Markafoni

What did it do?

Markafoni was a private shopping site founded in 2008 that initially admitted members by invitation only. It sold branded clothing and accessories at a discount through short-lived sales campaigns. Over time it expanded into sister sites, Zizigo for shoes and Miss Pera for cosmetics, international versions and physical stores.

Why did it shut down?

According to Bloomberg HT, Naspers wanted to turn Markafoni into an in-season shopping destination; but as the model grew less attractive to consumers, the balance between revenue and costs became unsustainable. Since the acquisition Naspers had covered the losses, cut costs and also considered a sale. Consumers turned to sites offering a wide product range instead of short-lived discounts; by early 2017 rival Trendyol's real user numbers had reached twice Markafoni's. The founders' departure after Naspers took full control was also seen as a loss. A relaunch attempt by Cafer Mahiroğlu, who bought the brand in 2017, ended in closure about a year and a half later.

The story

In 2008 Sina Afra, Ahmet Emre Sarı and Tolga Tatari decided to try a model little known in Turkey: a private shopping site that members could join only by invitation, selling branded products at a discount through short-lived campaigns. According to Bloomberg HT, Markafoni started out with $300,000. By early 2009 it was selling around 500 items per campaign, and its first foreign investor had come on board with a 15 per cent stake. According to a round-up by Webrazzi, the Turkish tech news site, it reached 870,000 members in March 2010 and raised 11 million TL in investment.

Growth attracted international capital too. MIH Allegro, part of Naspers, bought 71.2 per cent in 2011, when the company was said to be valued at between $200 million and $210 million, and the remaining 28.8 per cent in 2014. During this period Markafoni set up Zizigo for shoes and Miss Pera for cosmetics, and opened a sister site in Australia called BrandsExclusive. In 2014 it had around 7 million members, 20 million visitors a month and some 600 employees. In 2016 it opened its first physical store in Zorlu Center.

But the wind had turned. Consumers were moving away from short-lived discounts towards sites offering a wide range of products at any time. The founders had left the company after Naspers took full control. Zizigo and Miss Pera were closed in 2016 and their traffic redirected to the main site. On 1 June 2017 Markafoni announced it would cease operations as of 30 June. According to Naspers' statement, the balance between revenue and costs did not allow the business to be sustainable.

The story did not end there. Cafer Mahiroğlu, owner of UK-based Select Fashion, announced he had bought the brand for $15 million, and the site reopened on 22 August 2017. Mahiroğlu was planning a further $15 million of investment and expansion into Europe. This second life did not last long: according to a March 2019 report by Patronlar Dünyası, the site closed for a second time and the address began redirecting to Selectmoda.com.

Markafoni was the company that made private shopping popular in Turkey. When the market broadened and habits changed, however, it could not transform at the same speed, and it left the stage together with the model it had pioneered.

Lessons for founders

• If your model's appeal depends on the consumer habits of a particular moment, prepare your transformation plan before those habits change.
• The departure of the founding team after an acquisition can seriously slow a company's ability to find its direction.
• A well-known brand name is not enough for a second life if there is no working business model behind it.

Sources

1. The Markafoni story, from then to now (in Turkish) (Webrazzi, 2017-06-01)
2. Why did Markafoni close? (in Turkish) (Bloomberg HT, 2017-06-02)
3. Key figures on the Markafoni Group from İlker Baydar (in Turkish) (Webrazzi, 2014-09-25)
4. It's official: Cafer Mahiroğlu buys Markafoni for $15 million (in Turkish) (Webrazzi, 2017-07-10)
5. He bought Markafoni for $15 million, then closed it (in Turkish) (Patronlar Dünyası, 2019-03-19)
6. Markafoni reopens for shopping with a new look (in Turkish) (Webrazzi, 2017-08-22)
7. Private shopping sites that closed before Markafoni (in Turkish) (Webrazzi, 2017-06-01)

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