Flipkart snubs Jabong; to prioritize Myntra instead

Flipkart snubs Jabong; to prioritize Myntra instead

Summary:

  1. Flipkart announced that they will be focusing on Myntra, Jabong users will now be redirected to Myntra’s website
  2. Lack of a long-term strategy, marketing & supply chain efficiency and sharpened focus in the fashion retail segment are amongst the main reasons behind this snub
  3. This move comes after Flipkart’s mega-acquisition of Jabong in 2016 for $70 million

Reports at ET have revealed that Walmart-owned Flipkart has decided to shut-down its recently acquired online fashion e-commerce portal, Jabong, citing strategic difficulties to be the cause. Ever since Jabong was acquired in 2016, Flipkart was unable to incorporate and streamline Jabong and Myntra from the point of view of logistics and marketing. In 2019, Flipkart reduced Jabong’s marketing spend and complementarily offered better incentives to customers at Myntra, thus eliciting an affinity towards the latter.

Jabong also faced a considerable decline in terms of customers using their platform, which ultimately led to a dip in traffic, purchases and consequently revenues. As per a well-established market research firm, Jabong’s app downloads and daily active users plunged by 12.71% and 10.61% respectively in December 2019, thus recording a loss of INR 22.41 Cr in 2019, as compared to their INR 35.9 Cr profit of 2018. All of the above statistics coupled with a lack of strategy culminated into the demise of Jabong, who once registered a $66 million gross merchandise value in sales in 2016.

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