Myntra a FlipKart Ltd. Unit acquires Jabong for $70 million. This deal has made FlipKart the no. 1 e-commerce market place.
Jabong offers more than 1,500 international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from more than 1,000 sellers.
Flipkart, beat Snapdeal and Future Group in this deal, FlipKart will pay cash for the acquisition, according to a statement by Global Fashion Group (GFG), which owns Jabong. In September 2014, German investor 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.
Sachin Bansal and Binny Bansal, Flipkart’s co-founders, confirmed the news by tweeting:
— Sachin Bansal (@_sachinbansal) July 26, 2016
— binnybansal (@binnybansal) July 26, 2016
Since last one year the sales of Jabong.com owned had been declining and they had stopped offering discounts to reduce its losses to Rs 46.7 crore in 2015 from Rs 159.5 crore in 2014. In 2015 jabong.com was almost sold to Amazon but the deal did not get finalized.
“Through the sale of Jabong, we are achieving a milestone in our strategy to refocus and invest in our core markets that show both, significant growth and revenue potential but also a clear and predictable path to profitability,” GFG CEO Romain Voog said in a statement.
Binny Bansal, co-founder of Flipkart said:
“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,” he added. For now Myntra has said it will keep Jabong as a separate entity.
This deal strengthens the Bengaluru-based company’s prospects of competing with Amazon a in this high-margin business.
Welcoming Jabong to the group, Flipkart CEO Binny Bansal sent a letter to all its employees. Here’s the text of the letter sent by Bansal:
I am happy to inform you that our group company, Myntra, today acquired Jabong from Global Fashion Group, thus creating India’s biggest fashion shopping destination.The acquisition of Jabong further strengthens Flipkart Group’s position as the undisputed leader in Fashion and Lifestyle segment in India.
As you are aware, Jabong is among India’s major fashion multi-brand e-store with more than 1500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from over a thousand sellers. Myntra and Jabong are all set to define the next generation of online shopping offering the best of brands to Indian consumers.Some of the most iconic global brands that will be exclusive to both the platforms include Dorothy Perkins, Topshop, Tom Tailor, G Raw Star, Bugatti Shoes, The North Face, Forever 21, Swarovski, Timberland and Lacoste.
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 across our 3 platforms even more wider variety of styles, products and a broad assortment of global as well as Indian brands. Ananth will be leading both Myntra and Jabong platforms. Please join me in welcoming the talented team of Jabong to the Flipkart group.
It’s an interesting coincidence that Myntra’s announcement coincides with the launch of Amazon Prime in India. But, Flipkart already has a Prime like service available in the form of Flipkart First. This provides free shipping and other benefits, much like Amazon Prime.