Making sense of Myntra's acquisition of Jabong

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

Saurabh Uboweja, CEO & Chief Brand Strategist, Brands of Desire said, “It is a clear indication of the long due consolidation in the industry and a sign of things to come. Jabong had been damaged beyond repair since the exodus of their top leadership and funding constraints from last year. Since then it has been a case of damage control for them and reduction of further loss of equity before an emergency treatment could rescue it back. For Rocket Internet, its parent, things have been far from rosy over the last 2 years, with many of their portfolio companies around the world nose-diving. Jabong was their star in India after they saw their other companies give in one after another.”

He further added, “The industry will benefit and so will Myntra as it will reduce the competition between similar platforms which means lower discounts and promotions going forward. The customers will certainly be the biggest losers as they will not have access to super deals anymore.”

Hitesh Gossain, CEO and Founder of Onspon.com cited, “It is a win-win situation for both the parties. In the Western countries, aggregation and consolidation is happening, the generic categories are taken by Amazon and there are a lot of niche categories. Similarly, in India as well, the generic play categories are not going to last long, vertical level aggregation has to happen. It would have been fantastic if the trigger would have come from a brick and mortar store. But it is a beautiful deal and I would like to track it.”

Naresh Gupta, CSO, Bang in the Middle said, “Myntra buying Jabong will make the former stronger. They get one more brand in their arsenal which they can use strategically. Myntra will have the flexibility with Jabong. Though I suspect that Myntra will want to keep Jabong alive for a long time, but it may turn Jabong into a non-fashion retailer, may be like personal care products etc. If Flipkart has put in the money, then I guess expansion in size of company must have been a big driver to consider having this deal. For the consumer it may eventually mean one choice less.”

Will Flipkart benefit in the long-run from the deal?

Ramanujam Sridhar, Founder, CEO, Brand-comm explained, “In earlier times, acquiring a brand was a straight forward situation. The company saw if there was a gap in the market place and if the brand has a role in the over-all portfolio. However, with the involvement of VC, their philosophy is different from any of the marketing company. They are probably aiming to have 1 player in a category eventually. If you ask, is this buyout adding any value to Flipkart’s portfolio, my views are mixed. Yes they will be acquiring new consumers, especially at a time when everything is not hunky dory for the company, it is a pure play investment decision to increase their market share. On the other hand, Amazon has also got their act together and is growing in size and presence immensely. But coming to the merchandises, there is no differentiation; the same brands are available on both Myntra and Jabong, so as a consumer I am confused.”

Echoing similar views, Uboweja said, “Flipkart gains from what is left out of Jabong, though it is yet to be seen if the remnants are worth the fight. It is difficult to determine clearly what does Jabong have that Myntra doesn’t. Jabong would end up losing its brand identity almost certainly as it merges its operations with Myntra. For Flipkart, it has been a clinical destruction of Jabong as they pumped funds to move the market share from Jabong to Myntra, even at the loss of its own equity at Myntra. In a way, it is a very attractive deal for Flipkart as it looks to consolidate and lead in the fashion & lifestyle category of e-commerce.”

According to Anshul Sushil, co-founder, Boring Brands, Jabong was not making profit, so instead of getting shut down, it being bought over is any day a good option. Also, a lot of brands have exclusive tie-ups with Jabong; and in case of a shutdown, consumers would have been affected. From the consumer point of view, Jabong is very sales driven and they have garnered a lot of attention in the tier ii and tier iii cities. Myntra on the other hand has a very urban imagery. So this deal will surely help Flipkart get more eyeballs.”

For the record, at its peak in June 2015, when Flipkart raised $700 million from global investors, it was valued at $15.2 billion, the highest for an Indian venture capital-backed company. Since then, the company has seen five mark-downs by global mutual funds, as the company has lost both market share and a perception battle to Amazon. Along, with this, there have been several high-profile exits from Flipkart as well. So things were anyways not looking very bright for the e-commerce player for a long time. But, whether Myntra acquiring Jabong is a well-thought strategy or not, only time will tell.

