Jabong sale likely soon, but at lowered value: reports

05 Jul 2016

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Online fashion retailer Jabong.com, which has been looking for a buyer for some time now, is likely to see the sale process completed in the next six months – but it may not get its asking price of $250 million to $300 million, according to media reports.

Mint newspaper, citing sources, said on Monday that Snapdeal, Flipkart and Aditya Birla Group are among the suitors for Jabong, owned by Global Fashion Group (GFG).

It said Flipkart is also believed to be interested in the deal since it owns leading online fashion retailer Myntra, which competes with Jabong.

Jabong co-founder Praveen Sinha had last year said that the company was not making money, even though sales had doubled to $600 million in 2014 from $300 million in 2013. Jabong was aiming to grow in a balanced way by paring down losses, he had told NDTV Profit.

Launched in 2012, Jabong gave tough competition to Myntra before scaling down discounts to focus on its bottom line. It cut down its losses to Rs46.7 crore in 2015 from Rs159.5 crore in 2014.

Jabong's story reflects the ongoing consolidation in the domestic e-commerce industry, where the focus has shifted from raking up higher gross merchandise value (GMV) to profitability.

Earlier this year, the government notified new rules prohibiting marketplaces from offering discounts and capping total sales originating from a group company or one vendor at 25 per cent.

 

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