The race to buy online fashion retailer Jabong has finally ended, with Flipkart’s unit Myntra reaching the finish line before other contenders, including Alibaba, Future Group, Aditya Birla’s e-commerce venture Abof and Snapdeal.
Flipkart Ltd has acquired Jabong through its unit Myntra in a cut-price deal that values the online fashion store at $70 million. “The acquisition of Jabong further strengthens our position as the undisputed leader in Fashion and Lifestyle segment in India,” Flipkart said in a company statement.
Over the past 10 months, Jabong has been scouring for a buyer amid low sales, losses and management changes. The company reportedly held talks with online and offline retailers; however, there had been no agreement on valuation.
The talks to sell Jabong were led by Kinnevik CEO Lorenzo Grabau, who was in India in the first week of July to meet executives at Snapdeal, Abof, Future Group and Flipkart. Kinnevik is an entrepreneurial investment group focused on building digital consumer businesses.
Kinnevik was tasked with the job of negotiating with buyers on behalf of Rocket Internet, which owns more than 21 per cent stake in Jabong’s parent company, Global Fashion Group (GFG).
CEO & Co-Founder, Flipkart, Binny Bansal said, “Fashion and lifestyle is one of the biggest drivers of ecommerce 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.”
According to CEO Myntra, Ananth Narayanan, “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. We look forward to working with the talented Jabong team to shape the future of fashion and lifestyle e-commerce in India.”
The acquisition is all set to change the face of Indian e-commerce. The two portals, with a combined active user base of 15 million per month, aim to provide users with the best of brands and e-shopping experience.
Jabong has more than 1,500 international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from over 1,000 sellersto its name.
In September 2014, Jabong investors — Investment AB Kinnevik and Rocket Internet AG — had merged the Indian online fashion retailer with four other firms to create a new global fashion e-commerce group, GFG.
The valuation of GFG, which was €3.1 billion in July 2015, reportedly 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 rounds.
At the end of May, Jabong reported a 14 per cent increase in revenue to €32.6 million for the March quarter. The Gurugram-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.
With an aim to start a fresh for a business, Jabong last year appointed former Benetton India head Sanjeev Mohanty as its CEO and Managing Director. This followed various series of top management appointments. But nothing seemed to work for e-tailer.
Sanjeev Mohanty resigned from the post of CEO last month, leading to open speculation about the future of the ailing fashion portal.