Jabong, Rocket Internet Group’s flagship company in India, reported an operating loss of R426 crore in FY15, marginally lower than in the previous year. The fashion e-tailer’s revenue growth slowed to just 7% at R866 crore whereas in the previous year revenues had grown at a far more robust 136% to R811 crore. According to Rocket Internet’s annual report, the annual gross merchandise value (GMV) increased by 13.8% to R1,502.9 crore.
The fall in revenue growth and orders could drive down valuations at a time Rocket Internet is struggling to find a buyer for Jabong, part of its move to exit its India portfolio companies. Last week, it made its first exit selling online furniture store FabFurnish to the Kishore Biyani-led Future Group.
Jabong competes with players like Flipkart-owned Myntra, Snapdeal and Amazon in the fashion retail segment. In 2014, Amazon reportedly wanted to acquire Jabong but the price tag was a steep $1.2 billion. Sources say the current valuation is less than a fifth of that. Myntra has said that it had clocked an annualised GMV of $800 million in January 2016 and that it targets to achieve $1 billion GMV in FY17. Myntra posted a loss of R740 crore in 2014-15, more than four times the R173-crore loss reported in the previous year.
Meanwhile, Koovs, yet another fashion portal, had posted a revenue of R28.2 crore, up 180% over the previous year. According to Technavio, a leading market research company, the online fashion retail market in India is set to grow at a CAGR 64.87% until 2019.
“Greater focus on its marketplace platform as well as in increase in product assortment led to an increase of Jabong’s net revenue from R8114.1 million in 2014 to R8691.4 million in 2015…while adjusted Ebitda changed to negative R4263.6 million due to continued strong investment in infrastructure,” the report said.
Jabong received total orders in FY15 of about 5.4 million, 8% lower than in the previous year. Emails sent to Sanjeev Mohanty, the new CEO and managing director at Jabong, did not elicit any response.
Rocket Internet, which entered the Indian market in 2012, incubated half a dozen companies including FoodPanda, Jabong, FabFurnish and Couponation. Several top executive at Jabong had quit last year including its co-founders Praveen Sinha and Arun Chandra Mohan. Also, in February, its chief marketing officer Saurabh Srivastava quit, less than five months after joining.
In 2015, Rocket Internet rolled out Global Fashion Group (GFG), consolidating six emerging market fashion e-commerce portals — Dafiti (Latin America), Jabong (India), Lamoda (Russia and CIS), Namshi (West Asia), The Iconic (Australia) and Zalora (Southeast Asia and Australia) — to operate across four continents and 27 countries by creating its own private label brands.
According to reports, in March, GFG had committed to invest over $20 million in Jabong to keep it afloat for one more year. While Rocket-backed companies continued to increase sales, operating losses widened at several of them.
