Online fashion portal Jabong is shedding several low-margin brands, including three-fourth of its private labels, in a bid to cut losses and position itself as a platform for premium lifestyle products.
The company, unit of German ecommerce incubator Rocket Internet, will instead focus on top 200-300 brands, said a top executive of the company.
“We had spread ourselves too thin and now we are shrinking our portfolio,” said Sanjeev Mohanty, who joined Jabong as managing director from Italian fashion brand Benetton six months ago. “We are sharpening our positioning and opting out of lower price point brands and labels,” he said.
The Gurgaon-based company refused to disclose specifics on brands which are being delisted.
Jabong managed to reduce its losses to about a third in 2015 to Rs 46.7 crore from a year ago after a clampdown on discounts, but the move slowed sales growth to 7% at Rs 869 crore.
Over the years, the company launched several global brands such as Dorothy Perkins, G Star Raw, Tom Tailor, Topman and Bugatti Shoes exclusively for India, helping it earn higher margins. The company is now also discontinuing a dozen of its own labels to focus on bestsellers, including Sangria and Incult.
The lifestyle portal, which competes with players such as Myntra, Voonik and Koovs, will also expand its ethnic and sports portfolio, said Mohanty.
India’s biggest domestic ecommerce companies Flipkart and Snapdeal are flush with cash as overseas investors in both companies seek a piece of the market that’s set to surge.
While the country’s overall online fashion market is expected to reach $20 billion by 2020, Jabong’s latest move is seen narrowing the market for itself.
“We are looking at 40% of the market, which is Rs 750 and above, with focus on the upper mid-priced market to premium and super premium,” Mohanty said.
Experts said repositioning of the brand could mean initial loss of customers who aren’t strictly brand conscious. However, many also feel consolidation of brands could create a unique identity, something that several online players, which sell single-category products have started doing.
“It is good to consolidate the brand portfolio using analytics and understanding of customer preferences. This could even help in a clear value proposition to the customers. Brands need to provide either revenues or margins or variety to the platform” said Sreedhar Prasad, partner – e-commerce, at KPMG.
Jabong and Flipkart-owned Myntra were considered leaders in the fashion category, but Amazon India has been gradually getting aggressive. Most lifestyle product makers are either shying away from heavy discounts or giving price-offs for old merchandise, something that goes against Jabong’s business model of offering fast fashion or the latest collection.
Jabong To Focus on Premium Lifestyle Products