Jabong,Rocket Internet’s Zalora for India, may be up for a merger, reports The Economic Times. The Indian fashion marketplace is allegedly in talks with competitors such Alibaba Group, Future Group and Flipkart owned Myntra, however the Jabong CEO, Sanjeev Mohanty, refused to comment.
Jabong was reportedly worth $1 billion in 2014. Now the fashion e-tailer’s valuation is barely worth $100 million.
This is the second time that rumors of a Jabong acquisition made the news. In the same article, The Economic Times reported that Amazon was in talks to acquire the company for $1 billion in attempt to counter local player Flipkart’s acquisition of Myntra in 2014. However, the company’s current valuation is a fraction of that, approximately at $100 million. Although vastly different in numbers, the drop in valuation is reflective of Zalora Thailand and Vietnam’s modest acquisition by Central Group, for what was said to be $10 million for each country.
As commented by Quartz, 2014 was Jabong’s peak year, as the company was among the top two online fashion retailers in India, sharing the winning spot with Myntra. Since then, Jabong has struggled to regain its steam.
Myntra leaped ahead with funding from Flipkart, whilst Jabong struggled to attract funds to further fuel its business, making it harder to stay in the race with the other marketplace giant.
This news follows a string of M&As in India, as the ecommerce landscape in the country gets overcrowded with competing players. In a weakening investment environment, M&As have been increasingly common, especially in ecommerce.
In the last three months, online fashion retailer Voonik acquired four startups. Craftsvilla, an online store for ethnic product, acquired four.
[The M&A trend] will continue because the big players are now scouting for companies that compliment their offerings or add new segments. Rishabh Lawania, Founder of Xeler8
Due to the current tight investment landscape in India , small startups are struggling to raise funds like they have done in the past, which means they have to be more open to acquisitions. The money is beginning to run dry in Southeast Asia as well as there are less and less Series B and above investment rounds happening.
If the speculation regarding Jabong is true, it will be the third Rocket Internet backed company to get acquired within the past month, after Lazada, Zalora and as Daraz & Kaymu recently announced a merger.