Flipkart owned Myntra has acquired Jabong the online fashion store in a price deal of $70 million, in a move to remain as the #1 e-commerce platform after the raising competition from Snapdeal and Amazon India. The two sites will now have a combined base of 15 million monthly active users and that’s huge.
According to sources, Snapdeal and other tech giants were also in the race to acquire the Fashion Store but were beaten down by Flipkart. Global Fashion Group who owns the Jabong said in a statement that Flipkart will pay in cash for the acquisition. The Group was in talk with Snapdeal, Future Group, Aditya Birla Group, Amazon and several other companies for over a year now.
“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. This acquisition is a continuation of the group’s journey to transform commerce in India,” said Binny Bansal, Founder and CEO of Flipkart, in a statement.
Once valued at $508 million the number have now crumbled down to $70 million, even after its sales increased to Rs 869 crore in the last financial year, Jabong’s value collapsed because of a combination of leadership issues, market share losses and a funding crunch. Jabong offers 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.
“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,” said Ananth Narayanan, CEO of Myntra.
Now it will be pretty interesting to see what Myntra and Flipkart will do with Jabong to improve its financial conditions. We may expect a few changes in top leadership.