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Amazon intends to counter Flipkart’s Myntra with acquisition of Jabong

With recent flash sales across Flipkart and Snapdeal, Amazon has been worried of losing the hold of the market in India. The Seattle based giant has been head hunting for new investments that could bolster its presence in the country and now has found a potent weapon in Jabong, the fashion e-tailer to counter Flipkart’s fashion arm – Myntra.

Jabong, which now is a part of a global merger of other emerging fashion start-ups entitled Global Fashion Group (GFC) with merger value estimated at around 2.7 billion euros or Rs 21,000 crore. The German venture capitalist Rocket Internet with the Swedish investor Kinnevik, who hold 21.4 per cent of stake in the website have been quite active in support of the fashion e-tailer, after the big announcements of investments by Flipkart and Amazon in near past.

With Myntra and Flipkart eating over 50 per cent in fashion retail combined, Jabong comes second with around 25 percent. Jeff Bezos of Amazon told media during his last visit to the country that they are going to invest close to $2 billion in the country with major of the capital going to acquisitions.

According to recent industry reports, Jabong is valued at around $500 million (Rs 3,000 crore) and is holding out as it wants Amazon to pay atleast $700 million to acquire its services. With Myntra going for close to $350 million, the fashion portal is really fancying its chances. Amazon will have to do away with a good portion of its $2 billion war chest if it is planning to acquire Jabong.

No one from the said companies is talking to media regarding the sale but Jabong’s sale will be a desirable one for Amazon. With fashion retail accounting for major chunk of 25 per cent in the industry sales and gross margin around 35 per cent, the e-commerce giant will be more than happy to dole out money if the end result is a beneficial one.

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