Times are tough for our once-so-idolised eCommerce folks. And tough to the extent, that Jabong — despite bringing down its valuation to just $100 Mn from the $1Bn it proposed in 2014 — is seeing no backers to acquire the company and swim it out of these troubled waters.
The company was established back in 2012, under Rocket Internet’s incubation program. It had a good run for a couple of years and indeed, in 2014 the it asked Amazon for $1 Billion, to even consider selling itself out. However, that deal didn’t come through due to certain reasons.
The company also received several other offers. As per sources, an Indian company recently offered to buy it out for $200 million. The deal however, did not materialise with the rejection coming in from Jabong’s end.
So now, after a significant drop in sales and a corresponding spike in losses, Economic Times reports, that the company’s investors — Rocket Internet and Kinnevik — are trying to somehow get rid of the company, even going to the extent of dropping its price to a meagre $100 million. Its meagre when you consider that those numbers were proudly beyond the billion mark a couple of years ago.
Meanwhile, Rocket Internet seems to have had its fill of doing business in India. Most of the companies purchased by the firm, turned into loss making entities almost as soon as it stopped pumping investments into them.
The firm recently sold Fabfurnish, another one of the companies on its portfolio to Kishore Biyani’s future retails, forms reported sum of 11 crores, and is probably looking to make an exit from the country, as soon as it manages to sell its other assets.
However, Jabong is proving to be a tough nut to crack. The company undoubtedly had a clutch of potential buyers before its 2015 clampdown on discounts, that led to the company losing significant portions of its business. Since then, it has seen a 7% fall in revenue which at last reports was at Rs 869.1 crores. The company’s problems however, would have been much larger had it not managed to reduce losses to Rs 46.7 crore from an initial estimate of Rs 159.5 crores.
Jabong actually seems to have run into a patch of bad luck. After a claimed good performance and its highest month over month growth rate in January perked up hopes of a revival, the company’s largest warehouse near Gurgaon caught fire, causing some serious damage.
And that’s not even the most disappointing part yet. GMV, or Gross Merchandise Value is often taken to be a measure of a company’s health. Jabong was doing really well until 2014, and at one point had recorded a GMV growth of 158%. However the figures plummeted to rock bottom until arriving at a 13.8% growth rate in 2015. Things are slightly better in 2016, however, Jabong is still a long, long way from where it should have been — considering its past record.
A possibility of some Indian marketplaces buying and integrating Jabong still exists. However in a time when many online portals are struggling to survive, the company shouldn’t expect to go for a premium price.