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

Saurabh Uboweja, CEO & Chief Brand Strategist, Brands of Desire said, “It is a clear indication of the long due consolidation in the industry and a sign of things to come. Jabong had been damaged beyond repair since the exodus of their top leadership and funding constraints from last year. Since then it has been a case of damage control for them and reduction of further loss of equity before an emergency treatment could rescue it back. For Rocket Internet, its parent, things have been far from rosy over the last 2 years, with many of their portfolio companies around the world nose-diving. Jabong was their star in India after they saw their other companies give in one after another.”

He further added, “The industry will benefit and so will Myntra as it will reduce the competition between similar platforms which means lower discounts and promotions going forward. The customers will certainly be the biggest losers as they will not have access to super deals anymore.”

Hitesh Gossain, CEO and Founder of Onspon.com cited, “It is a win-win situation for both the parties. In the Western countries, aggregation and consolidation is happening, the generic categories are taken by Amazon and there are a lot of niche categories. Similarly, in India as well, the generic play categories are not going to last long, vertical level aggregation has to happen. It would have been fantastic if the trigger would have come from a brick and mortar store. But it is a beautiful deal and I would like to track it.”

Naresh Gupta, CSO, Bang in the Middle said, “Myntra buying Jabong will make the former stronger. They get one more brand in their arsenal which they can use strategically. Myntra will have the flexibility with Jabong. Though I suspect that Myntra will want to keep Jabong alive for a long time, but it may turn Jabong into a non-fashion retailer, may be like personal care products etc. If Flipkart has put in the money, then I guess expansion in size of company must have been a big driver to consider having this deal. For the consumer it may eventually mean one choice less.”

Will Flipkart benefit in the long-run from the deal?

Ramanujam Sridhar, Founder, CEO, Brand-comm explained, “In earlier times, acquiring a brand was a straight forward situation. The company saw if there was a gap in the market place and if the brand has a role in the over-all portfolio. However, with the involvement of VC, their philosophy is different from any of the marketing company. They are probably aiming to have 1 player in a category eventually. If you ask, is this buyout adding any value to Flipkart’s portfolio, my views are mixed. Yes they will be acquiring new consumers, especially at a time when everything is not hunky dory for the company, it is a pure play investment decision to increase their market share. On the other hand, Amazon has also got their act together and is growing in size and presence immensely. But coming to the merchandises, there is no differentiation; the same brands are available on both Myntra and Jabong, so as a consumer I am confused.”

Echoing similar views, Uboweja said, “Flipkart gains from what is left out of Jabong, though it is yet to be seen if the remnants are worth the fight. It is difficult to determine clearly what does Jabong have that Myntra doesn’t. Jabong would end up losing its brand identity almost certainly as it merges its operations with Myntra. For Flipkart, it has been a clinical destruction of Jabong as they pumped funds to move the market share from Jabong to Myntra, even at the loss of its own equity at Myntra. In a way, it is a very attractive deal for Flipkart as it looks to consolidate and lead in the fashion & lifestyle category of e-commerce.”

According to Anshul Sushil, co-founder, Boring Brands, Jabong was not making profit, so instead of getting shut down, it being bought over is any day a good option. Also, a lot of brands have exclusive tie-ups with Jabong; and in case of a shutdown, consumers would have been affected. From the consumer point of view, Jabong is very sales driven and they have garnered a lot of attention in the tier ii and tier iii cities. Myntra on the other hand has a very urban imagery. So this deal will surely help Flipkart get more eyeballs.”

For the record, at its peak in June 2015, when Flipkart raised $700 million from global investors, it was valued at $15.2 billion, the highest for an Indian venture capital-backed company. Since then, the company has seen five mark-downs by global mutual funds, as the company has lost both market share and a perception battle to Amazon. Along, with this, there have been several high-profile exits from Flipkart as well. So things were anyways not looking very bright for the e-commerce player for a long time. But, whether Myntra acquiring Jabong is a well-thought strategy or not, only time will tell.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

Saurabh Uboweja, CEO & Chief Brand Strategist, Brands of Desire said, “It is a clear indication of the long due consolidation in the industry and a sign of things to come. Jabong had been damaged beyond repair since the exodus of their top leadership and funding constraints from last year. Since then it has been a case of damage control for them and reduction of further loss of equity before an emergency treatment could rescue it back. For Rocket Internet, its parent, things have been far from rosy over the last 2 years, with many of their portfolio companies around the world nose-diving. Jabong was their star in India after they saw their other companies give in one after another.”

