![](\"..\/images\/spacer.gif\"){kind=spacer}
Nivedita Mookerji, Business\nStandard\n<\/i><\/p>\n
Nivedita Mookerji, Business\nStandard
\n<\/i><\/p>\n
New Delhi, 27 July 2016<\/i><\/p>\n
Nivedita Mookerji, Business Standard New Delhi, 27 July 2016 More than two years after Flipkart founders Sachin Bansal and Binny Bansal had announced acquisition of fashion portal Myntra at a high-street restaurant in Bengaluru, the action shifted to New Delhi’s Connaught Place for a similar deal on Monday night. While the Bansals had bought Myntra […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-2987","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n![\"\"](\"..\/images\/myntra-acquires-jabong.jpg\")
More\nthan two years after Flipkart founders Sachin Bansal and Binny Bansal\nhad announced acquisition of fashion portal Myntra at a high-street\nrestaurant in Bengaluru, the action shifted to New Delhi’s Connaught\nPlace for a similar deal on Monday night. While the Bansals had bought\nMyntra for $300 million in May 2014 to go strong in fashion, they have\nacquired German investor Rocket Internet-backed Jabong for $70 million\nto stamp out competition in the high-margin fashion space.
It’s\na wise deal, according to analysts, as fashion is increasingly turning\nout to be the route to money-making, profitability and success for\nonline players. Not a surprise then that well past dinner time, at\naround 11 pm, the large conference room of Khaitan & Co, legal\nadvisors to Flipkart, turned into a party place where congratulatory\nmessages came thick and fast. The deal that promises to make Flipkart a\nleading force in fashion segment — estimated at about Rs 3 lakh crore —\ncame after hectic weekend parleys. About 12 persons representing legal\nteams, merchant bankers and advisors agreed on the deal while the\nBansals called in to say “well done”.
If in 2014, Flipkart had\nscripted the Myntra deal with an eye on competition from Amazon, this\ntime too it is believed to have kept the same rival in mind. Vinay Joy,\nassociate partner at legal firm Khaitan & Co, said the deal was all\nabout synergy at a time when Amazon is trying to grow strong in fashion\nvertical and entering new categories. Recently, Amazon announced fresh\ninvestment of $3 billion and the global giant has often said that it\nhas an open cheque book for India. Consolidation in the space makes a\nlot of sense as “Flipkart will become the go-to site for fashion,” Joy\nadded.
Flipkart CEO Binny Bansal stated that the company has\ncreated the biggest fashion shopping destination through acquisition of\nJabong, a portal that has been on the block for long. “Myntra and\nJabong are all set to define the next generation of online shopping\noffering the best of brands to Indian consumers,” according to Bansal.
Devangshu\nDutta, chief executive at consultancy firm Third Eyesight, reasoned\nthat the internal DNA of Jabong and Myntra were more\nmerchandise-oriented than trading-oriented, a differentiation that is\nof significance to go big in fashion. The fact that fashion is a\nhigh-margin sector would mean that any player doing well in this space\nwould make money that much quicker, he said. The margins in fashion\ncould go up to as much as 50 to 60 per cent in case of own labels and\nat least in low two digits in other formats of fashion, Dutta pointed\nout. In contrast, margins in electronics are at low single digit.<\/span>
Kunal\nBahl, CEO of Snapdeal, which was seen as a frontrunner in the race to\nacquire Jabong, however, told Business Standard in a recent interview:\n“I look at net margin; fashion in India is also sold with plenty of\ndiscounting. Selling shoes on a deep discount is like selling mobile\nphones.” Snapdeal already has a fashion portal Exclusively.in under its\nbanner.
It may take a while for Flipkart plus Myntra plus Jabong\nto beat physical retailers which are strong in fashion space, but as\nArvind Singhal, founder, Technopak, summed up, with the latest deal,\nFlipkart has prevented Jabong from turning a threat if it was to be\nacquired by a powerful player. “It’s a very intelligent deal,” said\nSinghal.
\n
\n<\/span>(Published\nin Business\nStandard<\/span><\/a>)<\/i>\n<\/p>\n","protected":false},"excerpt":{"rendered":"