New Delhi: In a move to maintain its position as the market leader, Flipkart Ltd has acquired online fashion portal Jabong through its unit Myntra, ahead of other suitors such as Snapdeal.
Financial details of the deal were not made public.
Global Fashion Group (GFG), which owns Jabong, has been looking for a buyer for more than a year now. GFG held discussions with several firms, including Snapdeal, Future Group, Aditya Birla Group and Amazon.
“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,” said Binny Bansal, co-founder of Flipkart.
Jabong offers more than 1,500 international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from over a thousand sellers.
“Jabong has built a strong brand that is synonymous with fashion, a loyal customer base and a unique selection with exclusive global brands. 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,” said Ananth Narayanan, chief executive, Myntra.
Jabong, which matched larger rival Myntra in sales until early 2014, has ceded market share since then, as Myntra’s parent Flipkart has been spending crores of rupees on advertisements and discounts to lure customers.
At the end of May, Jabong reported a 14% increase in revenue to €32.6 million for the March quarter. The Gurgaon-based firm’s adjusted Ebitda (earnings before interest, taxes, depreciation and amortization) loss narrowed to €11.9 million from €16.3 million in the same quarter a year earlier.
In the past year, the company has witnessed an exodus in its senior management, a funding slowdown and strong competition from Myntra and Amazon India.
In September 2014, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create GFG.
GFG, which is jointly owned by Rocket Internet and Kinnevik, houses the German e-commerce company’s fashion businesses from emerging countries, including Jabong, Latin America’s Dafiti, Russia’s Lamoda, Namshi in the Middle East and Zalora in South-east Asia and Australia.
Earlier this month, Jabong expedited its sale process as the firm’s owners, AB Kinnevik and Rocket Internet, were reluctant to pump in more capital into the company in a gloomy e-commerce market.
The valuation of GFG, which was €3.1 billion in July 2015, slid to $1.13 billion (€1 billion) after barely 10 months. In May, GFG said it raised $339 million (€300 million) from Kinnevik and Rocket Internet at a valuation that was a third below the previous round’s.