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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.

Retailers afraid of Amazon’s growth can take consolation in the fact that Prime Day was not the resounding success of last year. Anticipation was high but sales were flat in the US and many customers complained on social media about checkout problems.

Fashion and Apparel brands also failed to benefit from the occasion. Brands in these categories did not sell a large number of products despite promoting Prime Day deals more than usual, according to L2 research.

On Prime Day, there were more than 1,300 Active and Upcoming deals in Men’s and Women’s Clothing and Fashion– a sharp increase from the average day in June, when only 100 Unique Deals existed in those categories. This suggests Fashion and Clothing sellers and brands were looking to leverage Prime Day.

However, only 13 men’s and six women’s deals had been completely claimed at the time of data collection. Furthermore, 15 of those deals were for watches or sunglasses – often licensed products not sold directly by brands.

Furthermore, clothing was a slow seller: the average clothing deal sold less than a quarter of available stock. At the time of data collection, the 12 clothing deals with the largest discounts had only sold 28% and with less than two hours remaining, it was unlikely they would exhaust that inventory.

In Asia, fast fashion is experiencing troubles selling online. Rumours of Rocket Internet’s fashion site Jabong surfaced of an extremely low valuation and in April Zalora, the Southeast Asia fashion e-tailer was acquired in Thailand for a mere $10 million.

A version of this appeared in L2 on July 14. Read the full article here.

Source: roposo.com

Source: roposo.com

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.

Rocket Internet Jabong's possible merger

Ecommerce is leading the way in India’s M&As. Source: Quartz

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.

A version of this appeared in The Economic Times on July 4. Read the full article here.