German Firms Seed Web Shopping in the Developing World

Tuesday, January 14, 2014

LAGOS, Nigeria — The message from his boss on the phone from Germany was straightforward, recalls Hendrik Harren, a former website manager in Africa: “I want you to build the Amazon of Nigeria for me.”

The caller was Oliver Samwer, an Internet tycoon in Berlin who had already cloned American e-commerce businesses for Europe’s market. By 2012, his focus was shifting to the developing world.

Mr. Harren found his new assignment daunting. “I had never founded an Amazon,” he says.

Two years after the call, Nigerian men on motorbikes ply the streets of the chaotic megacity of Lagos delivering toothpaste, English soccer jerseys and women’s wigs in a small and unprofitable, but growing, online shopping business.

They are the vanguard in a race to hook the developing world on American-style e-commerce. It is a contest in which the U.S. companies that largely created the business are less dominant than they are in the West. Playing a major role, instead, are businesses with roots in Germany, an economy that has excelled at refining and exporting 20th-century technologies rather than digital innovation.

Representatives of another online business from Rocket Internet. Jane Hahn for The Wall Street Journal

The most-aggressive player is Rocket Internet GmbH, majority owned by Mr. Samwer and his two brothers. The three gained a measure of notoriety in Silicon Valley a few years ago by adapting made-in-America businesses such as eBay Inc. EBAY +0.73% and Groupon Inc .GRPN -5.02% for Europe, then selling them to eBay and Groupon.

Now, as U.S. e-commerce companies invest heavily in Europe, the brothers have raised about $3 billion to expand far afield—convincing investors that developing-world cities’ often mind-numbing traffic jams and limited store selection offer a fertile source of future online-shoppers. They have mounted a broad effort to plant Western habits of Internet shopping from Africa to Latin America to the Middle East, Asia and Eastern Europe.

Source: The Wall Street Journal (Subscription Required) (link opens in a new window)