Flipkart beats Snapdeal to buy Jabong for just $70Mn!

combo-jabong-myntra

Flipkart has just snatched Jabong from under Snapdeal’s nose. While the startup world was abuzz with the problems marring Jabong and how it was supposed to eventually fall in either Flipkart or Snapdeal’s kitty, Snapdeal was ahead in terms of the odds of the deal going through. What sent the social media world in a frenzy was the sudden news of Flipkart acquiring Jabong through Myntra.

Acquiring Jabong will not only strengthen Flipkart’s presence in the online fashion e-tailing business but will also provide the much-needed respite. The downfall of Jabong can be understood by its drastic fall in valuation. A company that was worth $508 Million in December 2013 has been sold off for $70 Million. A drop of more than $400 Million in under three years is alarming, to say the least. If one was to consider this event in isolation, there is a high probability that 90 out of 100 people will feel that the startup bubble has burst.

Kinnevik and Rocket Internet would be more than happy to have finally seen out the deal which was ‘on the verge’ of happening for more than a year. While the heavy cut would have hurt them, the ability to sell would have made them feel better about themselves. While this move will give Flipkart an upper hand in the online fashion space, the continuous onslaught by Amazon India is still hurting them big time.

“The acquisition of Jabong is a natural step in our journey to be India’s largest fashion platform. We see significant synergies between the two companies, especially on brand relationships and consumer experience” – Ananth Narayanan, CEO of Myntra said.

While Flipkart might believe that it can move ahead of Amazon by forming a niche in the online fashion space, a move which will be lauded by many but might not contribute much to be able to defeat Amazon in the long run. Amazon doesn’t have a hold in the fashion business but focusing on the niche in such a competitive marketing where everything is sold and bought, it will be difficult to sustain the pressure.

With Amazon Prime coming to India at a rate which will look affordable to most of the people, the whole Amazon experience is bound to go up which will easily reflect on the number of sales Amazon makes per month.

It will be interesting to see where all of these e-commerce giants go from here. Also, SnapDeal’s loss has certainly been Flipkart’s gain. The way things unfolded, it is a perfect example of how fast the startup world moves and waiting a minute to think might make you lose out on an opportunity which has the capability of completely transforming your startup.

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