It takes an active role in their development by providing them with access to its many resources, including its technology platform, marketing support, and investor network. This gives the firms a competitive advantage over most startups, which are usually built independently.

The company is able to reduce upfront expenses. It has a massive global infrastructure, with 30,000 employees in 110 countries. This feature enables it to build new firms in difficult markets at low cost.

The company has demonstrated strong performance. It has a set of standardized processes that have proven effective. This feature allows it to build firms in a quick and repeatable way, as it is typically able to launch a new company in fewer than 100 days and rapidly internationalize its model.

The company’s strategy reduces risks. It only invests in models that have demonstrated success in other markets. It then coaches the founders of the ventures to ensure they have the necessary skills to continue. Finally, the ventures can tap into its funding network throughout the process. All of these factors significantly increase the probability of the startups achieving success.

The company has established a strong brand. It has launched numerous companies through its efforts, giving it an impressive track record. It is well-known in the VC industry and differentiates itself through its business model and “first mover” positioning.

Channels

Rocket Internet’s main channel is its investment team, which actively seeks businesses for potential funding. The company promotes its service through its website, social media pages, and attendance at various conferences and forums.

Customer Relationships

Rocket Internet’s customer relationship is primarily of a dedicated personal assistance nature. The company works closely with startups to help them get off the ground, providing a wide variety of services and funding throughout the development process.

Key Activities

Rocket Internet’s business model entails maintaining its platform and providing its advisory services to its customers, new startups.

Key Partners

Rocket Internet maintains strategic partnerships with various groups that provide significant operational, financial, and strategic support:

Telecommunications Providers – Partners include United Internet, MTN, Philippine Long Distance Telephone Company, Millicom, and Ooredoo. The company benefits from their billing relationships, mobile subscriber base, physical distribution network, customer relationship infrastructure, text message marketing knowledge, and pre-installation of Rocket Internet’s mobile apps on handsets.

Technology Companies – Partners include Google, Criteo, Facebook, Responsys, Rackspace, and Salesforce. They complement Rocket Internet’s technology platform and offer its startup customers competitively-priced technology, online advertising, and other services.

Industry Partners – Partners include Tesco, Axa, Kering, and Tengelmann.

Financial Investors – Partners include Access Industries, Kinnevik, and Holtzbrinck.

Key Resources

Rocket Internet’s main resource is its proprietary software platform, which its startup clients are given access to for their online businesses. The platform features plug-and-play options for practically any type of Internet business model, as well as industry-specific solutions. The company also has valuable human resources in the form of its functional experts, who maintain significant knowledge in search engine optimization, search engine marketing, customer relationship management, business intelligence, product design, online marketing, and information technology. Lastly, as a startup itself it has relied heavily on funding from outside parties, raising $1.12 billion from three investors as of February 2015.

Cost Structure

Rocket Internet has a value-driven structure, aiming to offer a premium proposition through significant personal service and enhancements to its technology. Its biggest cost driver is marketing, a fixed cost. Other major drivers are legal and information technology expenses, both fixed costs.

Revenue Streams

Rocket Internet has two revenue streams:

Product Revenues – Revenues the company generates by taking a portion of earnings from online and mobile sales of the goods offered by its clients.

Service Revenues – Revenue the company generates by charging its clients for intermediation, consulting, and other services.