Flipkart to control 70 per cent market share post Jabong buy

The acquisition of Jabong by Flipkart is a win-win situation for the e-commerce giant. It will now get to control almost 70 percent market share in India’s growing online apparel shopping segment. Jabong controls 25 percent of the market. Together, Myntra and Flipkart hold 45 percent of the fashion e-commerce market.

Even though Jabong has been making losses, its revenues grew 14 percent to Rs 240 crores in the first three months of this year, and it even managed to narrow its operating loss. The revenue numbers of the previous financial years show that Jabong was bigger as a marketplace compared with Flipkart-owned Myntra. The fashion e-tailer put in more money during the year ended 31 March 2015. Myntra’s revenues rose 70 percent to Rs 746 crores but its expenses climbed at twice that speed during FY15 due to employee compensation and an increase in inventory. Also, wage bills grew five times to Rs 210 crores, and was bigger than what it spent on advertisements. Staff expenses surged due to a 30-fold jump in stock-based compensation. Meanwhile, Jabong as a marketplace doubled its revenue to Rs 1,083 crores but bled far less in the same period.

As a marketplace, Jabong is bigger than Myntra but the latter seems to be far bigger in selling products from the in-house vendor. In order to comply with foreign investment norms in e-commerce, both the firms have separated what would be their internal vendor.