Jabong was the KING of fashion e-commerce in India!
- 6.4 million users/month
- INR 1000 Cr revenue in 2015
- Revenue in 2nd year = 50x of 1st year 🤯
Shockingly, the startup was acquired & shut down!
Here’s how Flipkart KILLED Jabong to make Myntra the ultimate winner 🧵
- 6.4 million users/month
- INR 1000 Cr revenue in 2015
- Revenue in 2nd year = 50x of 1st year 🤯
Shockingly, the startup was acquired & shut down!
Here’s how Flipkart KILLED Jabong to make Myntra the ultimate winner 🧵
Structure:
1. What is Jabong?
2. What was Jobong's USP and working model?
3. The rise of Jabong
4. What happened to Jabong?
5. Why exactly did it fail?
6. Is Jabong still active?
1. What is Jabong?
2. What was Jobong's USP and working model?
3. The rise of Jabong
4. What happened to Jabong?
5. Why exactly did it fail?
6. Is Jabong still active?
1/ What is Jabong?
- Jabong is an Indian fashion and lifestyle e-commerce platform.
- Very quickly, it rose to ~6.4M users and became the 2nd largest fashion e-commerce platform in India.
- But, unfortunately, its success was short-lived and it eventually collapsed in 2020.
- Jabong is an Indian fashion and lifestyle e-commerce platform.
- Very quickly, it rose to ~6.4M users and became the 2nd largest fashion e-commerce platform in India.
- But, unfortunately, its success was short-lived and it eventually collapsed in 2020.
2/ What did Jabong do?
Jabong started in 2012 when e-commerce was beginning to bloom in India.
At the time, people in India had limited access to popular international brands.
Jabong aimed to solve this problem, by selling international brands to Indians, online.
(contd.)
Jabong started in 2012 when e-commerce was beginning to bloom in India.
At the time, people in India had limited access to popular international brands.
Jabong aimed to solve this problem, by selling international brands to Indians, online.
(contd.)
From the UK's Dorothy & Perkins to Mango from Spain, Jabong racked up clothing from many international brands. That was their USP.
Similar to Amazon, it operated on an inventory-based as well as a marketplace-based working model.
(contd.)
Similar to Amazon, it operated on an inventory-based as well as a marketplace-based working model.
(contd.)
In the former, Jabong brought products for wholesale and sold them on the platform themselves.
While in the marketplace model, it acted as an interface between the sellers/brands and the consumers.
Over time, they expanded to selling apparel, accessories, beauty products, etc.
While in the marketplace model, it acted as an interface between the sellers/brands and the consumers.
Over time, they expanded to selling apparel, accessories, beauty products, etc.
3/ The rise of Jabong
In a few months, Jabong had the 2nd largest number of visitors in India, ~6.4 million!
Within a year, they were shipping 14000 orders daily, out of which 60% were from small towns.
So, they had great penetration in the remote areas as well.
(contd.)
In a few months, Jabong had the 2nd largest number of visitors in India, ~6.4 million!
Within a year, they were shipping 14000 orders daily, out of which 60% were from small towns.
So, they had great penetration in the remote areas as well.
(contd.)
Second year into business, they made a whopping 50x revenue compared to their first
Jabong became the 10th most searched term in India. And, it had 2M fans on Facebook and 299K+ active users on Twitter.
By 2014, it matched the revenue of its main rival, Myntra!
Jabong became the 10th most searched term in India. And, it had 2M fans on Facebook and 299K+ active users on Twitter.
By 2014, it matched the revenue of its main rival, Myntra!
4/ What happened to Jabong?
When Jabong was at the top, its numbers began to stumble.
But even in this state, Jabong knew no bounds.
It flung 70% discounts frequently, over-promised same-day deliveries, and kept running other expensive initiatives.
(contd.)
When Jabong was at the top, its numbers began to stumble.
But even in this state, Jabong knew no bounds.
It flung 70% discounts frequently, over-promised same-day deliveries, and kept running other expensive initiatives.
(contd.)
By 2016, Jabong was bleeding with huge losses. And, Rocket Internet, its leading investor, was no longer interested in funding the company.
Unable to take it anymore, Jabong tapped out. So, what did they do? Did they shut themselves down completely?
Well, NO.
(contd.)
Unable to take it anymore, Jabong tapped out. So, what did they do? Did they shut themselves down completely?
Well, NO.
(contd.)
In July 2016, multiple Indian and International brands raced to buy Jabong.
But, Flipkart-owned Myntra ended up buying Jabong for $70 million, in an all-cash deal.
(contd.)
But, Flipkart-owned Myntra ended up buying Jabong for $70 million, in an all-cash deal.
(contd.)
Flipkart wanted Myntra to become the undisputed leader in online fashion & clothing, so this move aligned perfectly with their objective.
Interestingly, Amazon was in talks to buy Jabong for $1.2 billion in 2015.
Unfortunately for Jabong, the deal was eventually called off.
Interestingly, Amazon was in talks to buy Jabong for $1.2 billion in 2015.
Unfortunately for Jabong, the deal was eventually called off.
5/ Why exactly did Jabong fail?
E-commerce is a tough industry, with thin margins & stiff competition. Let's analyse the 3 key reasons for its failure.
