🧢 Unboxing SA's R193bn Fashion Game
🧢 Unboxing SA's R193bn Fashion Game
Plus: SA’s coolest champ, Happy funding, the last of your Tupperware & your ticket to home-grown AI insights.
Bright future? Scientists have found a way to store an entire human genome in 5D memory crystals for billions of years. The material is one of the most chemically and thermally stable substances on Earth and could be the next way for today’s billionaires to attain immortality (kind of).
In this Open Letter:
Data unwrapped: Levelling up SA’s R193bn fashion game.
SA’s coolest champ, Happy funding & the last of your Tupperware.
Taking the leap: How to set up an offshore entity for your startup.
Your biggest gripes with big banks: The results are in.
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TRENDING NOW
A Shoo-In for SA’s R193bn Fashion Sector
There are a handful of things humans need to survive…
Food, water, maybe a shelter of some kind – and, of course, clothing.
Early humans started wearing adapted animal skins and vegetation around 170k years ago to protect them from cold, heat and rain, particularly as they migrated to newer climates.
With the advent of newer technologies like sewing needles (50k years ago), dyed fibres (36k years ago), and later on looms, and high-tech machinery to produce the type of modern textiles we use to manufacture clothes today, clothing form an integral part of human history.
Despite breaking multiple social norms, Derek still rocked his signature “Blue Stone” look…
The big bucks in global fashion…
And with more than 8 billion people on the planet, it’s no wonder the global fashion/clothing/apparel market is huge.
Despite taking a knock in 2020 during Covid, the global clothing market is set to be $1.79 trillion this year, employing 1 in every 8 workers (~12%) around the world in the fashion and textiles industry.
There are more than 100 billion items of clothing made each year — equating to about 12 items of clothing per person per year.
Closer to home, South Africa has the largest apparel and footwear industry in sub-Saharan Africa – worth over $11 billion or R193 billion+.
Big bucks also mean big headaches…
The fashion industry is highly cyclical… Warm clothing for autumn and winter, cooler for spring and summer. Not to mention different colours or colour schemes, different styles and cuts, different patterns and textures – all dependant on current trends (or what’s about to become trendy).
Then, retailers are often sourcing stock from multiple suppliers. Plus they’ve got to get that fine stock balance just right – too little stock and you suffer from stockouts. Too much, and you’re overstocked.
So imagine a large retailer with multiple stores across the country (sometimes with quite a broad range of socio-economic customer base) having to source and place a variety of items, in different sizes, all in a way to maximise sales and minimise leftover stock that needs to go on the profit-eroding sale rack at the end of the season. It’s complicated….
The local player helping local fashion retailers
But this is exactly the kind of problem where machine learning shines.
Local startup Pattern has built a business intelligence platform tailored to solve this problem for fashion retailers.
It uses big data and AI to automate typical resource-heavy activities like merchandise planning and buying, stock allocation and replenishment to ensure that fashion retail teams can focus on getting the right mix of stock into the relevant stores to ensure their customers’ needs are met.
It integrates with a fashion retailer’s existing systems, where it takes the data from those systems to track in-season trends, optimise stock, and analyse historical customer purchasing patterns.
With greater granularity on single stock items, users are able to see how each item is specifically driving revenue. They can also see how each item performs at a store level, and assess the size curve accuracy (did they have enough of the item in the various sizes to ensure optimal stock levels?), which helps them understand future stock levels.
Pattern consolidates a ton of merchandising intelligence available in real-time and at their fingertips, to help teams make critical buying and planning decisions on the fly.
In the fast-paced world of fashion, companies like Pattern are bringing old-school industries into the future. Through data-driven insights and automation, they're helping fashion retailers thrive in a highly competitive environment. We’re watching this space…
On the Pod…
We had James Townsend the Co-founder and CEO of Pattern on the latest episode of our How Would You Build It podcast. Check out some highlights below:
What is Pattern (The Elevator Pitch), and how James started out in the fashion industry?
How hard is founder mode?
Getting that first client and convincing notable retailers to invest in local tech.
Shein and Temu and its impact on the local retail landscape.
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IN SHORT
🛍️ Syfting to Xero. Syft, a local cloud-based reporting and analytics platform will be acquired by global accounting software firm Xero for a cool $70 million. Having started in 2016, Syft’s AI financial reporting platform provides small and medium businesses with access to reporting tools.
🚀 Happy Funding. SA BNPL player Happy Pay has raised R32 million in pre-seed funding to accelerate the FinTech’s growth and product offering expansion. It’s also just hit the 150k active user mark after launching in 2023.
🥽 I can (almost) see clearly now. Neuralink’s experimental Blindsight implant has been designated as a "breakthrough device" by America’s Food and Drug Administration (FDA). The Blindsight implant is being touted as being able to potentially restore blind people’s sight.
🥶 World Champions of Staying Cool. Philippus Saayman was the sole winner from South Africa at the 2024 WorldSkills Competition where he was awarded the 'Best of Nation' medal for being the top competitor in the Refrigeration and Air Conditioning skill category.