He further added, “The industry will benefit and so will Myntra as it will reduce the competition between similar platforms which means lower discounts and promotions going forward. The customers will certainly be the biggest losers as they will not have access to super deals anymore.”

Hitesh Gossain, CEO and Founder of Onspon.com cited, “It is a win-win situation for both the parties. In the Western countries, aggregation and consolidation is happening, the generic categories are taken by Amazon and there are a lot of niche categories. Similarly, in India as well, the generic play categories are not going to last long, vertical level aggregation has to happen. It would have been fantastic if the trigger would have come from a brick and mortar store. But it is a beautiful deal and I would like to track it.”

Naresh Gupta, CSO, Bang in the Middle said, “Myntra buying Jabong will make the former stronger. They get one more brand in their arsenal which they can use strategically. Myntra will have the flexibility with Jabong. Though I suspect that Myntra will want to keep Jabong alive for a long time, but it may turn Jabong into a non-fashion retailer, may be like personal care products etc. If Flipkart has put in the money, then I guess expansion in size of company must have been a big driver to consider having this deal. For the consumer it may eventually mean one choice less.”

Will Flipkart benefit in the long-run from the deal?

Ramanujam Sridhar, Founder, CEO, Brand-comm explained, “In earlier times, acquiring a brand was a straight forward situation. The company saw if there was a gap in the market place and if the brand has a role in the over-all portfolio. However, with the involvement of VC, their philosophy is different from any of the marketing company. They are probably aiming to have 1 player in a category eventually. If you ask, is this buyout adding any value to Flipkart’s portfolio, my views are mixed. Yes they will be acquiring new consumers, especially at a time when everything is not hunky dory for the company, it is a pure play investment decision to increase their market share. On the other hand, Amazon has also got their act together and is growing in size and presence immensely. But coming to the merchandises, there is no differentiation; the same brands are available on both Myntra and Jabong, so as a consumer I am confused.”

Echoing similar views, Uboweja said, “Flipkart gains from what is left out of Jabong, though it is yet to be seen if the remnants are worth the fight. It is difficult to determine clearly what does Jabong have that Myntra doesn’t. Jabong would end up losing its brand identity almost certainly as it merges its operations with Myntra. For Flipkart, it has been a clinical destruction of Jabong as they pumped funds to move the market share from Jabong to Myntra, even at the loss of its own equity at Myntra. In a way, it is a very attractive deal for Flipkart as it looks to consolidate and lead in the fashion & lifestyle category of e-commerce.”

According to Anshul Sushil, co-founder, Boring Brands, Jabong was not making profit, so instead of getting shut down, it being bought over is any day a good option. Also, a lot of brands have exclusive tie-ups with Jabong; and in case of a shutdown, consumers would have been affected. From the consumer point of view, Jabong is very sales driven and they have garnered a lot of attention in the tier ii and tier iii cities. Myntra on the other hand has a very urban imagery. So this deal will surely help Flipkart get more eyeballs.”

For the record, at its peak in June 2015, when Flipkart raised $700 million from global investors, it was valued at $15.2 billion, the highest for an Indian venture capital-backed company. Since then, the company has seen five mark-downs by global mutual funds, as the company has lost both market share and a perception battle to Amazon. Along, with this, there have been several high-profile exits from Flipkart as well. So things were anyways not looking very bright for the e-commerce player for a long time. But, whether Myntra acquiring Jabong is a well-thought strategy or not, only time will tell.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

On Tuesday, Flipkart announced the acquisition of Jabong from Global Fashion Group. As per reports, the valuation of the deal is for $70 million. The acquisition of Jabong is believed to further strengthen Flipkart Group’s position as the undisputed leader in fashion and lifestyle segment in India, especially at a time when it is facing stiff competition from Amazon India.

In fact, Global Fashion Group was looking for buyers for over a year. Among the list of potential buyers, names of Snapdeal, Paytm, Future Group and Aditya Birla Group had also come up. In 2014, Amazon India held talks with Jabong for a potential buyout, but the deal fell through in the beginning of 2015, after Jabong asked for a $1.2 billion valuation.