A) Running out of money
Jabong’s revenue doubled from ~INR 500 Cr in FY14 to ~INR 1000 Cr in FY15.
(contd.)
E-commerce is a tough industry, with thin margins & stiff competition. Let's analyse the 3 key reasons for its failure.
A) Running out of money
Jabong’s revenue doubled from ~INR 500 Cr in FY14 to ~INR 1000 Cr in FY15.
(contd.)
But their losses more than doubled from ~INR 17 Cr to ~INR 44 Cr.
They desperately needed money to survive, and their go-to source for cash, Rocket Internet, backed out.
Now, at this point, it will help to understand how Rocket Internet functions.
(contd.)
They desperately needed money to survive, and their go-to source for cash, Rocket Internet, backed out.
Now, at this point, it will help to understand how Rocket Internet functions.
(contd.)
Rocket Internet is a German company that takes successful internet-based business models and executes them in developing countries with low competition.
Their key goal is to scale the startup, and eventually sell it off to the market leader, making money in the process.
(contd)
Their key goal is to scale the startup, and eventually sell it off to the market leader, making money in the process.
(contd)
Of course, they had the same goal in mind with Jabong and had always wanted a good exit.
When they realized the fight was getting too tough, they decided to back out instead.
(contd.)
When they realized the fight was getting too tough, they decided to back out instead.
(contd.)
B) Senior leaders call it quits
Amid the turmoil at Jabong, many senior leaders, as well as, Jabong's co-founders left the company.
Rocket Internet, with its laser focus on a successful exit, pushed everyone in the same direction.
(contd.)
Amid the turmoil at Jabong, many senior leaders, as well as, Jabong's co-founders left the company.
Rocket Internet, with its laser focus on a successful exit, pushed everyone in the same direction.
(contd.)
The founders & other leaders at Jabong didn’t quite like the external pressure and decided to move on.
The sudden change & instability in the top management at Jabong only added to the chaos.
(contd.)
The sudden change & instability in the top management at Jabong only added to the chaos.
(contd.)
C) Just another online shopping site & nothing more!
Though Jabong kicked off with a KILLER strategy of bringing international brands to India, the market didn’t respond as positively as expected.
People came to Jabong only for its attractive discounts. Nothing else.
(contd.)
Though Jabong kicked off with a KILLER strategy of bringing international brands to India, the market didn’t respond as positively as expected.
People came to Jabong only for its attractive discounts. Nothing else.
(contd.)
People shopped the same products on Jabong as say Myntra, Amazon, Flipkart etc.
Customer loyalty & stickiness is an almost unrealistic expectation in e-commerce.
(contd.)
Customer loyalty & stickiness is an almost unrealistic expectation in e-commerce.
(contd.)
This was especially true for India back in 2012 to 2016.
So, people were happy to switch to any platform that offered them the best discounts.
In essence, Jabong was just another online shopping platform, playing the price war in a fiercely competitive space.
So, people were happy to switch to any platform that offered them the best discounts.
In essence, Jabong was just another online shopping platform, playing the price war in a fiercely competitive space.
6/ Is Jabong still active?
Well, Myntra ran Jabong for a few years. But there was a consistent decline in users, and consequently sales.
The active users on the website had also dropped by ~11% and app downloads by ~13% compared to the previous month.
(contd.)
Well, Myntra ran Jabong for a few years. But there was a consistent decline in users, and consequently sales.
The active users on the website had also dropped by ~11% and app downloads by ~13% compared to the previous month.
(contd.)
Finally, Flipkart decided to pull the plug on Jabong in July 2020.
Myntra, the industry leader was itself losing money. So it made no sense to run another loss-maker in the same space.
However, Myntra had access to Jabong's entire user base even after its closing.
(contd.)
Myntra, the industry leader was itself losing money. So it made no sense to run another loss-maker in the same space.
However, Myntra had access to Jabong's entire user base even after its closing.
(contd.)
So, what did Jabong teach us?
Jabong made a name for itself in the e-commerce industry in India.
But it couldn’t survive the stiff competition with deep pockets.
Jabong with its huge losses was never a “good” business and hardly had any differentiating factor.
(contd.)
Jabong made a name for itself in the e-commerce industry in India.
But it couldn’t survive the stiff competition with deep pockets.
Jabong with its huge losses was never a “good” business and hardly had any differentiating factor.
(contd.)
There was a constant external pressure to move fast & scale, which set them up for failure.
So, the key takeaway from Jabong’s grand failure for us is to keep things simple and focus on buildd-ing a profitable & sustainable business :)
So, the key takeaway from Jabong’s grand failure for us is to keep things simple and focus on buildd-ing a profitable & sustainable business :)
💡 Lessons
1. Discovering competitors for your startup is a validation of the market, NOT a source of sadness.
2. Your startup doesn't need to fail fast. It can succeed slowly.
3. Startup battles are regularly won by people who can run longer than those who can run faster.
1. Discovering competitors for your startup is a validation of the market, NOT a source of sadness.
2. Your startup doesn't need to fail fast. It can succeed slowly.
3. Startup battles are regularly won by people who can run longer than those who can run faster.
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