The merger between the two biggest e-fashion platforms, Superbalist and Spree, was announced on 1 July with the companies announcing there would first be a three-month integration period.
Yesterday saw the first official day of a fully merged e-fashion juggernaut, now just under the Superbalist brand name. Importantly one must note that now the majority shareholders, Media 24 (51%) and Takealot (49%), are both owned by Naspers – who with this merger have established themselves as the go-to source for e-fashion.
The promotional photo released by both Spree and Superbalist on all social media platforms announcing the then already underway merger. PHOTO: Spree Twitter
Their positioning within the e-commerce sector is remarkable when looking at the current growth trajectory of e-commerce in the South African market. E-commerce has grown by an average of 20% a year since 2000, according to World Wide Worx. The South African e-commerce market is likely to be worth around R45 billion by the end of 2018 and R61 billion by the year 2020, according to the market research company Ipsos.
“In South Africa, the penetration of online retail sales is currently around 1%, while in the USA, 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 USA, China and India,” read a statement by Takealot. “This suggests that there is room to build a substantial position in the online footwear and apparel market in South Africa.”
Unfortunately, this massive e-commerce merger is also concerning for the rest of the South African fashion and the e-fashion landscape.
Why this merger kills the South African fashion industry:
First and foremost, one of the main concerns is whether this merger will not just simply kill off all their competitors. The two companies were already the only substantial competition for the other within the e-fashion sector. However, even this can be argued against as they are both owned under the same umbrella company in Naspers.
The effects of not only the merger but also a struggling South Africa economy can be seen in the fashion industry. Many well established and internationally recognised fashion labels such as Sol-Sol and Young and Lazy have struggled to compete on the retail front due to fast fashion labels such as H&M, as well as on the e-commerce front due to the incredible market power Superbalist has.
Young and Lazy recently took to social media to announce that their spring/summer 2018 collection would be the last they produce as a brand before the company disbands.
An Instagram post by internationally recognised Cape Town fashion label Young and Lazy which announced that spring/summer 2018 would be the last collection the brand produces. PHOTO: Young and Lazy, Instagram
Sol-Sol may have found success overseas, but the Cape Town based fashion label has opted to close down their online store rather favouring to sell their products through the Orphan Street Clothings Shop or OSCS’s website. PHOTO: Casey Delport
“Mergers do not fall under the same stipulation as other regulations with regards to the Competition Act. Mergers cannot be prohibited from the outset, they are rather evaluated by competition law authorities such as the Competition Tribunal or the Competition Commission of South Africa.
“It is under the discretion of these authorities if the merger should be allowed to proceed or not,” said Nicholas McLaughlin (23), a final year LLB-student at Stellenbosch University (SU).
Interestingly enough, there is no sign of the Competition Tribunal or the Competition Commission of South Africa (CompCom SA) reporting on this merger at the time of writing. The merging companies may argue that even if the merger leads to a less competitive market, the competitive advantages outweigh the losses and so the merger cannot be deemed to be “anti-competitive”, McLaughlin went on to say.
Secondly, the merger will only make the South African fashion industry even more trend-orientated and homogenous. It only takes a glance at the Superbalist website’s offerings to see that the company plays it safe when it comes to the clothing and accessories they choose to stock.
Even after reportedly acquiring a massive 20 000 more products due to the merger, Superbalist’s website is still a selection of very basic garments with items not exploring the boundary-pushing work currently taking place in the fashion landscape. This basic, although no-longer barebones selection, is predominantly trend-focused.
The companies also admit that Spree and Superbalist, while they were separate companies, were running their “own sourcing and buying, technical, marketing, warehousing and logistics functions while primarily targeting a similar, if not the same customer segment and demographics in South Africa”, only furthering the argument that the e-fashion landscape will become far more homogenous.
“I do struggle to find items that I like on Superbalist. The other day I scrolled through all the different sections multiple times before I found a dress that I actually like. Maybe it is because my taste is a bit different so there aren’t that many pieces I find interesting,” said Lynne Lloyd (20), who says she predominantly does her shopping online due to the convenience of platforms like Superbalist.
Diana Emma Allers (22), a final year Bcomm Management Sciences student at SU, does, however, warn that this is not the full picture.
“One needs to remember that, yes, the selection on Superbalist is rather basic and safe, but this is predominantly due to how conservative the South Africa consumers are when it comes to fashion,” she said.
Whether or not the future holds a viable competitor to Superbalist is yet to be seen. One thing, however, is certain. Superbalist, and by extension, Naspers, have once again jumped into a profitable venture before competitors even saw the gap in the market.