In 2014, Flipkart acquired Myntra for an estimated deal size of $300 million. That was a strategy adopted by the company in response to Amazon’s ramp up of its year old India operations, and to tackle competition from arch rival Snapdeal. Flipkart used Myntra’s platform to experiment the app-only model. In 2015, Myntra had shut down its mobile and desktop websites. Flipkart also had plans of soon converting to an app-only model. However, the idea didn’t work and last month Myntra again relaunched their desktop website. Even the prized Silicon Valley hire Punit Soni, Chief Product Officer at Flipkart also quit the company recently, although he was hired from Google in 2014 with the intention of helping the player transform the market place into a mobile-first platform.

What does this deal mean?

We spoke to brand consultants and digital experts in order to understand what this deal means for the consumers and whether Flipkart took the right decision by acquiring a ‘loss making company’ like Jabong.

Saurabh Uboweja, CEO & Chief Brand Strategist, Brands of Desire said, “It is a clear indication of the long due consolidation in the industry and a sign of things to come. Jabong had been damaged beyond repair since the exodus of their top leadership and funding constraints from last year. Since then it has been a case of damage control for them and reduction of further loss of equity before an emergency treatment could rescue it back. For Rocket Internet, its parent, things have been far from rosy over the last 2 years, with many of their portfolio companies around the world nose-diving. Jabong was their star in India after they saw their other companies give in one after another.”

He further added, “The industry will benefit and so will Myntra as it will reduce the competition between similar platforms which means lower discounts and promotions going forward. The customers will certainly be the biggest losers as they will not have access to super deals anymore.”

Hitesh Gossain, CEO and Founder of Onspon.com cited, “It is a win-win situation for both the parties. In the Western countries, aggregation and consolidation is happening, the generic categories are taken by Amazon and there are a lot of niche categories. Similarly, in India as well, the generic play categories are not going to last long, vertical level aggregation has to happen. It would have been fantastic if the trigger would have come from a brick and mortar store. But it is a beautiful deal and I would like to track it.”

Naresh Gupta, CSO, Bang in the Middle said, “Myntra buying Jabong will make the former stronger. They get one more brand in their arsenal which they can use strategically. Myntra will have the flexibility with Jabong. Though I suspect that Myntra will want to keep Jabong alive for a long time, but it may turn Jabong into a non-fashion retailer, may be like personal care products etc. If Flipkart has put in the money, then I guess expansion in size of company must have been a big driver to consider having this deal. For the consumer it may eventually mean one choice less.”

Will Flipkart benefit in the long-run from the deal?

Ramanujam Sridhar, Founder, CEO, Brand-comm explained, “In earlier times, acquiring a brand was a straight forward situation. The company saw if there was a gap in the market place and if the brand has a role in the over-all portfolio. However, with the involvement of VC, their philosophy is different from any of the marketing company. They are probably aiming to have 1 player in a category eventually. If you ask, is this buyout adding any value to Flipkart’s portfolio, my views are mixed. Yes they will be acquiring new consumers, especially at a time when everything is not hunky dory for the company, it is a pure play investment decision to increase their market share. On the other hand, Amazon has also got their act together and is growing in size and presence immensely. But coming to the merchandises, there is no differentiation; the same brands are available on both Myntra and Jabong, so as a consumer I am confused.”

Echoing similar views, Uboweja said, “Flipkart gains from what is left out of Jabong, though it is yet to be seen if the remnants are worth the fight. It is difficult to determine clearly what does Jabong have that Myntra doesn’t. Jabong would end up losing its brand identity almost certainly as it merges its operations with Myntra. For Flipkart, it has been a clinical destruction of Jabong as they pumped funds to move the market share from Jabong to Myntra, even at the loss of its own equity at Myntra. In a way, it is a very attractive deal for Flipkart as it looks to consolidate and lead in the fashion & lifestyle category of e-commerce.”

