Leading fashion marketplaceJabongis searching high and low tofind someone to buy its business, say reports. The company is finding it difficult to keep the sales up without the discounted model. This could be a reason why Rocket Internet and Kinnevik, Jabong’s main investors are trying to quit India.
“They just want to park the company somewhere, find a home for it,”says a personfamiliar with the proceedings.
The company has devalued itself from $1 billion to $100 million, but no one is biting. Recently Kishore Biyani’sFuture Group purchased Rocket group’s FabFurnish, but declined to pick up Jabong as well.Rocket Internet wanted Future to take over Jabongas well, but Biyani did not oblige.
Losses fall, but sales fall too
The company was able tobring down its lossesby roughly Rs. 112.8 crores after curbing its discounts. However, the rate ofsales also droppedby 7%. Its GMV has also fallen, admitted the companyin a statementto investors,
“Increased focus on gross profit margin, unit economics and overall profitability resulted in net revenue and GMV decline in Q4.”
CEOSanjeev Mohanty says,
“Jabong is bringing in a very frugal culture and operating like how a good retail offline business should operate.”
These factors could be rendering Jabong an unattractive proposition to prospective investors. Thecompany had talkswithAmazonin 2014 to buy Jabong, valued at $1.2 billion, but it did not work out.
It alsoheld discussionswithPaytmandSnapdeal, none of which appear to have worked out.
Someexperts are suggestingthat Jabong bring down its asking price even more, or add to its bank balance. The prospects sound worrying, but if Rocket wants someone to adopt Jabong, it might have to end up pandering to the market demands.