Success and Failures of an Indian fashion eCommerce portal: Jabong
Jabong is an Indian fashion and lifestyle eCommerce portal founded by Praveen Sinha, Lakshmi Potluri, Arun Chandra Mohan and Manu Kumar Jain. It is headquartered in Gurugram, India and was launched in January 2012. Jabong sells apparel, fashion accessories, beauty products, fragrances, home accessories, and other lifestyle products.
Jabong’s launch was during the early days of eCommerce growth in India. Jabong was confident enough about their potential to beat the competitors. They introduced the right brands on their platform, mostly those that were not available offline in many parts of the country. They worked with user-friendly features like express delivery; 30-days return policy and open box delivery which gave them better customer experience. And, finally, they indulge themselves in fashion curation and thus came closer to the fashion community.
Jabong’s revenue grew from Rs 4 crore in FY 2011-12 to Rs 527 crore in FY 2013-14. Jabong also entered into an exclusive partnership with international brands. Various partnerships like one with Nike also contributed to the success of Jabong in the Indian market. Jabong was able to capture 1000 brands with a variety of products to sell on its website.
Jabong follows both inventory model and a controlled marketplace model. In the inventory model, products from the brands were stored in the Janong’s warehouse. In a controlled marketplace model, Jabong takes care of the fulfillment, customer service, and refunds, if any. Currently, 90% of the company’s budget is going towards digital medium and rest 10% on TV and OOH.
In the early years, co-founders Manu Jain and Lakshmi Potluri left the company and in the recent years remaining co-founders also left Jabong. Things were not good for Jabong as revenue wasn’t keeping pace. In June 2015, Janong’s losses were turned up to be Rs 227 crore. It was clear that Jabong was in trouble. The only solution of cutting loses for Jabong was figured to be a sellout.
Snapdeal, Aditya Birla Group, and Future Group were the top contenders in claiming Jabong but Flipkart got the deal. Global Fashion Group, the umbrella company that runs Rocket Internet’s fashion businesses ensured that Flipkart’s interest in Jabong never leaked out, showing how both parties were keen on closing the deal. The deal might not have an immediate impact on Flipkart’s turnover but it ensured that the competitors didn’t get the advantage. In July 2016, Flipkart acquired Jabong through its unit Myntra for about $70 million.
Even after Flipkart acquired Jabong in 2016, it seemed to be standing strong. It is no doubt that Jabong had a strong brand value among fashion enthusiasts and had a loyal customer base. But Jabong’s value dropped dramatically, due to multiple factors like leadership issues, market share losses, and a funding crunch. Well, Jabong is a clear example that just pumping money into the business is not enough to ensure it’s a success. eCommerce business has to be done on fundamentals and focused on sustainable metrics.