That Amazon’s CEO Jeff Bezos was impressed with the Indian market is no secret now. He even expressed keen interest in further investments to tap into the potential in the country. Little did we think it could mean an acquisition, that too of one of the major fashion portals currently.
The eCommerce space is abuzz with news of talks between Amazon and Jabong – possible acquisition of Jabong by Amazon. According to people in the know about the discussions, it is part of Amazon’s plans to expand its presence in the fashion retail segment.
Although nothing is confirmed yet, there are apparently more parties interested in Jabong, which means the deal may or may not come through.
“After Myntra got acquired by Flipkart, Jabong is the ideal candidate,” said a person who is working closely with Amazon on the negotiation. Jeff Bezos mentioned investment of $2 billion in the Indian market, a significant part of which is apparently meant for acquisitions.
According to Bezos, Amazon India sold products worth $1 billion in a year and they were keen on expanding into the fashion product category. Right now, Jabong is the second biggest online fashion portal in India, the top spot held by Myntra, which was recently acquired by Flipkart.
Industry estimates indicate that Flipkart-Myntra constitutes around 50% of the online fashion retail market followed by Jabong with 25%. It is not yet known if Amazon is coveting Jabong alone or other popular fashion portals like Limeroad and Fashionara.
Getting it right in India is significant for Amazon as its presence in China is negligible compared to Alibaba. Making headway and competing in India is easier than doing so in India.
As per reports from Technopark (retail consultancy), fashion contributes to 25% of online retail sales in India. Add to it the fact that fashion brings in as much as 35% margins or more, it is no wonder that Amazon is eyeing the fashion segment.
Earlier in September, investors Rocket Internet and Kinnevik started merging five of their international fashion e-commerce companies into a single global entity, which includes Jabong. So how the deal will happen is not sure.
Also, this could be the only way for Amazon to take on Flipkart after its acquisition of Myntra.
After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!
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