The idea of Jabong which is a fashion e-commerce website was conceptualised in 2011 and was launched under Rocket Internet in 2012. It gained massive popularity because of the urban and trendy clothes and was valued at a whopping $440 million by the end of 2013. In the year 2014, the Global fashion Group was formed and Jabong.com was an integral part of it. However, the Myntra-Jabong acquisition has raised various anticipations and here are five things you should know about the acquisition:
1. Myntra acquires Jabong
Myntra, an online fashion app which was acquired by Flipkart in 2014 acquired Jabong for a whopping $70 million. The deal was only sealed after Global Fashion Group decided that Jabong had to tie up with a local player to succeed. Jabong has managed to minimise losses after reducing discounts recently and conditions got better as GFG raised 300 million Euros from Rocket Internet and Kinnevik.
— binnybansal (@binnybansal) July 26, 2016
2. Myntra’s take on the acquisition
“The acquisition of Jabong further strengthens Flipkart Group’s position as the undisputed leader in Fashion and Lifestyle segment in India. Jabong is among India’s major fashion multi-brand e-store with more than 1,500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 1,50,000 styles from over a thousand sellers,” Myntra said in a statement.
Myntra CEO Ananth Narayanan said: “The acquisition of Jabong is a natural step in our journey to be India’s largest fashion platform. We see significant synergies between the two companies especially on brand relationships and consumer experience. We look forward to working with the talented Jabong team to shape the future of fashion and lifestyle e-commerce in India.”
3. What this deal actually means
Jabong had captured approximately 25% of the Indian e-commerce fashion market and an acquisition by Myntra means Flipkart’s share rising up to almost 70%. All the sites will operate as independent ones so that the customer base of neither is affected.
Through this acquisition, Flipkart along with holding the largest e-commerce share in the country also made up for what they lack in valuation. If Flipkart didn’t do anything about diminishing funds, they’d be in trouble so by buying out Jabong, they actually accomplished two huge targets rolled into one.
Also, this acquisition puts an end to the rumours of an Indian e-commerce industry heading towards its demise. In the future, Flipkart is bound to beat Amazon and at the same time, revive the industry.
4. Flipkart’s take on the acquisition
“Fashion and lifestyle is one of the biggest drivers of e-commerce growth in India. We have always believed in the fashion and lifestyle segment and Myntra’s strong performance has reinforced this faith. This acquisition is a continuation of the group’s journey to transform commerce in India. I am happy that we will now be able to offer to millions of customers a wide variety of styles, products and a broad assortment of global as well as Indian brands,” Binny Bansal, co-founder of Flipkart said.
Sachin Bansal, the Executive chairman of Flipkart tweeted, “Welcome @JabongIndia to the @Flipkart family. We’ll create history together.”
— Sachin Bansal (@_sachinbansal) July 26, 2016
5. Other suitors to buy Jabong
Myntra owned by Flipkart wasn’t the only company which wanted to buy Jabong. There were other companies in line which were willing to pay bigger amounts of money.
In November, 2014 VCcircle reported that Amazon India was looking to buy Jabong for a whopping $1.2 billion and later, Paytm was ready to pay a little over $500 million for Jabong. Jabong was in the market for a sell-off for a considerable amount of time and the potential buyers were Future Group, Snapdeal and Aditya Birla-owned Abof.
Flipkart was a potential buyer but never really showed much interest but with companies offering such high amounts of money, it has seemed to have gotten itself a brilliant deal at $70 million.