Myntra forcing Jabong to sell private labels despite weak sales?

In an attempt to make higher sales and beat offline retailers, Myntra leveraged private brands. This is also expected to bring in higher revenue as the etailer reduces its dependence on heavy discounts. The etailer plans to do the same for its sister company Jabong.

Sellers on both portals claim that online fashion firm Myntra intends to turn Jabong into a platform for its private labels. HRX by Hrithik Roshan, Roadster and other in-house brands are now available on Jabong too. This makes one wonder about its long-term strategy for survival.

Jabong not happy with Myntra’s plan?

Based on their knowledge of the situation, a senior official of a brand on both Myntra and Jabong said, “Jabong’s team is not happy as the private brands don’t sell much but they (Myntra) are forcing Jabong to list private brands.”

Another seller claimed that there will be more private brands added to Jabong’s platform from Myntra.

Before its acquisition by Myntra last year, Jabong faced major losses that were difficult to cope with. It decided to delist most of its private brands and call itself a premium lifestyle platform. The company managed to bring down its losses making it attractive to many online retail players. Its new owner plans go completely against its loss reducing strategy and this could cost Jabong its profitability.

Jabong maintained an exclusive selection of global and Indian brands. The etailer introduced multiple foreign brands like Next, Topshop Topman, Missguided and Dorothy Perkins to the Indian market.

Upon acquisition, Myntra renegotiated Jabong’s contract with international brands and now also sells these global brands along with its parent company, Flipkart.

Has Myntra robbed Jabong’s exclusivity?

An anonymous Jabong and Myntra seller stated, “The private labels of Myntra have very large portfolios. For instance, if a regular brand has 3,000- 4,000 products, Myntra-owned brands have between 6,000 and 7,000 products.”

In response to this a spokesperson for Myntra said, “… the entire portfolio of our private brands is now available on Jabong, and not just unsold inventory.”

And added, “Jabong private labels will also be available on Myntra in a few months. This is part of our strategy to grow and cross promote our private labels on both platforms.”

A Jabong seller believes that Myntra has taken away its exclusivity title. The seller added, “Before its acquisition, Jabong’s unique proposition was its exclusive tie-ups with international brands. However, since Myntra took over, very few such associations have fructified.”

The Myntra spokesperson informed that its sister firm still has a strong portfolio of foreign brands. Since acquisition, Jabong has partnered with 16 international brands such as Esprit, Forever21, Aeropostale and others. But, none of those are exclusively available on Jabong.

According to the brand senior official mentioned at the start, “They are taking Jabong’s exclusive brands and listing them on Myntra. Exclusive brands are the differentiator and with this, the differentiator goes and there is no reason for consumers to come to Jabong.”

A competitor also sided with the seller saying that moves like these could eventually lead to the closure of Jabong.

Slow sales on Jabong Myntra’s fault?

Apparel brand, The Vanca’s, founder said, “… sales on Jabong have been down since its acquisition.”

Sales for the firm are much higher on Jabong than Myntra, but the latter claimed that this is just how business is and it has no intention of closing Jabong.

The Myntra spokesperson said, “There is a 30% customer overlap between Myntra and Jabong, which enables us to have access to a wider customer base through both platforms.”

But, everything’s not that bad at Jabong right?

According to reports, after Jabong’s acquisition the etailer saw a 50% hike in profits. It is expecting 40% growth during 2017-18. The etailer said it will invest in creating awareness about its brand. The ecommerce company also has plans of going offline to expand its presence in the retail market.