India e-commerce giant Flipkart has beaten rivals including Snapdeal and Amazon, to buy online fashion portal Jabong from Global Fashion Group.
The purchase was made by Flipkart's fashion unit Myntra, and the combination should help the company take on increasing competition from Amazon Fashion in India. However, Jabong and Myntra will operate as separate brands, Myntra CEO Ananth Narayanan told CNBC-TV 18.
"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 Narayanan.
Global Fashion Group had been seeking buyers for Jabong for several months now after its owners AB Kinnevik and Germany-based Rocket Internet expressed an interest to exit their investment in Jabong. The company was reportedly courted by several suitors including Future Group, Amazon, and Aditya Birla Group's Abof in addition to Snapdeal, according to media reports.
According to a Mint report, the deal was valued at $70 million. Media reports had earlier pegged $50 million as the price of the some of the recent bids for the company.
Flipkart Co-founder Binny Bansal said the fashion and lifestyle segment has been a strong performer for Flipkart and Myntra, and is one of the biggest drivers of the broader e-commerce sector in India. Flipkart plans to broaden its product range, bringing a wide variety of styles as well as global brands with this deal, he added.
Jabong features over 150,000 styles from more than 1,500 "high-street" international brands and Indian ethnic and designer labels.
In early 2014, Jabong was neck-and-neck with the larger Myntra in terms of sales, but the online portal's market share has shrunk since then. The company faced further headwinds when parent's Global Fashion Group's backers Kinnevik and Rocket Internet wouldn't invest further capital in the business.
Jabong also saw a string of senior executives leave the company in the past year amid what has been a tough year for fundraising for India's e-commerce players and increasing competition from Myntra and Amazon.
While the deal appears to be of great value for both parties, we can't tell what this means for the discounts on either Myntra or Jabong.