If you can’t beat ’em, join ’em — that seems to be the mentality over at fashion e-commerce startup Shoedazzle. On Wednesday, the company announced a merger — of sorts — with former rival JustFab that the two companies say would create the “world’s largest fashion subscription e-commerce company.”
The news comes a day after a report in Pandodaily that JustFab planned to acquire Shoedazzle. But according to today’s announcement, the two companies plan to “merge” their distinct brands. Adam Goldenberg and Don Ressler will continue to serve as co-CEOs of JustFab Inc. and ShoeDazzle president and co-founder MJ Eng will continue running ShoeDazzle. ShoeDazzle co-founder Brian Lee, who was also the company’s CEO, will join JustFab’s board of directors. (That should free up Lee to focus more closely on his other venture, Honest Co., which is an eco-friendly baby and bath products site founded by Jessica Alba).
Even though the companies describe the deal as a merger, it’s worth noting that under the new structure, JustFab Inc. will operate a portfolio of lifestyle brands including JustFab, ShoeDazzle, FabKids and Fabletics, and that the two brands will share a campus in El Segundo, Calif., which is where JustFab is currently headquartered. For e-commerce brands, success is about taking advantage of price inconsistencies in different markets and achieving scale – and, from that perspective, this a good deal for both companies. But Shoedazzle is entering into it with less luster than it had at one point.
The company, which launched in 2009 and has raised $66 million from investors including Andreessen Horowitz, had a good thing going with its subscription shoes business. But, last year, Shoedazzle made an odd about-face and ditched that model to become a plain, old e-commerce site. Since then, it’s changed CEOs (again) and reinstated a subscription model. But, as my colleague Om Malik has said, it had already lost its dazzle. Ahead of its talks with JustFab, PandoDaily reported that the company’s current state was “not great.”
JustFab, meanwhile, which launched in 2010, appears to have cut a smoother path with a service that lets VIP members purchase monthly items, including shoes, handbags and clothing, for a set cost. It’s raised $109 million from Matrix Partners, Technology Crossover Ventures, Rho Capital Partners and Intelligent Beauty, and recently said that it has 15 million members worldwide and is on track to do $250 million in revenue globally.
Image by PROKOPEVA IRINA via Shutterstock.