Leading online fashion retailers Jabong is planning to migrate to the marketplace model in the light of the recent DIPP rules (a single seller cannot sell more than 25% of the marketplaces’ total sales). A reliable source has confirmed that the company’s plans are an attempt to be legally compliant to enable a merger with Snapdeal. According to the source,
“Given Snapdeal is a pure marketplace, buying an inventory-led business with foreign capital would have invited trouble from the government.”
Jabong now has a total of four sellers, including the newly created Ravenna Fashion Pvt. Ltd, Wearhouse Products Pvt. Ltd, Bren Trading Pvt. Ltd apart from the existing Xerion Retail. Sanjeev Mohanty, CEO, said on the developments,
“We look forward to onboarding more sellers and customers, while enjoying good and equal working partnerships with all parties. We have no comment to offer in relation to speculation regarding a sale of the business.”
Complying with the law by hook or crook?
However, the new setup is stage managed by the company, said a reliable source, requesting anonymity.
“These sellers have largely been identified and floated by the company and continue to work on the same terms and conditions as they were working with Xerion before,” said the source.
The observations are based on details available with the Registrar of Companies (RoC). One of the directors of Bren Trading, Sanjeev Dhull was also director of Xerion. Likewise, Wearhouse Products is indirectly controlled by Xerion.
Jabong’s parent companies Rocket Internet and AB Kinnevik have been attempting to sell the company off from sometime. However, these attempts have been largely unsuccessful.
Snapdeal on a shopping spree
The leading Indian ecommerce marketplace has been trying to add more members to its family. It was undertaking attempts to buy GoJavas, but due to differences on the price, the deal did not work out. IOS had reported that Snapdeal was contemplating buying Jabong. If this deal works, both Jabong and Snapdeal will heave collective sighs of relief.