graphic-jabong-2Rocket Internet-incubated fashion e-commerce venture Jabong that hit a speed bump in the second half of 2015 has begun the new year with a marked improvement in performance while simultaneously cutting down operating loss.
Jabong, which competes with Flipkart-owned Myntra among others, has been focusing on mending its leaking boat. Its EBITDA or operating loss (adjusted for share-based compensation) had been shrinking from Q3 and declined further in the three months ended March 31, 2016.
The performance of the first quarter shows that the firm is back on the growth track while pruning its day-to-day losses even further.
Jabong saw a change in management at the fag end of last year with former Benetton India head Sanjeev Mohanty taking over as CEO in December.
Indeed, Mohanty had claimed early this year that Jabong registered the highest-ever month-on-month growth of nearly 35% per cent in net revenue for January, which marked its best performing month ever since inception in 2011.
In what appeared to be a veiled reference to arch rival Myntra, he had said, “Some players in the industry hide their real performance behind the veils of lofty GMV figures. In those terms too, we touched $66 million in GMV in January itself positioning us as the largest fashion e-commerce company in India, with a robust growth of 56% in our gross orders and 59% in gross items. At this rate, we will be within striking range of the $1 billion GMV mark by the year-end.”
The company secured €300 million ($339 million or Rs 2,250 crore) from Germany’s Rocket Internet SE and Swedish investment firm Kinnevik. The transaction valued the company at €1 billion. This was a drop of almost 68% from its previous funding round in July when it was valued at €3.1 billion.
While the deteriorating performance of Jabong last year showed the big risk for e-commerce firms who have grown at a hectic pace on the back of aggressive customer acquisition tactics with discounts, its more recent track record reveals a silver lining.
But that has not stopped the dilution in valuation. Global Fashion Group (GFG), the global parent of Jabong, had recently raised fresh funding from its existing investors at a sharply lower valuation
GFG was created by combining six e-commerce brands that continue to operate in emerging markets around the world. It includes India’s Jabong, Latin America’s Dafiti, Russia’s Lamoda, Namshi of the Middle East, Southeast Asia’s Zalora and The Iconic in Australia.
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