The battle for supremacy in India’s ever-increasing e-commerce market is widely public. Flipkart and Amazon have been repeatedly infusing funds to stay atop each other. Now, VCC Circle reports that Amazon has already completed 1st level talks with Jabong, to acquire the fashion portal for a staggering $1.2 Bilion.
The report says that the meeting regarding the same took place pretty recently, as recent as less than a week. Though Amazon is interested in buying out Jabong, it will require some clever restructuring from Amazon’s side to do so. This is because, Jabong, being an inventory based site, is not allowed to take in foreign investments as per Indian FDI laws.
This new deal is reportedly Amazon’s counter to Flipkart’s $300 Million Myntra acquisition. Though Flipkart’s deal was smaller in magnitude, its impact on India’s e-commerce market has been quite vast. Flipkart had then confirmed, a further $100 Million investment into online fashion business.
Source, privy to the entire discussion, told VCC Circle that,
The way the market is placed, fashion is the biggest category. However, it would not be possible for a general merchandiser to crack this industry without targeting inorganic growth.
Jabong, which is backed by Rocket Internet, also has Swedish investment firm Kinnevik and UK’s development financial institution CDC as shareholders. Kinnevik holds a 25% stake in the company.
As mentioned earlier, the entire restructuring process at Jabong, for this specific deal will be interesting. Jabong is a part of a large group of companies under Rocket Internet which includes Dafiti, Lamoda, Namshi and Zalora, all under a big umbrella firm called Big Foot Retail.
An Amazon spokesperson declined to comment on the matter.