Flipkart Ltd on Tuesday announced that it has acquired online retail portal Jabong through its fashion subsidiary Myntra. The online retail company refused to disclose the deal amount. Jabong is one of India’s major fashion multi-brand e-store with over 1,500 retail brands.
In a statement issued, Flipkart co-owner Binny Bansal 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.” In a tweet this morning, Flipkart Executive Chairman Sachin Bansal said: “Welcome Jabong India to the Flipkart family. We’ll create history together.”
Jabong, which is owned by Global Fashion Group, has been on the lookout for a buyer for the last few months. The company has been in touch with Snapdeal as well as Future Group and Amazon, but a deal failed to pass through. In 2014, Amazon reportedly wanted to acquire Jabong but the price tag was a steep $1.2 billion. According to a report by Rocket Internet, Jabong is the only loss-making outfit in GFG’s portfolio of ten companies in the January-June 2015 period. Jabong also registered slowest revenue growth of 26.5 per cent y-o-y in the six months to June, 2015 among the ten companies.
Research Director at Gartner Sandy Shen said the move will help Flipkart further penetrate into the fashion category and keep rival Amazon at bay.
“Fashion (esp. women’s fashion) is a top category on e-commerce platforms in terms of transaction volume and growth, and also one of the most competitive due to lots of brands and manufacturers. The acquisition of fashion platforms is a move for Flipkart to not only further penetrate into the red-hot category but also maintain its leadership position in the market and keep Amazon at bay.”
Jabong reported an operating loss of Rs 426 crore in FY15, slightly lower than in FY14. The revenue growth in FY15 inched up by just 7 per cent to Rs 866 crore from Rs 811 crore in the previous year.