Amazon takeover Jabong in cards
Amazon the online giant in talks with Jabong, leading fashion online portal for a possible takeover. This move comes after Amazon acquired Zappos, Las Vegas based online shoe and fashion apparel company. A regulatory filing by Rocket Internet, incubated Jabong stated that apart from Amazon, Flipkart also in talks with them. Jabong valued at Rs 3,000 crores (around $500 Million)looking for suitable acquirer.
After Myntra acquisitions by Flipkart for $350 million, Jabong largest fashion online portal valued at $500 million much more than expected. On the other hand, Amazon scouting for suitable partner likes Jabong. According to the latest estimates, Flipkart and Myntra has cornered 50% of the fashion market, while Jabong at second 25%. Amazon likes to be a front runner for fashion, however getting right mix in fashion would be challenging. Online Fashion is one of the fastest growing categories in online world.
On the other side of the globe 5 Rocket Internet incubated, fashion e-commerce portals merged together into group called Global Fashion Group consists of Dafiti (Latin America), Lamoda (Russia and CIS), Namshi (Middle East), Zalora (South Africa) and Jabong. Operated in 5 continents GFG focused on growth markets, covers 23 countries. GFG markets a wide assortment of leading multinational apparels and accessories. It has tailored a selection of private labels and local assortments developed for the markets like India, Indonesia and Mid East to their portfolio of suppliers.
Kinnevik is the largest shareholder, Rocket Internet and Access Industries are other shareholders in GFG.
Rocket Internet, Germany is an investor in Bigfoot I holds 23.5% of the capital. In turn GFG hold 73.2% in Jabong.
Jabong one of the two top lifestyle e-tailers in the country reported gross merchandise value (GMV) of Rs. 509.5 Crores from 3,198 million order for the first half of 2014. Compare to previous year GMV which increased to 3 times. It is inventory based e-tailer, FDI is not allowed.
Earlier in the year, Jeff Bezos, CEO of Amazon committed $2 Billion in Indian operations. With phenomenal run, the company has sold goods worth $1 billion in India. Bezos, also said ‘If there is an opportunity to invest more, we will’ he said.
Amazon had acquired Zappos, in the US. Zappos is leading brand of online shoe and clothing shop. Based on the news of acquisition by Amazon UK based clothing portal Asos shares on rise.
Jabong is looking to drive a hard bargain given the strategic position to Amazon and significance of the deal in India.
The stakes are very high for Amazon, has $ 2 Billion in their money chest would be proving their mettle.