Flipkart Takes Out the Competition, Buys Jabong for $70 Million

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The world of online fashion is becoming it’s own competitive industry within the business world. Much like countless other industries devoted to sales, the goal is to to knock Amazon from their perch as the top online provider of just about anything. In this case, the juggernaut has devoted a larger portion of it’s attention towards India’s ever-growing market by nearly doubling their investment.

To help combat Amazon‘s stranglehold, Flipkart’s Myntra, one of India’s top fashion e-retailers, has successfully bought out the competition by acquiring Jabong. Flipkart faced a fierce bidding war for the Rocket Internet-based company from competitors Future Group, $35 million, and Snapdeal, $50 million, before bringing the proposed sale price to $70 million. The move comes on the heels of a very poor year in sales for the selling company, formerly having an estimated worth of more than $500 million.

This brings a large difference to the market that had previously been completely dominated by Amazon Fashion in a country whose customer growth is higher than ever before. This isn’t the first instance of Flipkart pulling the rug out from under their direct rivals;  It once again changes the entire landscape of India’s e-commerce, holding Amazon India at bay for the time being as Flipkart continues to absorb it’s competition in response to the growing difference in active users. In perspective, Jabong’s four million active users combine with Flipkart’s current 11 million, bringing with it a strong base of exclusive brands as well.

 

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Jabong is just one of the smaller groups being brought into the growing portfolio Flipkart has accrued over the past few years. Myntra, Flipkart’s direct fashion e-retailer, were themselves bought for $300 million just last year with the same mindset of better positioning the company to compete against Amazon Fashion.

It can be seen in many ways, most certainly as an avenue of slowly building up Flipkart’s legitimate potential for competing with both Amazon and Snapdeal. This isn’t to say that the deal itself will put them over the top in that war of fluctuating active users, but it’s the right direction. Amazon themselves have already positioned themselves as the biggest player in online sales, let alone fashion, so gathering up small players in that market to hopefully gain the stature Amazon has is almost definitely the best move available. There’s no easy way to become the largest online fashion retail group, let alone in India’s market.

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