Friday 30 October 2015

What’s up with Jabong –turning profitable or being sold?

https://jackworldsapart.wordpress.com/tag/jabong-com/
When it comes to fashion etailers, Jabong and Myntra were the two names that were featured regularly. Although at present, Myntra along with Amazon Fashiontake the maximum space in the online fashion world. Whereas, Jabong has left us wondering where does it stand now?

Things were looking up after integrating with GFG

In April 2015, Jabong was integrated into the Global Fashion Group (GFG), which is formed with five Kinnevik and Rocket-Internet backed online fashion startups operating in various emerging markets such as Russia, America, Middle-East, and Australia. Soon after the deal, the fashion etailer appeared to be positive about achieving profitability.

Jabong owners GFG in talks with Paytm & Snapdeal

However, by September end, the news about GFG looking to sell Jabong came out. Few reports suggested that Jabong’s owners are in talks with Snapdeal and few others hinted at a possible deal with Paytm.
It was believed that Jabong is losing its market and hence the owners feel it is best to sell it to one of the established online marketplaces akin to Flipkart-Myntra collaboration.

Then comes the declaration – ‘Jabong will be among the first Indian e-commerce firms to turn profitable’

Looks like, it was too soon to write-off Jabong. Nils Chrestin, CFO at Global Fashion Group (GFG) and interim Chief Executive at Jabong has confidently declared, “Jabong will be among the first Indian e-commerce firms to turn profitable.”
He also dismissed all the reports about selling Jabong by saying, “In general, there is lot of speculation in the market. The truth is that we are finalizing the transition to a new management team and we have sufficient capital available from GFG for Jabong to grow its business.”

What changed?

Chrestin agreed that Jabong went through a transition period, primarily triggered by the change in management and founder members resigning. This resulted in drop in sales and the pressure on the fashion etailer to cut down losses kept mounting. But, he is positive that by Diwali, Jabong will regain its lost market position.
Speaking about the same with Livemint, Chrestin said, “We went through a transition period and it is coming to an end now and this Diwali, we will shine a new light on Jabong. It will be a prosperous period post this Diwali with a new management team and fresh capital. We have a multi-year view. We are not trying to maximize some short-term valuations by throwing about GMV numbers for an exit.”
Another major strategic change that the company has implemented is focusing on building a sustainable and profitable business rather than GMV. Chrestin is of an opinion that ‘GMV is complete nonsense’ and added,
“It (GMV) is not a number anybody would focus on if you want to build a sustainable and profitable business. If you want to get a real sense on how they (ecommerce companies) are doing, ask them to give you the real revenue and not the GMV. If I were to focus in GMV, I could double my business immediately.”
We like the fresh, renewed energy around the new Jabong. Will the strategic changes work? We’ll know that when Diwali comes. Until then, let’s hope that Jabong comes back with a bang.

No comments:

Post a Comment