Troubled fashion etailer Jabong is getting ready to cut its losses and revive growth. The online retailer is getting rid of all low-margin products & non-performing private labels and will instead focus on high-end fashion brands.
The newly minted CEO of Jabong, Sanjeev Mohanty clarified,
“We had spread ourselves too thin and now we are shrinking our portfolio. We are sharpening our positioning and opting out of lower price point brands and labels.”
Realigning their brand positioning
Jabong offered a host of fashion & lifestyle products on its portal including several in-house brands. But the company will now focus on nearly 200-300 premium brands with high-margins. The main aim is to create a new identity and channelize funds to increase revenue, rather than accumulating losses.
Mohanty said,
“We are looking at 40% of the market, which is Rs 750 and above, with focus on the upper mid-priced market to premium and super premium.”
Strategies to cut losses
The rumour about Jabong being sold is refusing to die down. The etailer is trying hard to survive amidst the heavy losses and highly competitive ecommerce industry.
One such effort from their end was reducing discounts, which worked as the company managed to bring down losses. Funds were injected too, but lowervaluation and sales is making it difficult for the etailer to stay steady in the storm.
Will the new strategy to focus on premium brands and distance itself from the low-margin products work for Jabong?
Sreedhar Prasad, Partner at KPMG feels,
“It is good to consolidate the brand portfolio using analytics and understanding of customer preferences. This could even help in a clear value proposition to the customers. Brands need to provide either revenues or margins or variety to the platform.”
Other online fashion stores such as Myntra, Voonik, and Koovs are expanding aggressively. Ecommerce giants Amazon, Flipkart and Snapdeal are there too to give stiff competition to pure fashion etailers. How will Jabong fight in the challenging external and internal environment? Will the hard work pay-off or will they be forced to shut shop?
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