The Flipkart Group Company's Myntra on Tuesday announced the Rs 470 crore acquisition of Jabong from Global Fashion Group creating India's biggest online shopping destination.
The acquisition has strengthened Flipkart Group's position, in the e-commerce space, making it a leader in the online Fashion and Lifestyle segment in India.
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"The acquisition of Jabong is a natural step in our journey to be India's largest fashion platform. We see significant synergies between the two companies especially on brand relationships and consumer experience," said Ananth Narayanan, CEO, Myntra.
Jabong was on the market for acquisition as it was suffering from deep financial crisis. It had been in talks for an acquisition with Snapdeal, Aditya Birla Group's abof.com and Flipkart. Swedish investment firm Kinnevik also owns a large stake in Jabong's parent Global Fashion Group (GFG).
Now, Myntra and Jabong, with a combined base of 15 million monthly active users, are set to redefine online shopping experience by offering the best of brands to Indian consumers. Some of the most iconic global brands that will be exclusive to both the platforms include Dorothy Perkins, Topshop, Tom Tailor, G Star Raw, Bugatti Shoes, The North Face, Forever 21, Swarovski, Timberland and Lacoste.
"Fashion and lifestyle is one of the biggest drivers of ecommerce growth in India. This acquisition is a continuation of the group's journey to transform commerce in India," said Binny Bansal, CEO and Co-Founder, Flipkart.
While Jabong has managed to reduce losses by reducing discounts, both Kinnevik and Rocket Internet seem unwilling to infuse fresh capital and are believed to be keen to exit.
In April this year, GFG raised fresh funding from existing investors at a lower valuation, raising 300 million euros from Rocket Internet and Kinnevik.
Post the last round, GFG was valued at 1 billion euros, a significant fall from earlier valuation of 3.1 billion euros.
According to the Internet and Mobile Association of India, e-tailing has grown at 57 per cent year-on-year, moving from Rs 24,046 crore to Rs 37,689 crore between the December 2014 and December 2015. This is further estimated to touch Rs 72,639 crore by end of 2016.
As per a Rocket Internet investor presentation, Jabong had a net revenue of 32.6 million euros in Q1 2016, up 14 per cent from 28.6 million euros in the year-ago period. For FY2015, its revenues were at 122.1 million euros.
(With inputs from PTI)