Online furniture store Home24 opens in Belgium, eyes more markets

Thu Aug 21, 2014 11:55am EDT

* Home24 sales exceed 100 mln euros, growth accelerating

* Rocket Internet expected to list in coming months

* IKEA expanding online after slow start

* Home24 to open in another market this year, more in 2015

* Only 3-4 pct of furniture sold online but share rising

By Emma Thomasson

LONDON, Aug 21 (Reuters) - Online furniture retailer Home24, a German-based start-up which hopes to challenge IKEA's dominance, is expanding to Belgium, its sixth market, and plans to launch in other countries in the next year, its managing director told Reuters.

Home24 was launched in 2011 by Rocket Internet, the venture capital group which has founded dozens of start-ups in recent years and is expected to list its shares in Frankfurt in coming months, according to financial sources.

Home24, which already operates in Germany, France, Austria, the Netherlands and Switzerland, as well as Brazil under the brand name Mobly, saw revenue jump to 93 million euros ($123 million) in 2013 from 52 million euros in 2012 and crossed the annualised 100 million mark in February.

Its site went live in Belgium on Thursday and managing director Constantin Eis said he expects to launch in another country before the end of the year, with more European markets in the pipeline for next year. He said more than 40 percent of sales already come from outside its home market Germany.

"We are accelerating in growth right now... we are expanding our assortment, launching new countries and the experience of the customer on the site is getting better and better," Eis told Reuters in a telephone interview.

"We are also launching private labels and this is all fuelling our growth," he added, noting the Home24 sites now have 1 million registered customers.

Only about 3-4 percent of furniture sales are currently made online, but research firm Euromonitor forecasts the market will grow almost 10 percent a year to $24 billion by 2015 from $20 billion in 2013.

IKEA, the world's biggest furniture retailer, has been slow to embrace e-commerce given its focus on a shopping experience that combines maze-like showrooms with cafes and play areas and that drives impulse buys of high-margin accessories.

But it is now ramping up its online business and saw e-commerce sales grow almost 27 percent in its biggest market Germany to 92 million euros in the 2012/13 fiscal year, still just 2 percent of total sales.

Eis, a 31-year-old former strategy consultant at Roland Berger who took over as managing director of Home24 at the start of 2014, said the business that now employs 300 people was making progress towards profitability.

"We are on a clear path to reducing losses," he said.

Swedish investment firm Kinnevik, which holds a direct and indirect stake in Home24 totalling 33 percent, said the firm narrowed its operating loss to 40.2 million euros in 2013 from 81.1 million in 2012.

Home24 is just one of some 70 e-commerce firms, online market places and financial technology companies launched by the German Samwer brothers behind Rocket Internet who are reported to have pledged to "take down" IKEA.

German Internet service provider United Internet AG last week paid 435 million euros for a 10.7 percent stake in Rocket Internet, valuing the firm at 4.3 billion euros. (1 US dollar = 0.7535 euro) (Editing by David Evans)