Bangalore: Myntra, a Flipkart Group
company, acquired Jabong from Global Fashion Group (GFG) for $70 million in
cash, creating one of the biggest online fashion destinations in the country as
well as the largest e-commerce marketplace in India.
The acquisition will arm Flipkart
with much-needed muscle to take on global rival Amazon, which continues to make
inroads into consumers’ wallet and mindspace.
Myntra and parent Flipkart together
held 60 percent share of the online fashion and lifestyle market in the
country. With the acquisition of Jabong, the trio will together command a
whopping 75 percent. The deal is crucial for Flipkart because the fashion and
lifestyle category is set to overtake electronics by 2020, according to a
Google and AT Kearney forecast.
In a statement, Romain Voog, CEO of
GFG, which owns Jabong, said, “Through the sale of Jabong, we are achieving a
milestone in our strategy to refocus and invest in our core markets that show
not only both significant growth and revenue potential but also a clear and
predictable path to profitability.”
GFG had over the past 12-18 months
reviewed multiple bidders including Snapdeal, Amazon, Future Group and Aditya
Birla group. The transaction is expected to close during the third quarter. He
said the deal would allow the trio to lead the online fashion and lifestyle
segment, which is set to contribute $40 billion of the $110 billion e-commerce
industry by 2020. Jabong will continue to function independently and its CEO
will report to Narayanan.
The acquisition is significant for
Flipkart, said Rajeev Banduni, CEO of GrowthEnabler, a London-based online
advisory services firm. “From taking Amazon head-on, Flipkart has wisely
decided to adopt a flanking strategy by roping in smaller players and building
up its base. With Amazon on one side and Alibaba-backed Snapdeal and Paytm on
the other, this is just the beginning of a long battle for Flipkart,” he said.
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