The Rise of E-commerce and Wallapop's Growth

Throughout the past year, despite lockdowns, venue closures, and social distancing protocols implemented globally to mitigate the spread of COVID-19, shopping – and particularly e-commerce – has proven to be a consistently vital service. It wasn’t merely a necessity, but a crucial support system for many during a period when normalcy felt distant.

Wallapop Secures €157 Million in Funding

Today, Wallapop, a Barcelona, Spain-based virtual marketplace facilitating the resale of used goods and handmade crafts, has announced a substantial funding round to accelerate its expansion. The company has secured €157 million (equivalent to $191 million at current exchange rates).

Valuation and Funding Details

Wallapop has confirmed its valuation stands at €690 million ($840 million), representing a considerable increase from the $570 million valuation reported by sources in 2016.

This funding round is spearheaded by Korelya Capital, a French venture capital firm backed by Korea’s Naver. Existing investors, including Accel, Insight Partners, 14W, GP Bullhound, and Northzone, are also participating in this investment.

User Base and Market Position

Currently, Wallapop boasts a user base of 15 million individuals – approximately half of Spain’s internet-connected population, as highlighted by CEO Rob Cassedy. The platform maintains a strong No. 4 ranking among Spain’s shopping applications, according to data from App Annie.

Expansion of Shipping Services

The startup has recently invested in developing its shipping infrastructure, known as Envios, to streamline the delivery of sold items. This expansion has broadened the scope of transactions from local exchanges to nationwide sales. Approximately 20% of all goods are now shipped via Envios, with plans for continued investment in this and related services.

Strategic Investment by Naver

Naver, a prominent player in e-commerce and applications – notably the creator of the Asian messaging platform Line – views this investment as strategically important. Wallapop will leverage Naver’s technology for its research and development efforts, while Naver gains a foothold in the European market as it refines its e-commerce strategy.

A History of Evolution

The funding represents a noteworthy development for a company that has experienced periods of both success and challenge.

Early Growth and U.S. Expansion Attempt

Founded in Spain in 2013, Wallapop quickly gained prominence in a market traditionally hesitant to embrace e-commerce. By 2016, the company merged with competitor LetGo, aiming to penetrate the U.S. market with increased capital.

Strategic Shift and Focus on Spain

However, by 2018, this U.S. expansion plan was abandoned. Wallapop divested its stake in the LetGo venture for $189 million. (LetGo subsequently raised an additional $500 million before being acquired by OfferUp in 2020 for an undisclosed amount.)

For the past two years, Wallapop has concentrated on growth within Spain, rather than pursuing international expansion. The company has also refined its focus, concentrating on enhancing the user experience rather than diversifying its product offerings.

Focus on Unique and Secondhand Goods

“I spent 12 years at eBay and observed its transition towards new products from used items,” stated Cassedy. “We deliberately chose a different path for Wallapop. We are dedicated to unique items, primarily secondhand goods, alongside some artisan products. This distinguishes us from large retail operations.”

This focused approach may have resulted in a less explosive growth trajectory compared to some startups, but it has fostered a stable market presence built on a distinct identity.

Market Trends and Pandemic Impact

Wallapop’s recent growth is attributable to specific market trends amplified by the COVID-19 pandemic, positioning the company as a sophisticated virtual car boot sale or flea market.

Changing Consumer Behavior

Increased time spent at home led individuals to declutter and dispose of unwanted items. Simultaneously, consumers sought affordable options for home improvements and purchases, particularly amidst economic uncertainty. Furthermore, the pandemic spurred entrepreneurial activity, with individuals creating and selling their own products through grassroots channels.

Sustainability and Competitive Landscape

A growing emphasis on sustainability, with consumers prioritizing recycling and upcycling, has also contributed to Wallapop’s success. Facebook Marketplace and Amazon have not presented significant competitive threats within the Spanish market, according to Cassedy.

Navigating Pandemic Challenges

While these trends proved beneficial, the initial stages of the pandemic presented challenges. Cassedy recounted a significant business decline during the first lockdown in Spain, as severe movement restrictions limited local trading and disrupted postal services.

“It was a turbulent period for us,” he acknowledged. “We began the year with strong momentum, but business plummeted in March and April when leaving home for trading was prohibited and parcel delivery was suspended.”

Resurgence and Continued Growth

However, following the easing of restrictions in May, business rebounded dramatically. “The economic uncertainty prompted consumers to seek value, better deals, and spend less. They were also clearing out their homes,” Cassedy explained. “We experienced a 40-50% year-on-year growth in June.”

This growth has continued into 2021, validating the company’s long-term vision.

Naver's Regional Strategy

Naver’s investment reflects its strategy of maintaining a strong regional focus while pursuing growth. While Wallapop has a presence in the U.K., it has not prioritized expansion in that market.

“The global demand for C2C and resale platforms is increasing, driven by a renewed commitment to sustainable consumption, particularly among younger generations,” stated Seong-sook Han, CEO of Naver Corp. “We share Wallapop’s commitment to conscious consumption and are excited to support their growth with our technology and foster international synergies.”

The Importance of Sustainability

Prioritizing sustainability is a positive development for consumers, and hopefully represents a genuine commitment to encouraging and supporting such practices.

“Our economies are shifting towards a more sustainable development model; following our investment in Vestiaire Collective last year, wallapop is Korelya’s second investment in the circular economy, while COVID-19 is only strengthening that trend. It is Korelya’s mission to back tomorrow’s European tech champions and we believe that Naver has a proven tech and product edge that will help the company reinforce its leading position in Europe,” added Fleur Pellerin, CEO of Korelya Capital.