Is Amazon buying Jabong to steer-clear competition?

American e-retail giant Amazon is said to be in preliminary talks to

acquire India’s leading online player Jabong, on the lines of Flipkart acquisition of fashion platform Myntra in a bid to give tough competition to the latter. Sources claim that if the deal gets finalized, it would give an edge to Amazon in the fashion space, as another giant Alibaba prepares to make an entry into the booming online retail market of India.

While Amazon is interested in acquiring Jabong, Jabong is said to be considering others as well. This means that the finalization of the deal may take time. On the other hand, a regulatory filing by Rocket Internet, which incubated Jabong, has put the value of the fashion portal at 388 million euros (around Rs 3,000 crores) and Jabong is said to be asking for a much higher valuation of at least 700 million dollars (over Rs 4,000 crores). Experts point out that the deal with Jabong may further get tough because in September, investors Rocket and Kinnevik have begun the process of merging five of their international fashion ecommerce companies, including Jabong, into a single global entity.

According to industry estimates, the Flipkart-Myntra combine enjoys a market share of over 50 percent in fashion retail and Jabong 25 percent. In the fashion e-retail space Fashionara and Limeroad are the other significant portals. Amazon recently announced that it plans to invest another two billion dollars (over 12,000 crores) in India to aggressively take on the competition. The company, since the launch of its official Indian website in June last year is giving tough competition with several initiatives like low prices, same-day delivery, wide choice of product categories and investing in advertising and marketing activities.