💨 Disappearing kitchen supplies. After nearly 80 years as a staple in kitchens around the world, Tupperware has filed for Chapter 11 bankruptcy in the US. Perhaps they should start a lid/container swapping marketplace for people to complete their Tupperware sets.
😎 The Stack. Founders need tools and suppliers they can trust. Check out our Founder’s Stack with super-easy social payment collection by WigWag and your own CTO (for less) with OCTOCO.
BUILDER’S CORNER
How to Set Up an Offshore Entity from South Africa
Written in conjunction with Jacques Stemmet of Dommisse Attorneys Inc.
Setting up an offshore entity can seem daunting, but, if done right, it can open new doors for your business. We asked the experts at Dommisse Attorneys Inc. to break down the four key steps to establishing your company offshore:
We going offshore, Baby.
Step 1: Understand Why You Want to Offshore
Before you leap, make sure you know why. Do you have an international market or investors? Or perhaps you’re planning to sell offshore one day…
Whatever the case, it’s about more than just wanting to earn foreign currency – there are legal and tax implications, including South Africa’s exchange control regulations, to navigate.
Offshore entities must meet criteria like “place of effective management” and “a foreign business establishment”. I.e. OffshoreCo needs real people conducting real business to maintain compliance and avoid hefty profit taxes.
Additionally, exchange control requires you to get approval to license IP to a related offshore party and outright forbids selling the IP. It’s not impossible to offshore IP, but following the right process is paramount.
Step 2: Choose the Right Structure
There are two primary ways to structure your offshore company in relation to your South African company (SACo):
Mirror Structure: OffshoreCo mirrors the shareholding of SACo, forming a synthetic group structure where both entities operate in parallel. This is achieved by a stapling agreement, which ensures that any movement of shares in SACo must be replicated in OffshoreCo (and vice versa). In effect, an investor will subscribe for equal shares in both entities. On exit, the investor will sell their shares in both entities and benefit from growth from the respective entities.
Holding Company Structure: OffshoreCo acts as SACo’s holding company, which is often preferred by international investors because of its simplicity and industry-standard approach. It’s complicated, though: it creates a loop structure, requiring strict conditions to be met and additional reporting obligations.
Your structure impacts present and future tax, investor relations, and operational setup. And your circumstances can impact structure choice: shareholder limitations, numbers and company valuation may be so high that a mirror structure is more cost-effective than the legal and tax implications of restructuring to a holding company.
Step 3: Pick the Right Destination
Where you establish OffshoreCo matters. The destination should align with your business goals, target market, and investor preferences. Although popular jurisdictions offer tax benefits, business-friendly environments and reduced administrative burdens, you still need to do your homework, as some jurisdictions may offer more beneficial grants or tax breaks for your specific industry, or may be the most appropriate jurisdiction to leverage investment and your business growth.
It’s crucial to assess the long-term advantages, maintenance costs and risks before making a decision.
Step 4: Build the Right Team
The success of your offshore expansion hinges on having the right team to support you through legal and financial challenges. You’ll need advisors who are experienced in international structuring and can guide you through compliance, exchange controls, transfer pricing and ongoing obligations.
If you’re ready to take the next step and explore international structuring, contact Dommisse Attorneys Inc.
“Our team is here to help you achieve your global ambitions with ease”, says Dommisse’s Jacques Stemmet.
ENGAGE
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What You Said…
We asked about your biggest gripe with banks, and the fees are a problem…
🟩🟩🟩🟩🟩🟩 😭 High fees (32%)
🟨🟨🟨🟨⬜️⬜️ 👎 Horrible service (24%)
🟨⬜️⬜️⬜️⬜️⬜️ 💩 Products don’t suit my needs (9%)
🟨🟨🟨🟨⬜️⬜️ 😔 They don’t really care about me/my business (27%)
🟨⬜️⬜️⬜️⬜️⬜️ 🥰 Nothing, I love my bank (8%)
Your 2 cents…
“Impossible to get finance from them especially FNB.”
Ai, Xpress, now at least you know you can get up to 5 mil with Lula. 🤑
“Hi I must say, I am quite excited I came across your organization, there is hope for Small Businesses especially in traditionally unbankable communities. The fact that I can also open a Business Account in minutes with no costs at the beginning is magic. We have been struggling with the big banks to get our account going, it's a major struggle. Thank you.”
Wonderful, Sir! We love seeing you succeed. 🚀
“I miss the days where talking to my bank meant I could talk to a person. Not message an app. Some issues with my bank stay unresolved because of the anonymity and because I just give up.”
Ha ha, ja Erika would be great if they could try to get customer success right. 🤗
“Constantly following up on whether they have resolved issues, no one gets back to you, and those godforsaken call centers where you have to repeat your issues to 6 different people before the call cuts and nothing gets done.”
Eish, sure everyone can feel that one, Nikhil. 🛎️
“I switched to Capitec a long time ago and have never looked back.”
Sounds like you got it good, Alana. Nice one. 💳