Jabong raises service levels, expects 25% higher gross merchandise value in FY18
Bengaluru: Online retailer Jabong, which was bought by Flipkart in 2016, has raised service levels and expects to 25% higher gross merchandise value in the year ending 31 March.
Jabong’s net promoter score (NPS), a key measure of customer satisfaction, has risen to more than 50 from 37 last year partly because of faster and more consistent product deliveries, Myntra chief executive Ananth Narayanan said in an interview. Currently, more than 80% of Jabong’s orders are delivered by Myntra Logistics and Ekart, Flipkart’s logistics service, up from 10% six months ago.
The improvement in Jabong’s NPS has also helped the company grow revenues as well as increase its user base by 30% this financial year compared with the previous year. In the year ended March 2017, Jabong had reported a decline of 16% in revenues.
Flipkart owns Myntra and Jabong, both of which are overseen by Narayanan.
“We’ve integrated the supply chain fully. Myntra Logistics and Ekart are much better than the logistics service Jabong was using before. So that’s caused both the NPS to go up and costs to come down. We’ve also integrated the tech stack so you have two different platforms running on the same tech stack. That’s very important for us because Jabong’s previous tech system couldn’t handle the spike during the big sale events,” Narayanan said.
Flipkart bought Jabong from Rocket Internet in July 2016 for $70 million in cash. When they were separate platforms, Jabong and Myntra were arch-rivals. Some analysts have speculated that Myntra would shut down Jabong after buying it. But Narayanan has maintained that Jabong and Myntra have their own niches and appeal to differing customers.
“The overlap with Jabong and Myntra is still only 30%—the number hasn’t increased since we bought Jabong. There were three big differences between Jabong and Myntra. One, Jabong was more premium. Two, it is more metro focused. Three, it has a higher percentage of women customers. All these three have continued. Also, online penetration of fashion is still only 4% which we’re increasing. So we’re not taking share from each other. In all the consumer research we’ve done it’s come out that people like having choice of platforms,” Narayanan said.
Myntra and Jabong have turned out to Flipkart’s best acquisitions. The two specialty retailers have helped Flipkart build a monopoly in online fashion sales that arch-rival Amazon India has been unable to break despite throwing hundreds of crores of rupees in expanding its fashion business.
Jabong head Gunjan Soni said the company will continue to sharpen the differences between the platforms. Jabong will launch two in-app stores next quarter, for designer and luxury products. It will also offer faster product deliveries and concierge services.
“Given the large metro share of Jabong we’re looking at offering one-day and two-day deliveries as a guarantee. Today, while we attempt to have a large share of deliveries in one days and two days, we want to make it a promise. Another service we’re looking at is concierge services that we want to offer along with our luxury and designer purchases. So it would be by-appointment, where we would have a professional come to your house and give you complete advice on your purchases,” Soni said.