Nine Entertainment invests $4m in online shoe fetish

Want to get into online retailing? You have a new competitor: the might of Channel Nine, which is about to put its cross-promotional muscle behind footwear etailer Style Tread.

The Australian site was launched in August last year by serial internet entrepreneur and former CEO of Wagamama Mark Rowland and has become a leading local etailer.

Rowland raised initial investment backing from e-commerce investor duo Klaus Hommels and Oliver Jung via their Global Online Apparel vehicle. The duo also provided seed funding for coupon player Spreets, which was acquired by Yahoo!7 for $40 million earlier this year and are building up a hefty international portfolio of etailing properties. They were also early investors in Facebook.

Announcing the addition of Nine Entertainment as a new shareholder on the company blog, Rowland said “we are excited to have Nine Entertainment as a shareholder and to be able to work with all areas of Nine Entertainment to explore ways to promote www.StyleTread.com.au.”

The investment gives the etailer strong leverage into Nine’s television, online and fashion magazine properties. “Even before the decision was made by the Nine Entertainment board to invest in StyleTread, we were already working with ACP magazines, Channel 9 and NineMSN. This investment now strengthens our relationship,” Rowland said.

For Nine Entertainment which also has group buying company Cudo in its portfolio, the move may be the first of many as it looks to expand into the booming online retailing space.

According to Forrester Research Australian online retail sales will almost double from $16.9 billion in 2009 to $33.3 billion in 2015. While the shoe industry is valued at over $2 billion with forecasts suggesting that at least 15% of this industry will be sold through online channels over the next couple of years.

Rowland claims that StyleTread.com.au is Australia’s No.1 online shoe store, and achieved this via a focus on strong customer service, free and fast delivery, free returns and a free 100-day return policy. “The biggest hurdle to our continued growth is awareness and we are thrilled to be able to work with Nine Entertainment to assist us in letting Australia know how convenient it is to order shoes online,” Rowland added.

The Australian etailing sector has a lot of room to grow however both in consumer adoption and social media integration. It also a long way off witnessing the dotcom style investment activity occurring in the more advanced US market.

Last week Netscape founder Marc Andreessen ploughed US$30 million into the online shoe business ShoeDazzle, co-founded by reality TV personality Kim Kardashian.

The service has three million subscribers and is bolstered by its Facebook presence where it has nearly a million fans.

The investment is part of a $40 million round of funding for the two year old loyalty- based subscription etailer. The round was led by Andreessen Horowitz, which contributed $30 million, while existing investors Polaris Venture Partners and LightSpeed Venture Partners tipped in an additional $10 million.

As part of the deal John O’Farrell, general partner at Andreessen Horowitz will join the board. O’Farrell said Andreessen Horowitz were attracted by its inventory management and the supply chain. “ShoeDazzle is able to have really high quality products at acceptable prices and still get margins,” he said.

But it may have also been impressed by the social media leveraging power of the Kardashian element- her own blog commands 40 million hits a month.

The Santa Monica based company leverages off the social media power of co-owner and spokesperson Kim Kardashian and retains customers through a premium recommendation loyalty system. Consumers join the site for $39.95 per month and each month receive a Kardashian recommended pairs of shoes to purchase. The customer can pick one pair, or turn them all down and elect not to pay anything for that month but have the money put in credit. Shipping is free.

It also has strong ties to Facebook, where it has nearly a million fans.

The other founder Brian Lee, said the cash will be used for launching new product categories and expanding into international markets in coming months including the UK followed by Asia and South America.

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