As the style keeps changing, clothing industry remains a higher margin, fast growing and evergreen business.
American online retail giant Amazon is planning to buy the fashion portal Jabong.com as its first acquisition in India for $1.2 billion as reported by VCCircle.
Jabong is backed by Rocket Internet, which had incubated the company and invested $500 million in it. Besides Rocket Internet, Swedish investment firm Kinnevik and UK’s development financial institution CDC own stakes in Jabong.
In India, Flipkart and Myntra combination is bigger force in clothing industry than Amazon plus Jabong as Flipkart and Myntra is having more than 50% market share while Jabong is having only 25% market share. Share of amazon is minimal in clothing segment.
This is supposed be a strategy by Amazon to counter the rival Flipkart’s move after it acquired Myntra for INR 1800 crore deal in May.
According to the VCCircle report, Amazon could keep Jabong as a separate property after the acquisition.
During his visit to India, Jeff Bezos, CEO of Amazon said that he was excited about the potential of the fashion industry in India and also announced that Amazon will invest $2 Billion in India.
Jabong was founded in 2012 by three co-founders – Lakshmi Potluri, Praveen Sinha, and Arun Chandra Mohan. More investors joined in over the next year, including Manu Jain and Mukul Bafana. The company has more than 1000 brands on its catalogue and its annual sales was about US $300 million in the last financial year, calculated by gross merchandise value.