Amazon To Acquire Jabong In A Deal Worth $1.2 Billion

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BANGALORE: E-commerce space is booming and it has changed the face of retail, services and other things that make our economy work, reports FirstPost.com



Now the latest news is Amazon is planning to acquire Jabong in a deal worth about $1.2 billion. This would be the biggest acquisition in the history of the Indian e-commerce. While Flipkart and Myntra deal acquisition was around $340 million.



According to a report in VC Circle, Amazon would keep Jabong as a separate property post the acquisition, which would be on the lines of Amazon's acquisition of Zappos in the U.S.



"It is not immediately clear how the deal would be structured as Jabong is an inventory-based e-tailer, where foreign investment is not allowed at present. But others point out that if Flipkart can buy Myntra, Amazon can seal this deal too with some careful structuring, especially if Rocket Internet, Kinnevik and others can pour in money into Jabong," the report added.



At present, Flipkart and Myntra has a combined market share of 50 percent, while Jabong controls 25 percent of the market and Fashionara, Limeroad.com and Zovi, the rest.



Jabong had reported a gross retail value of Rs 509 crore from three million orders in the Q1, Q2 period of this year.



"E-commerce firms are focusing on fashion as a category because it has a huge potential for top lines and margins. Flipkart bought Myntra for the same reason. I think Amazon wants to replicate that. There are very few players in fashion e-commerce, hence the premiums likely to be charged," said Technopark's Arvind Singhal.



Amazon has also a tie-up with Aditya Birla owned fabric and ready-mades brand Grasim to retail Grasim’s readymade shirts on its marketplace. It also partnered Label Corp that operates several celebrity endorsed private labels. And In October it signed a strategic alliance with Future Group to sell products from Future Group’s portfolio of 40 fashion brands.



Praveen Sinha, founder of Jabong said that Jabong had sold goods with Gross Merchandize value of Rs 150-160 crore and the e- commerce company maintains to be the largest online fashion store in India.



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