Journey of eCommerce, which is already experiencing a tough rollercoaster, seems to get tougher now. After various shocks regarding the downfall of the industry, here is yet another massive quake that will add to the miseries.
One of India’s well-known online fashion portals Jabong, which was already finding it hard to operate with the splurging losses, has once again slashed its asking price, said a spokesperson on the condition of anonymity.
The Rocket Internet-backed fashion portal has been seeking buyers from past one year but, couldn’t manage to get any and thus investors decided to further drop the asking price for an estimated value of around $100 million. In 2014, the company was in talks with Amazon India and proposed an acquisition deal of $1 billion which failed to commence. Post that it witnessed a drastic dip in sales in FY-15.
This is Rocket Internet’s second attempt to exit from an Indian firm. Last month it sold one of its portfolio companies Fabfurnish to Future Group. The investment firm hinted to exit India and this could also be one of the reasons to find another home for Jabong.
There are some hints of early stage talks between Jabong and Future Group for the same. It is speculated that apart from Future Group, the fashion eRetailer is also in talks with other Indian online marketplaces.
However, with Jabong’s top-level management that includes some big names such as former Benetton Indian MD, Sanjeev Mohanty, former eBay exec Murali Krishanan B and others, it holds a decent position in the market. Jabong’s acquisition, if it happens, could be one of the biggest grabs in the history of Indian eCommerce. This could also be a wild card entry for foreign companies looking to enter India especially after the government’s nod to allow 100 per cent FDI in online marketplaces.
This can also be considered as one of the after effects of the FDI policy that has shaken the grip of eCommerce market. Though, the norm will enforce foreign investments but, Indian-based eCommerce players will see more of such hiccups for sure. As we see our society ‘westernising’, time has come when we see the retail market foreign-ising.
Speaking to a leading media house, Jabong’s CEO Sanjeev Mohanty said that the company is planning to bring in a very prudent culture and will continue operating like how a good online business should operate.
Despite other eCommerce majors such as Snapdeal, Amazon and Flipkart, which have been consistently strengthening their fashion array, Jabong has maintained its legacy of being a trendsetter in the online fashion space. The company brought-in several national as well as international fashion brands on its portal to offer wide range of fashion products to its consumers. Yes, it is struggling in terms of cash in bank but, to have an asset like Jabong is like having THE most lethal weapon to compete with the peers.