Performance by Jabong over the years – loss making enterprise or money spinner?
In the online fashion retail, Jabong has always been a dark horse. The company has had a tumultuous ride since its inception in 2012. The ownership has changed hands, it came to the verge of closure multiple times, faced cash crunch, but finally seems to be on terra firma now.
BT charts the company’s journey and its hits and misses.
The journey so far
- 2012 – Company takes birth – Jabong was founded by Praveen Sinha, Lakshmi Potluri and Arun Chandra Mohan in 2012. It was launched as a fashion and lifestyle portal. Its popularity spiked very quickly compared to peers. It ranked second in a 2013 ComScore survey on high traffic. The company recorded a net revenue of Rs. 4 crores.
- 2013 – Income goes up, losses come down – In a promising development, the company reported a rise in revenue to Rs. 202 crores, and a net loss of Rs. 16 lakhs.
- 2013 – Ranks ahead of Amazon in number of unique visits – According to a ComScore study, Jabong stood third in the number of unique visitors to its site.
- 2014 – Increasing number of customers – The company’s customer base kept growing at a steady pace with women’s apparel the highest contributor to the equation. The number of brands on the portal also grew.
- 2015 – Merges with the Global Fashion Group – The company was in talks with leading online marketplace Amazon for a possible takeover in 2015, but the deal did not work out. Instead, it got a sweeter deal when it became a part of the Global Fashion Group (GFG).
- 2015– Hits record sales, but profits continue to elude – Jabong raked in Rs. 1083 crores in revenue, but its losses grew proportionately.
- 2016 – Gets capital but devalued – Investor Rocket Internet gave the company a shot in the arm with funds, but devalued it by 68%.
- 2016 – Records profits – The company managed to make gross profit for the first quarter of 2015. Then CEO Sanjeev Mahanty said that the company undertook a series of measures including – regularising the prices, updated the stock to hold only new items, and removed low cost brands to focus on profitable brands.
Present day – merger with Myntra and the turn of fortune
Despite the rosy picture the company continued to paint, Rocket Internet had been wanting to give Jabong away from a long time. While it managed to sell off FabFurnish (to the Future Group), no one wanted the loss making fashion enterprise. After a long series of unsuccessful takeover talks with Snapdeal, Flipkart owned Myntra purchased Jabong in July 2016. Subsequently, Myntra planned to combine its revenues with Jabong to ensure quicker growth.
Jabong retained its individuality despite the takeover, and had its own sale idea during the festive sale. While Flipkart held its annual Big Billion Days sale, Jabong launched ‘You are the festival’, a sale to celebrate the shoppers, a few days after the big names concluded their first round of sales. Encouraging shoppers to ‘Be you’, the company launched an extensive ad campaign to popularise the sale.
Things looking good
Jabong recorded a 50% increase in its month on month profits in October. CEO Ananth Narayan (who helms both Myntra and Jabong) gave credit to the joint operations for the success.
He said, “Synergies with Myntra as well as cross-learnings between the companies have helped accelerate customer acquisition and better customer experience.”
While rumours abound that Flipkart might shut down the company, the former has confirmed that Jabong will go full steam ahead. What do you think about Jabong’s future prospects? Let us know in the comments section. If you need any help with managing your ecommerce business, drop us a line. Browntape is India’s largest ecommerce services provider, and we can help you manage your business.