FashionCo set to take on Amazon
The new e-commerce company formed through the merger of Superbalist and Spree may use its scale to compete against global firm Amazon, which is increasing its presence in SA.
The new e-commerce company formed through the merger of Superbalist and Spree may use its scale to compete against global firm Amazon, which is increasing its presence in SA.
Naspers subsidiaries Media24 and Takealot.com said on Monday they would merge their respective online fashion brands, Spree and Superbalist, to create an e-commerce behemoth called FashionCo.
Derek Engelbrecht, the retail sector leader at EY, said “the move in the local market is no doubt seeing whether they could compete, should Amazon decide to pull the trigger … as Amazon is what most retailers benchmark the quality of their strategic vision against”.
This also comes after Amazon Web Services announced it will be deepening its presence in the country to establish physical roots to bring the operation closer to local customers.
This merger of two of SA’s
online behemoths talks to an inevitable trend.
“The amount of money we spend online will double every year. Although it comes off a small base, those businesses are taking long-term views on trends and are of the size where they are patient enough to see that unfold,” Engelbrecht said.
Currently in SA, the penetration of online retail sales is just 1%, while in the US, China and the UK it is in excess of 13%.
Clothing and footwear sales in the UK drive a large share of the growth of online retail with similar trends in the US, China and India. FashionCo will be 51% owned by Media24, Spree’s current shareholder, while Takealot Group will own the remaining 49% of the company.
FashionCo will start operating on July 1, Kim Reid, CEO of Takealot, told Business Day on Tuesday. A period of “planning and integration” would start in July and would continue for two to three months, he said.
INTEGRATION PROCESS
During that time, both businesses would continue to operate independently under their own brands and in their existing offices, Reid said. The Takealot Group would manage the integration process and would be responsible for the day-to-day running of FashionCo after the integration period, he said.
Engelbrecht said that while e-commerce retail had not yet gained much traction locally, as brick and mortar retailers dominate, Naspers was “big enough and arguably patient enough to make those kind of bets”. /With additional reporting by Nick Hedley tshandup@sundaytimes.co.za