The Big Indian Sale! Myntra acquires Jabong

Myntra acquires Jabong

Global Fashion Group’s (GFG) owned fashion E-commerce retailer Jabong is finally sold to Myntra, Flipkart’s Fashion Arm. A move which is seen one of the step towards consolidation of E-Commerce Industry in India.

Jabong was launched in 2012 and in its initial years was one of most sought after platform and gave tough competition to the likes of Myntra in the Fashion E-commerce but in past year or two they have not been able to keep up with the pace after doing away with the huge discounts in order to reduce the losses. The move which was a logical step to take in order to reduce losses but they also lost customer base to Myntra.

Jabong has been looking for buyer as their main investors Rocket Internet and AB Kinnevik were not keen on investing in the e-tailer and had reduced fresh investments in it. In 2014 due to valuation mismatch Amazon missed on buying Jabong which at that point looked almost certain.

Interestingly, in 2014 Rocket Internet had merged fashion e-retailers Dafiti, Lamboda, Namshi and The Iconic, along with Jabong to create Global Fashion Group (GFG) in which AB Kinnevik had large stake. GFG on 22nd July had raised EUR 330 million from existing investors out of which Rocket Internet had invested EUR 68 million and has raised stake up to 20%. The investment was seen as a strategic step to move ahead on the path of becoming Market leader in the online fashion industry in the emerging markets and suddenly news of selling its Indian arm comes as a surprise and gives clear indication that they are not keen on investing in Indian Fashion Industry even though Jabong was showing improvement in market improvement with rise in their revenue in the March quarter ending,

Jabong had faced some tough times with their valuations falling from $500 Million in $100-$150 Million and eventually got sold for $70 Million to Myntra in all cash deal.

GFG has confirmed the news on its website with comments from its CEO and Chairman on the sale:

Romain Voog, CEO of GFG, commented: “Over the last 12 months, all of GFG’s operations have significantly improved their customer experience and economics. 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. With a strengthened balance sheet, we are now uniquely positioned to continue investing to deliver unparalleled shopping experience and best in class service to our customers and partner brand-owners across all of our countries”.

Lorenzo Grabau, Chairman of GFG and CEO of Kinnevik, GFG’s largest shareholder, further added: “We are grateful to the Jabong team for the great work carried out over the last several years to build such an attractive Indian fashion e-commerce company. We are pleased with the outcome of Jabong’s strategic review and will now focus all our energy and capital in driving the growth of Lamoda, Dafiti, Namshi, The Iconic and Zalora across their 24 countries of operation”.

Likes of Future Group, Snapdeal, Aditya Birla group were also interested in acquiring Jabong but eventually lost to Myntra.

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