Jabong pulls its socks up, set for new leadership team

Company in regular talks with investors to evaluate options, says CEO

Fashion portal Jabong, which has been in the news for a proposed buyout by prominent e-commerce companies, is getting ready for a makeover. Nils Chrestin, acting chief executive officer (CEO) at Jabong, told Business Standard that a new leadership team would be in place in the next two-three weeks. While playing down the talk around Jabong being on the block for a possible acquisition, Chrestin said: “We are in constant discussion with investors.”

To mark a beginning, the company announced the appointment of Saurabh Srivastava as chief marketing officer (CMO) on Tuesday. He’s coming from MobiKwik. Saurabh Goel has been named chief product officer and Sumit Jain chief technology officer. Goel has worked with One97 Communications and Gaana.com, while Jain has experience of working at 123bubbles, Times Internet and HT Media, among others.

Chrestin, who’s also the chief financial officer at London-based Global Fashion Group (GFG), which runs Jabong (a rival to Myntra which is now a part of Flipkart), said that by 2020, fashion would constitute 40 per cent of the estimated $100 billion e-commerce market in India and Jabong would be the topmost player in the segment. Would that mean Jabong would still be part of GFG, which is backed by investors such as Rocket Internet and AB Kinnevik, and operates in 28 geographies around the world, in 2020? In response, Chrestin said, “Who knows what could happen in five or 10 years?” But he added India has the potential to be a long-term destination for Jabong’s parent company, GFG.  

According to earlier reports, due to valuation mismatch, the acquisition could not be completed. Even as the asking price was around $500 million, buyers were not willing to shell out that much, said industry sources. On being asked if GFG was in talks with leading e-commerce companies to sell Jabong, the CEO said, “At any point in time, we have all sorts of conversations; we are all in the same industry. We constantly evaluate our options in each of our regions. The conclusion is that the best way forward for Jabong is to put a strong management on the ground and to have GFG support.’’

Refusing to put a valuation figure on Jabong, Chrestin said GFG is valued at €3.1 billion. “We will replicate the success in India,” he added. Last year, Jabong was brought under the GFG fold, along with other fashion e-tailers from Latin America, Russia, Australia, West Asia and others. Several co-founders and top executives  have left the company.

Although Jabong’s Ebitda losses, for the first six months of 2015, grew 46 per cent to Rs 227.4 crore compared to Rs 155 crore a year ago, Chrestin told this newspaper the focus would now be on profitability along with growth.

For GFG, the Indian market accounts for 17 per cent of its total revenues. “Jabong will take longer to reach profitability in the GFG portfolio, but in the Indian e-commerce space, we would probably be the first one to be profitable,” said to Chrestin. It may be recalled that Myntra executives had recently said the company would be the first to be profitable and that it would reach that milestone by March 2016. “We should check if Myntra is profitable in March 2016,’’ Chrestin retorted, adding “They are doing a great job and we have lot of respect for them but our targets are independent of what other companies are doing.’’ Jabong has a long-term vision. “We look at different metrics,” said Chrestin, who is looking at a transition to the new leadership team.

“We do not focus on GMV (gross merchandise volume) of products sold. In none of the 27 other countries where we operate do we use that metric. It is not very informative if you want to build a long-term sustainable business.”