Amazon Jabong acquisition

E-commerce giant Amazon plans to take over Indian online retailer Jabong.

American e-commerce stalwart Amazon may be buying Indian online fashion retailer in a deal worth$1.2 billion. It has been reported that the acquisition, backed by Rocket Internet, will take place as to counter its Indian rival Flipkart’s take over of fashion e-tailer Myntra in May 2014 in a stock and cash deal worth $2.9 million.

Amazon Jabong acquisition

Besides Rocket Internet, which is one of the world’s largest e-commerce focused venture capital (VC) firms, other firms that own stakes in Jabong include Swedish VC firm Kinnevik and British development finance firm CDC.

Owing to its acquisition of Myntra, Flipkart dominates 50 percent of the online retail market. Apart from Jabong’s market share of 25 percent, Zovi and Fashionara are other emerging players that have a hold over the rest of the market.

As per reports, Amazon may adopt the same strategy as the Flipkart-Myntra deal and retain Jabong as a separate entity, if the deal is finalized. The trend of acquiring online fashion retailers can be attributed to the fact that there are very few players in the sector in India. Curremtly, the Indian online retail market is reportedly projected to reach $32 billion by 2020.

Founded in 2012 by Lakshmi Potluri, Praveen Sinha, and Arun Chandra Mohan, Jabong houses over 1,000 brands and had churned out an annual sales of $300 million in the last financial year. The e-tailer garnered more investors joined in over the next year, including Manu Jain and Mukul Bafana, who joined the very next year. However, Jain left the company to join Xiaomi in 2014.

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