According to Anshul Sushil, co-founder, Boring Brands, Jabong was not making profit, so instead of getting shut down, it being bought over is any day a good option. Also, a lot of brands have exclusive tie-ups with Jabong; and in case of a shutdown, consumers would have been affected. From the consumer point of view, Jabong is very sales driven and they have garnered a lot of attention in the tier ii and tier iii cities. Myntra on the other hand has a very urban imagery. So this deal will surely help Flipkart get more eyeballs.”

For the record, at its peak in June 2015, when Flipkart raised $700 million from global investors, it was valued at $15.2 billion, the highest for an Indian venture capital-backed company. Since then, the company has seen five mark-downs by global mutual funds, as the company has lost both market share and a perception battle to Amazon. Along, with this, there have been several high-profile exits from Flipkart as well. So things were anyways not looking very bright for the e-commerce player for a long time. But, whether Myntra acquiring Jabong is a well-thought strategy or not, only time will tell.

- See more at: http://www.exchange4media.com/digital/making-sense-of-myntras-acquisition-of-jabong_65379.html#sthash.3oDb7PfH.dpuf

What Flipkart’s Jabong buy means for the industry

After acquiring Myntra earlier, and now Jabong, Flipkart has positioned itself as one of the largest players in the e-commerce space. Industry experts feel the buyout is not only a step towards consolidation of the industry but also a bid to acquire more customers

Flipkart has always been in the news for good and bad reasons. This time it has hit the headlines for its arm Myntra’s recent buy of Global Fashion Group’s (GFG) Jabong for $70 million. It is possibly the largest deal in Indian e-commerce, making Flipkart one of the largest players in the space. According to reports, with the acquisition, Flipkart is likely to have control over almost 70 per cent of the e-commerce industry.

Jabong commanded a share of 25 per cent of the online fashion market, while Flipkart (including Myntra) had a total market share of 45 per cent. After the deal, the combined share is likely to touch 70 per cent.

Flipkart, which already is the market leader followed by Snapdeal and Amazon, has now further strengthened its position with the acquisition.

Earlier in April this year, Amazon was eyeing Snapdeal to strengthen its position in India. For the record, Snapdeal, Future Group, Aditya Birla Groups’ Abof and Amazon were in the running to acquire Jabong.

The buyout is not only a step towards consolidation of the industry but also an attempt to acquire more customers. BestMediaInfo asked a few digital and brand experts what the deal means for India’s e-commerce industry.

Strengthening portfolio

Strengthening portfolio

Harish Bijoor

Harish Bijoor, Brand Expert and Founder at Harish Bijoor Consultants, thinks that it’s consolidation time for e-commerce in India. He said, “This acquisition is just the beginning. The Flipkart family grows bigger. To an extent the forces are rallying into three formations. You have Amazon growing at a frenetic pace on a lower base, you have Alibaba rallying forces and you have the Flipkart family. This acquisition is significant for sure.”

Already having an existing fashion platform, Flipkart seems to have strengthened its portfolio with brands that were not available on Myntra. Brand expert and Founder, Brand-comm, Ramanujan Sridhar, thinks when a company does an acquisition of an existing competing platform it is to bring in a greater sense of competition. He cites an example, “Some of the old acquisitions include Wipro taking over Chandrika soap or Lever which had once taken over a soap brand which means that there is a product in the portfolio and the new product will give a greater sense of competition.”

He continued, “In case of all these start-ups, there is one more critical factor: investment. The company has to be a category leader. There might not be a significant difference in merchandise but the idea being let me try and acquire customers. Amazon is also trying to catch up with the trend and be an Indian player.”

Some reports say Amazon India is one of the largest players in e-commerce and is also a trusted one. The buyout has taken place in a difficult time for Flipkart as the valuation of the company has been fluctuating due to rejigs in its senior management earlier this year.

Asked if the deal was a threat to Amazon, Sridhar agreed, saying Flipkart must be worried about Amazon. It is to be seen what Flipkart does with the Jabong brand name as it continued with the Myntra name after acquiring it in May 2014.

Anil Nair

Anil Nair, CEO and Managing Partner, Digital L&K Saatchi & Saatchi, thinks that eventually this had to happen. “As e-commerce and fashion markets move to some majority, there is going to be a huge pressure on the bottom line. There is a lot of back-end consolidation.”

