We’re thrilled welcome Jabong to the Flipkart family: As we all know that, Flipkart is the India’s most famous online shopping portal and it is the one of those companies that never stays out the minds of people because of its amazing services and exciting offers. Recently, Flipkart had a deal to compete with its main competitor Amazon. The deal is that Flipkart’s Myntra acquires most famous online fashion portal “Jabong” from its parent company Global Fashion Group in just $70 million. In the online shopping portals, Jabong created its own image and it becomes a fastest growing company in just a few years.
We’re thrilled welcome Jabong to the Flipkart family
The deal makes sense for Flipkart as it is now in a relationship with Jabong, according to the Facebook status of Flipkart and it looks that Flipkart is very excited with the deal as it tweets that “We’re thrilled to welcome@JabongIndia to the #Flipkart family. Here’s to a strong relationship and bold endeavors!”
The deal is cracked in a very low price, but another thing is that Aditya Birla Group valued the company at the half of price Flipkart paid in Jabong. The valuation of Jabong had fallen to $500-800 million. Jabong is very reputed company that gave a run for its money in terms of sales. The company started losing its worth as the funding was dried up.
But now the question is why Flipkart bought a company whose valuation is on a great fall. It is an obvious reason that Flipkart is seeing profitability in the deal with Jabong, but what is the actual strategy behind it no one knows. But now Flipkart is on a run with the deal to compete with its competitor Amazon.
— Flipkart (@Flipkart) July 26, 2016
Flipkart also helped Myntra at the time of its acquisition with a value of $100 million. The valuation of Jabong was gone down because of big leaders of online shopping like Amazon and Myntra. Before the deal with Flipkart, Jabong was posting a loss of Rs. 415 crore on the revenue of Rs. 933 crore. In these days, the valuation of Flipkart is being written down by its investors and acquisition of loss making company also make the valuation down of Flipkart. If the deal of Jabong would not going to be productive for Flipkart then there will be a huge loss in the valuation.