 "Why Jabong thinks merger with Flipkart may not have paid off for Myntra")
New Delhi: This may not sound pleasant to Myntra’s ears. Jabong’s founder Praveen Sinha doled out some advice to its closest competitor, saying that Myntra’s merger with etailing giant Flipkart may not have been beneficial to the former in every respect.
Speaking to CNBC-TV18, Sinha said any merger has advantages as well as disadvantages. “The advantages are investments which come due to this and some backend synergies. But then, becoming part of a general merchandiser can dilute focus. We at Jabong are strong from an investor perspective and also because of undiluted focus on fashion.”
There have been media reports earlier of Amazon being interested in an acquisition of Jabong but Sinha denied any plans to look for a merger or being acquired by a bigger merchandiser.
He emphasised that Jabong does not really need funds immediately and also claimed that his company “achived leadership in online fashion space last year itself. The focus now is on making the business sustainable and profitable”
Jabong raised $100 million dollars from existing investors in its last round of funding in December last year. Sinha said his company is well funded as of now though it continues to see interest from potential investors. “We are well funded as of now. But we are not closed to further investments, neither are we seeking any actively as of now”.
He said in just one month, December 2013, Jabong sold goods with Gross Merchandize Value (GMV) of Rs 150-160 crore, but declined to provide current GMV sales. Jabong claims it is the largest online fashion store in India. A story in Mint newspaper earlier this month said Jabong reported revenue of Rs.438 crore in the year to March 2014, making the company one of the five biggest e-commerce firms in India, in terms of sales and value. In the same period, it posted a loss of Rs 293.4 crore.
Earlier this month, many enthusiastic online shoppers were disappointed with delayed or aborted deliveries of their purchases during the Flipkart Big Billion Day sale on 6 October. Many also felt cheated about huge discounts being advervtised but then products not being available during the sale period. Even Diwali saw many disappointed online customers as deliveries took longer to reach and in some cases, never reached.
Sinha had a simple solution for this pain: all etailers should come together and build an infrastructure highway for improving delivery mechanism.
He also claimed that Jabong saw 250% increase in Diwali sales and a 100% jump in sales in October versus September but Jabong still managed to reach over 90% order fulfilment rate. Sinha said two strategies helped" Jabong did not consciously use the big courier/logistics companies and shipped only 30% of its merchadize through these companies, using smaller ones like GoJavas and Delivery for faster, more efficient deliveries.
Also, Jabong stopped taking orders after a certain peak was reached so that deliveries remained manageable. Will competitors also rein in their greed and stop taking orders to ensure customers remain satisfied? Seems like a tall order.
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