Will Flipkart retain ‘Jabong’ as a separate brand?

Nair said that after the acquisition, they might also look at smaller cities where they don’t have a presence. The challenge remains in whether Flipkart retains ‘Jabong’ as a separate brand or the two will co-exist, he wondered. This is indeed not the end of competition. Niche players in the fashion end are always popping up. The buy is purely revenue and economic one.

Jabong, which matched larger rival Myntra in sales until early 2014, had ceded market share since then as Myntra’s parent Flipkart has been spending crores on advertisements and discounts to lure customers.

Naresh Gupta

Naresh Gupta, Managing Partner and CSO, Bang in the Middle, it remains to be seen how everything will shape up. He said there are major announcements still awaited from the e-commerce major on whether the brand names will be the same, what categories of products both fashion portals will sell and so on. Gupta also thinks the deal won’t be a threat to Amazon “as they are in a different league”. Amazon recently entered India with its video content service Prime; hence there is no comparison with the global major, he averred.

Consolidation

Gopa Kumar

Gopa Kumar, Vice-President, Isobar, believes that Myntra buying out Jabong will help it preserve and maintain India’s top e-commerce player for the near future at least. “With the combined power of Flipkart, Myntra and now Jabong, this has become a potent combination and also now in the best position to take on Amazon, at least for the short term,” he said.

Kumar further said, “What it means for the e-commerce industry at large is that this consolidation will continue, as many experts have predicted. Consolidation and shakeout will continue to happen as the market is cluttered and facing cut-throat competition. This race for massive discounting, which is a hook to win customers, means nobody is making money. There have been huge jobs cuts across and valuations are down and at the lowest ever.”

It must also be noted that some government policies are not clear on the marketplace model, which is creating a lot of uncertainty in the industry. “It’s now over to Amazon and would be interesting to see how it will react to this acquisition,” said Kumar.

Currently, Jabong offers more than 1,500 international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from more than 1,000 sellers. In the past year, the company has been hit by an exodus of senior management executives, a funding slowdown and strong competition from Myntra and Amazon India.

GFG, which is jointly owned by Rocket Internet and AB Kinnevik, houses the German e-commerce company’s fashion businesses from emerging countries, including Jabong, Latin America’s Dafiti, Russia’s Lamoda, Namshi in the Middle East and Zalora in South-East Asia and Australia.

Info@BestMediaInfo.com

Pokémon Go: A fertile ground for brands and marketers

As the game has not been officially launched in India, it is still early days here. Developers and marketers are exploring possibilities to create consumer engagement programmes. That leads to the question: how far can brands and marketers cash in on the ‘Pokémon Go’ phenomenon? BestMediaInfo tries to understand it better from industry experts

 
Pokémon Go is possibly the last thing you want to read about. In the last three weeks, a lot has been discussed about the game, the various associations brands want to do with the game, the kind of incidences that have happened and, of course, needless to say the valuation of the company has been soaring.

A lot of brands and global companies did approach the Pokémon Company to associate with it. It seems that in its home country (Japan) launch, the company managed to close a partnership with global quick serving restaurant (QSR) McDonalds.

While the burger giant got lucky, others possibly are still waiting or figuring a way to partner with the gaming company. This leads to the question: is ‘Pokémon Go’ a fertile ground for brands and marketers? BestMediaInfo spoke to industry experts to know more.

Experts speak:

Vandana Das

The ’90s kids, who are the youth today, have grown up with Pokémon as a character and hence it is not something new for them. It has just been resurfaced in a modern avatar. Vandana Das, President, DDB Mudra North, tells us that rekindling of old memories with technology — augmented reality (AR) — created the rage.

Das says that with the kind of media consumption that happens, a lot of brands are obviously looking at associating with the game. Of course, keeping in mind the relevance to the audience, only youth-centric brands should look at associating with the game.

Unny Radhakrishnan

Unny Radhakrishnan, Chief Digital Officer, Maxus South Asia, said, “Pokémon Go per se may or may not become a fad. More likely the former. So it is not about what would brands now do with this new shiny thing. Developers and marketers will now explore possibilities of AR in creating consumer engagement programmes. In the short term, as the fever of Pokémon Go peaks, brands might use tactical methods to drive footfalls to designated areas or leverage some possibilities with virtual currencies.”

