In extremely layman terms, from this day on, whether you shop from Myntra or from Jabong, either way you will be lining the coffers of e-commerce giant Flipkart.
Myntra, a company of the Flipkart Group, acquired Jabong from Global Fashion Group (GFG) for $70 million in cash, creating probably the largest online fashion destinations in the country as well as the biggest 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 only a couple of days ago got itself tipped as the leading e-commerce company in the Indian market.
The 60 percent share that Myntra and Flipkart together held in India’s online lifestyle and fashion market, with the acquisition of Jabong will notably rise to a whopping 75 per cent.
Myntra Chief Executive Officer Ananth Narayanan said the largest consolidation in India’s fashion ecommerce space will create an “800-pound gorilla” of fashion and lifestyle. “I don’t think this is consolidation in the traditional sense. I intend to run Myntra and Jabong as separate entities,” Narayanan said in a telephonic interview with ET. He also assumes charges as the CEO of Jabong.
The transaction concludes months of seesawing talks between Global Fashion Group and Kinnevik, the owners of Jabong, and multiple Indian suitors. According to two persons familiar with the transaction, Myntra eventually offered to pay more than the $50 million that Snapdeal was willing to pay as well as the $35 million that Future Group had to offer.
Fashion and lifestyle is one of the biggest drivers of e-commerce growth in India. We have always believed in the fashion and lifestyle segment and Myntra’s strong performance has reinforced this faith,” said Binny Bansal, co-founder of Flipkart.
“This acquisition is a continuation of the group’s journey to transform commerce in India. I am happy that we will now be able to offer to millions of customers a wide variety of styles, products and a broad assortment of global as well as Indian brands,” he added.
Since Jabong and Myntra will be run as separate entities, they shouldn’t be any different from before for the shopper. Except, Flipkart, which offered hefty discounts to lure customers now sits on a cushy mountain. We know what that means.
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