Flipkart shook the online fashion industry by acquiring Myntra in May 2014. They have managed to do the same yet again by buying Jabong in July 2016.
This IOS article points out how the possibility of Flipkart towering over online marketplaces Snapdeal and Amazon is high. But with nearly 60-70% of the online fashion market share in Flipkart’s hands, small etailers too may find it hard to sustain their business.
From rivals to partners
Until few days ago, it was Myntra VS Jabong. The new partnership has changed that. Exclusive fashion players like Limeroad, Voonik, Koovs, Ajio, Abof, and Cliq overnight woke up to find one dominant player that now has the power to control 70% of the online fashion industry.
Flipkart’s massive reach combined with Jabong’s premium brands and Myntra’s private labelswill make it difficult for new entrants and fashion startups to compete. The trio can now offer a wide range of products at best possible prices and discounts, which will force other e-fashion portals to increase their marketing and promotion budget.
Sreedhar Prasad, Partner – Management Consulting at KPMG India shared,
“This will give them (Flipkart, Myntra and Jabong) a lot of bargaining power with the sellers and the sellers will, in turn, have to adhere to their conditions because about 70% of the online fashion market is with them… This could give them significant bargaining power with sellers and media buyers.”
Differentiate or consolidate to stay afloat
One of the top trends of 2016 is consolidation. And Flipkart-Jabong merger proves that forming strategic partnerships is key to survive in this highly competitive ecommerce industry.
Experts believe that those who don’t want to integrate with other firms will have to find ways to differentiate their product offerings.
“In this category, the niche and specialised players will continue to grow if they are well differentiated and maintain customer experience. However, rapid growth in this category may become difficult since about 70% of the market will be with one player, which will get a large share of the trigger-based or impulse purchases,” reasoned Prasad.
Will Jabong be Flipkart’s guinea pig?
The ecommerce biggie experimented with app-only platform through Myntra, which didn’t sit well with buyers. Flipkart was keen on becoming an app-only online marketplace but had to change its plan and also re-launch Myntra’s desktop site.
Will Flipkart repeat the same strategy with Jabong? The ecommerce leader got hands on the fashion etailer at a discounted rate of $70 million. It can try out new business strategies to lure more customers. But will Flipkart be able to utilize its fashionable advantage effectively? Or will Jabong (with heavy losses and pending governance allegations) add to the marketplace’s existing burden?