Myntra turns around Jabong's fortunes three months after acquisition

Myntra-owned Jabong on Thursday said that that it saw a 50% month-on-month growth in revenues during the month of October, closing the month with positive unit economics for the first time in its history.

The development comes roughly three months after Flipkart's fashion unit Myntra acquired the loss-making Jabong for $70 million from Rocket Internet.

Myntra Chief Executive Ananth Narayanan said that multiple factors helped turn around Jabong's fortunes, the largest of which being access to Myntra and Ekart for logistics. Moreover, over the course of three months, discounts on Jabong have been slashed by two-three percentage points to make the company's unit economics positive.

"We've made the selection a bit better and have cut out the lower edge items that were not doing well and introduced a few Myntra brands on Jabong. This made way for higher margins capture and made way for better results. The older customers of Jabong have started returning," said Narayanan.

Currently, Jabong drives close to a third of Myntra's revenues and serves a large base of users that do not shop on Mynta. The overlap of customers between the two platforms is just 30% according to Narayanan, something he had estimated to be higher during the time of purchasing the company.

Sales on Jabong in October were boosted by festive sales that ran alongside parent Flipkart's Big Billion Day sale during which it said it sold a total of 15.5 million items across its three platforms. The company claims it is the largest player in India's high-margin online fashion space.

"Next year, I'm hoping Jabong will grow between 30 and 50%, which will be slower than Myntra's growth because it has come in from a negative growth spiral. While Myntra is closer to 60% in terms of growth," Narayanan added.

Jabong witnessed the highest ever net revenue this year on weekdays and the average order value increased by 10%, while the app installations increased by 40%. Myntra has set up a joint team between the two entities to figure out over the next two years how both brands will differentiate themselves.