The cat is finally out of the bag! Despite being caught in a deep financial crisis and an investigation probe, Rocket Internet-backed fashion e-commerce platform Jabong has been picked up by Myntra for $70 million in an all-cash transaction. The acquisition is expected to close by the end of 3rd quarter for this fiscal year.
Jabong has been on the market for an acquisition for quite sometime now. We had received reports saying that Jabong was in initial talks with Aditya Birla Group, Snapdeal, and Flipkart among others for a possible acquisition. One of the key backers of the company — Kinnevik — had visited the country to meet with the executives of the aforementioned companies.
But, as mentioned in a press release sent to us, Flipkart-owned Myntra has acquired Jabong from the Global Fashion Group(GFG) to further strengthen its efforts to become an undisputed leader in fashion and lifestyle segment in India. The GFG board also believes that it’s in best interest of Jabong to partner with a local fashion e-commerce player like Myntra.
Commenting on the acquisition of a part of its venture, Romain Voog, CEO of GFG says that,
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.
Lately, Jabong’s finances haven’t been too impressive and the company has witnessed a loss of over $66 million with about $232 million in GMV in 2015. During its most recent quarter, the company’s losses narrowed and amounted to about $13 million, as compared to $16 million the previous year. It’s merger with Myntra will give Jabong a better chance at getting its business further in shape.
Commenting on the acquisition, Binny Bansal, CEO and Co-Founder, Flipkart says that,
Fashion and lifestyle is one of the biggest drivers of ecommerce growth in India. We have always believed in the fashion and lifestyle segment and Myntra’s strong performance has reinforced this faith.
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
Jabong and Myntra have both, faced some tough times and have taken quite sometime to find their footing in the Indian fashion e-commerce scenario. Myntra, after being acquired by Flipkart, had become a subject of experiments. The company had pivoted to an app-only strategy to focus on its key demographic — the youth, but it had to back-track and relaunch its mobile and desktop websites to give users the option to shop from any platform of their choice.
On a different note, Jabong too recently found it difficult to raise more money, and has been surviving on grants from its parent GFG. And as the news of its acquisition neared, a whistleblower raised question about the company’s financials and CEO Praveen Sinha’s involvement in money laundering — which he has rightfully denied. Jabong had recently also pivoted from an inventory-based model to a marketplace model, to comply with India’s latest FDI rules in Ecommerce.
Post-acquisition, Jabong will be adding over 1500 of its international high-street brands, sports labels, Indian ethnic and designer labels to the company’s roster — including its most recent addition of Hrithik Roshan’s lifestyle brand HRX. Myntra will also benefit from over 150,000 styles, and thousands of sellers on the platform. The two platforms will now have a combined userbase of over 15 million monthly active users.
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 look forward to working with the talented Jabong team to shape the future of fashion and lifestyle ecommerce in India.
adds Ananth Narayanan, CEO, Myntra.
He further adds that he sees significant synergies being worked out by the two companies, especially on brand relationships and consumer experience. The two combined platforms will be house to some of the most iconic global brands, including Dorothy Perkins, Tom Tailor, G Star Raw, Bugatti Shoes, The North Face, Forever 21, among others.