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Flipkart Shuts Down Jabong In Order To Strengthen Myntra

Pritish raj by Pritish raj
February 5, 2020
in News, Startup
2 min read
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Flipkart Shuts Down Jabong In Order To Strengthen Myntra
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Jabong has been officially shut down by Walmart-owned Flipkart to concentrate on its luxury apparel marketplace Myntra.

In July last year, Flipkart had said it had started cutting a significant portion of its marketing budget in Jabong and redirecting users to Myntra by providing incentives.

The Indian clothing market will be worth $59.3 billion by 2022, making it the sixth-largest marketplace in the world compared to the UK and Germany, according to data from McKinsey’s FashionScope.

In May 2014, e-commerce giant Flipkart had both purchased the Myntra apparel e-commerce site. Then Myntra purchased Jabong in July 2016 in a transaction estimated at $70 Mn. Soon after the November 2018 acquisition of Walmart, Flipkart merged Myntra and Jabong which resulted in the laying off of 150 employees.

“Jabong’s acquisition further strengthens the position of Flipkart Group as the undisputed leader in India’s fashion and lifestyle segment,” Myntra had said in a later statement.

After the acquisition, Myntra and Jabong had already merged their key business functions and simplified the operation. The businesses have intended to combine all of the remaining roles, including infrastructure, communications, division, sales, finance, and creative teams.

The recent development comes after a June 2019 announcement that Flipkart is cutting ad spending on Jabong and also redirecting users to Myntra with more lucrative rewards.

The 2019-2020 financials would have shown the extent to which those costs would be cut. Flipkart also took a $290 Mn non-cash impairment in November 2019, due to the trade name of Jabong. In addition, in the third quarter of FY20, Jabong’s value had been that.

Nonetheless, the FY2019 regulatory filings at the end of March 2019 reveal that Jabong has decreased its expenditure by 6.4%. Meanwhile, the company’s revenue also increased by 30 per cent, leading to a loss reduction of 2.8 per cent. Jabong noted revenue growth of 104 per cent year-on-year, representing INR 41.87 Cr in FY19. The company recorded a disappointing loss of INR 22.41 Cr in FY19, compared with FY18’s INR 35.9 Cr profit.

As per web traffic and market intelligence firm SimilarWeb, Jabong’s app downloads had dropped by 12.71% in December 2019, along with this the usage of the app was declining as well. Meanwhile, Jabong’s daily active users also fell by 10.61%. Myntra, on the other hand, noted a 41.18% rise in downloads and a 31.87% increase in daily active users.

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Pritish raj

Pritish raj

Pritish Raj is a content writer at Next Big Brand. Hailing from the diversified state of Bihar, he is an engineer by education who chooses the way of poetry, photography, and writing to kick off his career. Highly enthusiastic about brands and startups, he aims to be a travel content creator.

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