The game has indeed brought AR into the mainstream. The possibility of the game being a fertile ground for most of the marketers is all the more reason for brands to associate with them.

Bharatesh Salian

Bharatesh Salian, Vice President and Head Strategy, Razorfish thinks that while Pokémon Go is a fertile platform, a brand needs to be a natural fit and should not overdo the integration (if any) in the game. Their messages should be subtle. He strongly believes the game has created an omni-channel platform and a brand needs to be careful.

Early days in India

Rajiv Dingra

It is still early days for India, as the gamer has not officially launched in India. To predict what the game actually does after launch is something that is awaited. From a monetisation stand point, Rajiv Dingra, Founder and CEO, WATConsult said this is possibly the only game that has been able to monetise its model, while others are looking at advertising and associations.

The game is yet to launch in India and we have already seen branded content around it. Foodpanda.in, Godrej Security Solutions, Amul, Quikr, Ola cabs, Vodafone zoo zoos, Animal Planet India, Zomato, IndiaMart, FreeCharge and many more have already created content around the same. Marketers have already given appreciation on how interesting AR can be in the long run, clearly indicating their interest towards associating in making the game the best in the history of gaming.

According to reports, Pokémon Go has more active users than Twitter and more downloads than dating app Tinder. The estimated downloads is close to 20 million across the globe.

While one has spoken about AR, no one has been able to take it to this level. The game has unlocked the AR aspect of digital. Brands should look at it as an opportunity where the youth is comfortable with it in the offline environment and be driven by it. Brands will take advantage of the change in user behaviour in creating acts to leverage opportunity. It is an opportunity for multi-brand malls to create interesting gamification around the brand, to lead people to different places.

Pokéstops new attraction

Amaan Fakih

In spite of absence in India, malls have already become Pokéstops, attracting a huge amount of footfall. Amaan Fakih, CEO, Malls, Runwal Group, said, “The generation that has grown up watching Pokémon, are now active shoppers and hence this new Pokémon Go concept is quite interesting for marketers and brands. Malls are perpetually buzzing with activity and thus would be easy locations to have various Pokémons to sight. Hunting for Pokémon at a mall will not only increase the footfalls, but will also introduce new avenues of reaching out to customers.”

Srinivasa Rao

Adding, Srinivasa Rao, VP, Marketing, Lifestyle International, said, “The very nature of the game encourages people to step out of home and search for Pokémons in public places such as stores, malls or hotels. This will definitely aid footfalls. However, whether the players will take their eyes off the screen long enough to browse the collections in the store and buy something is yet to be seen. For stores falling in the digital map of the Pokémon Go, it would make sense to have special merchandise or offers that excites the Pokémon Go Trainers community.”

Innovative promotion would help

Comparing how brands would want to integrate in general, brand expert and Founder, Brand-comm, Ramanujan Sridhar, said, “The popularity of Pokémon Go has a similar analogy to whatever happened to Kabali. When brands like Fair and Handsome, Cadbury Five Star and Air Asia associated with Kabali, the marketers did not miss the opportunity. Similar is the case with Pokémon Go. Marketers do not want to miss on an opportunity and that’s really what somebody is looking for. One needs to figure an innovative promotion so that the brand is not lost.”

Sridhar feels that anything that reached the youth could be associated with the game, but eventually it is the developer that will take a call.

Tripti Lochan

Stating a classic example of McDonald’s association with the game, Tripti Lochan CEO VML, India and South East Asia, points out that the tie-up was very relevant when the burger giant partnered with the game. The QSR has done many such associations in the past (with movies, popular characters) and hence tying up made sense for them. Of the 2,900 outlets they have in Japan, 400 will act as gyms where a user can train the Pokémon while the remaining 2,500 will be Pokéstops where one can get more Pokéballs for their game.

The partnership will be the second form of monetisation for the gamer after its in-app purchases. It seems that museums are also attracting one to find Pokémons and it’s a phenomenon in time where it’s bringing all these interesting aspects to life.

