Myntra, Subsidary of Flipkart, Just Acquired Jabong From Rocket Internet


Myntra, owned by Indian ecommerce marketplace Flipkart, today announced its buyout of Jabong, the third largest online fashion retailer in the country, reports Tech In Asia. The acquisition was made for $70 million in cash.

The deal is expected to be completed in the third quarter. Once a big player in India’s online retailing industry, Jabong has fallen on hard times in the past year amid poor sales and management shake-ups.

Jabong was in talks with Amazon to sell the business for prices between $700 million to $1 billion until early 2015 as Rocket Internet was planning to exit Jabong since 2014.

The valuation talks hovered over a billion dollars, then fell to about $700 million between October 2014 and January 2015. However, Amazon did not agree on the pricing and Jabong was out of reach for Snapdeal or Flipkart at that price.

Jabong’s valuation fell drastically within the last 18 months and paved way for smaller competitors such as Flipkart to enter the talks. 

A new CEO took charge, with a main purpose of cleaning up the company and making the company presentable for a sale.

Jabong has one of the best sourcing systems, catalogs, and loyal customer bases, especially among female buyers. The buyout will also give a boost to profitability of Flipkart, as the fashion category is the most profitable of all ecommerce segments, with gross margins as high as 80%.

China’s Alibaba is sniffing around looking for an opportunity. And despite the denial – one rumor that won’t go away is Amazon making a decisive strike to become top-dog by buying Flipkart.

A version of this appeared in Tech In Asia and BBC on July 26. Read the full version here and here.