Myntra, an online fashion retailer platform, owned by Flipkart, has announced that it has acquired its rival – Jabong, in a deal that is worth $70 million.
It seems that this deal from Flipkart is aimed at holding on the 1st position in the online fashion market, of which Amazon India is slowly trying to get hold of.
Jabong is offering 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.
For the acquisition of Jabong, Flipkart beat other players such as Snapdeal, Future Group and Aditya Birla Group. Until now, Snapdeal was said to be the front-runner for the acquisition of Jabong.
Commenting about this acquisition, Binny Bansal, CEO 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.
At the end of 2013, the fashion portal was worth around $508 million. In the financial year that ended in March 2014, Jabong reported sales of Rs. 438 crore. While the company’s sales increased to Rs. 869 crore in previous financial year, Jabong’s value collapsed because of leadership issues, market share losses and a funding crunch.
Ananth Narayanan, chief executive officer of Myntra, said,
Jabong has built a strong brand that is synonymous with fashion, a loyal customer base and a unique selection with exclusive global brands. 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.
Jabong was a part of GFG, which is jointly owned by Rocket Internet and AB Kinnevik. It houses fashion businesses from emerging countries, including Jabong, Dafiti, Lamoda, Namshi and Zalora.
Since Kinnevik and Rocket Internet were reluctant to pump more capital into the company, the company decided to expedite its sale process last month.