Good news for gaming industry

Manish Agarwal

Mobile gaming in India has given a lot of household games. Advertising in gaming has always been in the mind of the marketer. Pokémon Go has only made it better for the gaming industry, thinks Manish Agarwal, CEO, Nazara Technologies. Pokémon Go has made gaming mainstream. Agarwal thinks that now the advertiser’s brief will include augmented reality and gaming apart from their normal marketing brief.

It is only the early days for the game in India and for global associations. While McDonalds has inaugurated the partnership in Japan, more are likely to be heard in different countries. Some experts feel that brands can create user experience using augmented reality, while others are positive about associating with the game. Only time will tell what prevails.

Info@BestMediaInfo.com

Why are network advertisements so misleading?

Claims of the ads are nowhere close to the reality of what the consumers face

Every one of us wears multiple hats and I am no exception. Let me talk about two large hats that I wear that still struggle to hide the shining halo at the crown of my head! One is of a consumer who buys products and services and has a strong point of view. If I am not happy with something I don’t hold back! I tweet till the cows come home! The second is that of a brand consultant who is passionate about advertising and who watches a lot of TV as sometimes I find the advertising a little more interesting than the programs in which they are featured in. Being a consumer of Airtel since the JTM days (a brand Airtel took over) I have been watching Airtel’s advertising with great interest even as the brand pushes the envelope with newer, more creative ads that have no relevance or relation to the ground reality. Increasing my frustration is their abysmal coverage, horrendous service and complete lack of concern for the consumer and that is me! Why haven’t I shifted then? Simply because I am increasingly sceptical about all mobile services in general and Airtel in particular for who would like to go from the frying pan to the fire?

Oh we are so transparent!

The latest in the series of misleading ads is the one that tells you that you know exactly where your tower is and where the gaps are and they keep patting themselves on the back as to how wonderful they are. Here’s the ad which you must have seen and which left me cold.

https://www.youtube.com/watch?v=1ya83LjUHJ4

And why do I say that? Let me tell you my own experience. Both I and my wife are heavy Airtel users for several years and yet the network is appalling in our house. We are invariably a little fitter as we rush out of the house the moment the phone rings. Probably the mobile service operator in their wisdom have decided that we don’t exercise enough. But I did exercise my rights (?) as a consumer by complaining several times. And what does our “transparent” mobile service operator do?  It says there are unable to do anything as there is no tower near my house which leads me to the important point I wish to make now. How is anything going to change? Are you really telling me that a company which is the market leader needs two decades to figure out where the network is poor? And why should I tell them how bad they are? Don’t they know it themselves? And to add insult to injury they are claiming transparency!

Ads have generally been misleading

Before this campaign, Airtel had launched their 4G campaign with great fanfare and proudly announced how it works in the farthest corners of India - in hilly mountains, distant villages and the back of beyond. Sadly, though it does not work in Malabar Hill or Koramangala and as an actual user I just cannot experience any difference between my earlier 3G and my present 4G. Here’s that Airtel girl who lies with a sweet face who thankfully seems to have taken a break

https://www.youtube.com/watch?v=pOEAvEklvNA

https://www.youtube.com/watch?v=8L2vUf9CZhg

This is my problem with all mobile services. The advertising is clever, interesting and entertaining. But it has no relation to what consumers face. Otherwise why would call drops be such an issue with all of us and Parliament even?  Vodafone too has had very cute ads talking about their service and network, but I continue to experience both their network and service and have been hardly impressed.

https://www.youtube.com/watch?v=Qedh62-LYiU

What do I expect as a consumer?

So what’s the bottom line? Today, the mobile is an integral part of our life and no one young or old can even imagine life without the mobile.  But the mobile service providers’ cartel is trying to milk the existing networks which are already stretched and painting a rosy picture about the coverage which has no relation to reality. They are like husbands who are taking their spouses for granted and are being extremely casual about our angst and genuine fears and are merely being glib in their attitude and advertising. If Airtel or Vodafone is serious about its business, consumer and way of doing business it must focus on network, coverage and customer service and spend less money, attention and time on advertising. Like a poor student who only concentrates on easy subjects they are focussing on the easy part which is advertising. And that’s the hard part for me as a dissatisfied, angry and frustrated consumer.