The acquisition of Jabong by Flipkart unit Myntra appears to be a marriage made in heaven. Jabong and Myntra are India’s two biggest online fashion retailers.
Though they will continue to run separately, the $70 million deal allows Flipkart, India’s biggest e-commerce company, to boost market share in fashion — the second largest e-commerce vertical after electronics — and become the one-stop destination for online fashion in India.
Smaller online fashion retailers now face two challenges. One, they have to deal with a formidable competitor, two, they risk a severe funding squeeze. Investors will be reluctant to part with money to compete with a combine that boasts superior brand recognition, logistics, customer experience and deeper pockets.
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“With a formidable competitor in the fray, companies imitating Jabong-Myntra won’t get funding and will have little option but to shut shop,” says Sandeep Ladda, leader, technology and e-commerce, PricewaterhouseCoopers (PwC).
Already, a clutch of online fashion retailers such as Fashionara, Freecultr, Zovi, Fashion and You have either shut down or are on the brink.
Does that mean this is the end of the road of the small companies? Not necessarily. Online fashion retail in India is vast and diverse at that with 839 startups vying for a slice of a growing market, according to startup tracker Tracxn.
The Indian apparel and fashion market is worth around $150 billion and online retailers have merely scratched the surface, according to consultancy KPMG.
Jabong-Myntra’s Narayanan says despite its formidable size, there is room for multiple players to grow. India is a diverse market and no single player will dominate fashion.
(Source: The Economic Times)