Indian e-commerce shake-up: Flipkart buys Jabong from Global Fashion Group

After months of fierce completion amongst big players of e-commerce in India, Flipkart-owned Myntra has confirmed the acquisition of Jabong from Global Fashion Group (GBG), backed by Rocket Internet, for an undisclosed amount.

Market insiders have coined this deal to be one to mark further consolidation in India's booming e-commerce industry. No financial details have been disclosed to date.

"Fashion and lifestyle is one of the biggest drivers of ecommerce growth in India. We have always believed in fashion and lifestyle segment and Myntra's strong performance has reinforced this faith," Flipkart CEO and co-founder Binny Bansal said commenting the acquisition.

Flipkart snaps Jabong to transform e-commerce in India

This acquisition is a continuation of the group's journey to transform commerce in India and “further strengthens Flipkart Group's position as the undisputed leader in Fashion and Lifestyle segment in India. Jabong is among India's major fashion multi-brand e-store with more than 1,500 on-trend international high-street brands, sports labels, Indian ethnic and designer labels and over 1,50,000 styles from over a thousand sellers," Myntra said in a statement.

"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 ecommerce in India," Myntra CEO Ananth Narayanan said.

Jabong has been in the market for sale for months, attracting the interest of Future Group, Snapdeal and Aditya Birla-owned Abof among others.

Jabong was founded in 2012 to be merged two years later by its investor, Rocket Internet, with four other online fashion retailers in Latin America, Russia, the Middle East, South-east Asia and Australia to create Global Fashion Group (GFG).

Rocket Internet and Kinnevic said to look for exit from the business

Swedish investment firm Kinnevik also owns a large stake in Jabong's parent Global Fashion Group.

Despite Jabong’s reduction of losses thanks to less discounts, both Kinnevik and Rocket Internet appear reluctant to inject more capital in the firm. Furthermore, they are reportedly looking for an exit from the fashion group.

In April this year, GFG raised fresh funding from existing investors at a lower valuation, raising 300 million euros from Rocket Internet and Kinnevik. However, after the last investment round, GFG was valued at 1 billion euros, a significant fall from earlier valuation of 3.1 billion euros, recalls the ‘Business Standard’.

According to 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, reports the ‘Economic Times’.

Launched in 2012, Jabong had been looking for a buyer for some time now. It gave tough competition to Myntra for some time, before scaling down discounts to focus on bottom line. Jabong cut down its losses to Rs 46.7 crore in 2015 from Rs 159.5 crore in 2014.

Image: Jabong Web