The race to buy online fashion retailer Jabong has finally come to a conclusion, 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.
With Jabong in its arsenal, Flipkart has strengthened its position in the Fashion & Lifestyle segment to compete with Amazon Fashion in India.
News about Jabong’s possible acquisition has been making headlines since 2014, with Amazon being the front-runner to buy the company.
Here’s a timeline on Jabong’s journey in India’s e-commerce.
Backed by the Germany-based Samwer Brothers company, Rocket Internet, Jabong was launched in 2012. Founded by Arun Chandra Mohan, Praveen Sinha, and Lakshmi Potluri in 2012, Jabong was later joined by others like Manu Jain and Mukul Bafana. The company had a hybrid e-commerce model with both inventory-based business and third-party merchants selling through its marketplace.
The company rolled out several categories like shoes, apparel, accessories, sports equipment, jewellery, beauty products, fragrances, home décor and toys in record time. It embarked on a huge mass communication campaign and ensured a significant presence in the market within a very short span while others took at least two-three years to build them up.
According to a ComScore report in 2013, Jabong.com had the second highest amount of traffic on its website within a few months of its launch. It also ranked 10th in Google Zeitgeist India trends making it 10th most searched term in 2012 in India.
In less than 20 months, Jabong.com managed to become the third-most visited online shopping website after Myntra.com and Flipkart.com in India.
During September 2013, Jabong shipped 14,000 orders on a daily basis out of which 60 per cent were from small towns. It was one of the most visited e-commerce sites during the Great Online Shopping Festival 2013.
In 2012-13, the company’s revenue soared 50 times – to Rs 202 crore from Rs 4 crore the previous year – and its loss narrowed to Rs 16 lakh from Rs 64 lakh in 2011-12, according data from the registrar of companies. By comparison, Flipkart’s loss in 2013-14 doubled to Rs 400 crore, while Amazon’s net loss stood at Rs 320 crore.
The company, which matched larger rival Myntra in sales until early 2014, ceded market share since then. The company struggled at multiple fronts, starting from senior-level churn at the organization to continuous erosion of market share. Rumours about both co-founders Praveen Sinha and Arun Chandra Mohan exit started mounting this year. They left the company in 2015.
After Flipkart acquired rival Myntra in a Rs 1,800-crore stock-and-cash deal in May 2014, the former significantly increased its market share pumping in hundreds of crores of rupees to grow its offering and give deep discounts to boost sales growth, which added to the loss of Jabong’s market share.
Simultaneously, talks of a potential deal between Amazon and Jabong gained momentum, witnessed as Amazon’s move to counter Flipkart’s move.
During the same year in September, Rocket Internet merged Jabong with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create Global Fashion Group (GFG).
Swedish investment firm Kinnevik also owned a large stake in Jabong’s parent (Global Fashion Group).
The company’s losses, on the back of heavy discounting, for the first six months of this year stood at Rs 227.4 crore compared to almost Rs 155 crore in the corresponding period last year. Net revenue also did not see a healthy rise as online retailer saw sales grow moderately by 26 per cent to Rs 410.7 crore compared to Rs 324.7 crore in January-June last year.
Amidst this, the speculation about Amazon buying Jabong took a U-turn with Amazon pulling out when Jabong asked for $1.2 billion in valuation. If the deal had progressed, it would have been a landmark development and the largest M&A in the e-commerce sector in India.
It could have pitched Amazon as a much stronger competitor for Flipkart-Myntra combine.
After Amazon, rumours of Vijay Shekher’s Paytm emerging as a potential buyer surrounded, but didn’t take off.
In December 2015, in a bid to turnaround Jabong’s fate, company announced the appointment of 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.
After Mohanty’s joining, the company even said that it is looking to transact a gross merchandise value of $800 million by December 2016. It claimed it had achieved a GMV of $66 million in January this year.
In July this year, the news broke about players like Flipkart, Snapdeal, Alibaba, Abof.com, among others in a race to buy Jabong. Followed by a speculation about Sanjeev Mohanty quitting the ailing company to join Levis Straus.
With Jabong finally been bought by Flipkart, its still unclear whether Mohanty is still in the team or not. Flipkart Ltd has acquired Jabong through its unit Myntra in a cut-price deal that values the online fashion store at $70 million, moving to preserve its position as India’s No.1 e-commerce marketplace.
As per a Rocket Internet investor presentation, Jabong had a net revenue of 32.6 million euros in Q1 2016, up 14 per cent from 28.6 million euros in the year-ago period. For FY2015, its revenues were at 122.1 million euros.