India’s leading online fashion destination, Jabong is betting big on luxury this spring. The brand is launching two new online stores in April – a luxury store and a designer store. The stores will concentrate on the premium fashion segment, luxury brands, global brands.
Speaking on the sidelines of India Fashion Forum 2018, Gunjan Soni, Head of Jabong and Chief Marketing Officer at Myntra said, “Jabong is making a lot of waves when it comes to the luxury segment and in April we expect to launch both a luxury store and a designer store in line with the expectations of our consumers. The launch of the stores is in line with our belief that the Indian customer is ready to experience both these segments online. The luxury store will see several innovations because if we are bringing luxury online, we actually want to create an experience that is different.”
She further added, “Luxury as a category will be available on both Myntra and Jabong, but these specific stores will be launched only on Jabong.”
Myntra will continue to lead as a mass premium platform and will focus on driving the next wave of adaption.
“We have been the leader in the fashion category, we want to make sure that there is next wave of adaption happening in online fashion in India and on Myntra,” revealed Soni.
Both Myntra and Jabong today have a combined base of 12 million customers. However, the customer overlap between both the brands today is close to 28 percent.
Despite betting high on luxury, just like Myntra, Jabong has no plans to take offline route and open brick-and-mortar stores.
Tracing Jabong’s Journey
Backed by Germany-based Samwer Brothers company, Rocket Internet, Jabong was launched in 2012. Founded by Arun Chandra Mohan, Praveen Sinha, and Lakshmi Potluri in 2012, others including Manu Jain and Mukul Bafana also joined Jabong. 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 percent 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. It 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 – exits started doing the rounds this year. They finally 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 acquisition of Myntra.
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 US $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 US $800 million by December 2016. It claimed it had achieved a GMV of US $66 million in January this year.
In July of this year, news broke out of players like Flipkart, Snapdeal, Alibaba, Abof.com, among others in a race to buy Jabong. This was followed by speculation that CEO Sanjeev Mohanty was quitting the ailing company to join Levis Straus.
Flipkart Ltd finally acquired Jabong through its unit Myntra in a cut-price deal that values the online fashion store at US $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 percent from 28.6 million euros in the year-ago period. For FY2015, its revenues were at 122.1 million euros.
Brands like WROGN, Forever 21, YWC, Aèropostale, New Era Caps, Mothercare, Roadster, Cover Story, AAY, Zivame, HRX and Mast and Harbor were launched on Jabong.
Jabong also forayed into toys segment with the launch of Hamleys – the finest toy store in the world.
Jabong also invested in expanding range of products to give consumers more options to buy, made mobile application more engaging and invested in marketing to create more awareness among consumers about the brand.
The apparel category contributed around 45 percent to the Jabong business, followed by footwear around 11-12 percent.
Jabong has added brands like Marks & Spencer and Splash to its repertoire.
The Big Brand Sale by Jabong was huge hit as it opened to a record-breaking start with a 40x revenue over baseline within the first hour. 8 million products were wishlisted, with premium international brands dominating the share, followed by sports and footwear. All the orders placed during slots with promised next day deliveries are on track for deliveries.
Gunjan Soni, Head of Jabong, said, “The Big Brand Sale received a tremendous response with traffic to the platform rising by 4x and new customer acquisition ahead of our plan. Our innovation of VIP slots for loyalists created huge excitement with 1.3 million products getting sold even before the formal start of the sale. Our customers also embraced our offerings on the premium international brands, thereby increasing their share by 40 percent.”
And now, Jabong will be soon introducing luxury and designer stores.