Jabong, the online fashion portal is shedding many low margin brands that include 75 percent of its private labels. This move is to cut losses and place itself as a platform that is meant for premium lifestyle products.
The company that is a unit Rocket Internet, a German e-commerce incubator, it will focus on leading 200 to 300 brands, claimed a top executive of the Jabong.
Sanjeev Mohanty, the managing director of Jabong, who took the position six months back, stated that they had spread themselves too thin and now they are shrinking their portfolio. He added that they are sharpening their position and choosing out of the low price point brands as well as labels.
The company refused to disclose the details of the brands that will be delisted. It managed to reduce the losses by about one third in the last year to Rs 46.7 crore from the previous year after clamping down on discounts. However, this move slowed the sales growth by 7 percent.
Over the years, Jabong launched many global brands such as Topman, Tom Tailor, G Star Raw, and Dorothy Perkins exclusively for India. It helped the brands earn high margins. The company is also discontinuing a dozen of its labels in order to focus on bestsellers such as Incult and Sangria.
The lifestyle portal competes with players including Voonik, Myntra, and Koovs and it will expand the sports and ethnic portfolio, claims Mohanty.
The country’s largest domestic e-commerce firms such as Snapdeal and Flipkart are flush with a lot of cash as overseas investors in the companies seek a segment of the market that is likely to surge.
The country’s online fashion market is believed to reach $20 billion by the year 2020. By then, this move is likely to narrow the market for Jabong.