Can Jabong’s new management reverse sales growth slump?
2 min read . Updated: 29 Oct 2015, 12:25 AM IST
PremiumThat, and the competition from e-commerce firms Flipkart, Amazon, Myntra and Snapdeal will prove to be a handful for the online fashion store
Bengaluru: Jabong needs to revive brand, increase discounts, improve its social commerce offering, and launch exclusive brands to claw back market share to rivals, such as Flipkart-Myntra and Amazon India. That’s a handful, especially given the deep pockets of its rivals and the lead that they have established over Jabong in the past year or so.
Jabong, which has seen an exodus of leaders over the past year, has a new senior management team in place. The company is in advanced talks with Benetton India managing director Sanjeev Mohanty to take charge as its new chief executive officer, Mint reported Wednesday. (bit.ly/1OWc5kZ)
The proposed appointment of Mohanty comes after co-founders Praveen Sinha and Arun Chandra Mohan resigned from the company last month. (mintne.ws/1iHkbjP)
Jabong, owned by Global Fashion Group (GFG), desperately needs skilful leadership. Its sales growth plummeted to 26.5% for the six months ended 30 June, compared with nearly 136% in all of 2014. Loss before interest, taxes, depreciation, and amortization widened to ₹ 227.4 crore from ₹ 154.93 crore
While Jabong is struggling with slowing sales growth, rivals Flipkart, Amazon India and Snapdeal, which are called horizontal marketplaces, have seen a surge in demand for apparel, shoes and jewellery this year.
Jabong’s brand also seems to have lost so-called top-of-mind awareness among shoppers.
According to data with Frrole Inc., a social media analytics provider, Jabong was mentioned just 5,180 times by shoppers on micro-blogging website Twitter in September, compared with 97,211 mentions for rival Myntra and 131,702 mentions for Snapdeal. On an immediate basis, Jabong needs to launch an extensive marketing campaign to revive its brand and present itself as one of the top shopping platforms for fashion. It may also need to increase the quantity of discounts, especially as rivals are courting customers with eye-popping offers during the ongoing festive season.
This year, online fashion businesses, such as Myntra as well as newer start-ups like Limeroad, Voonik and Roposo have been pushing fashion content and letting users interact with each other to try and create a social network for fashion enthusiasts.
With the mass market taken up by horizontal marketplaces, some investors believe a social commerce strategy is one of the few ways speciality fashion businesses can survive.
Jabong, which has been a laggard in this aspect, needs to launch innovative social-commerce features on its app to keep users hooked. Jabong also has reputation for being a hire-fast-fire-fast organization. The new management team will need to build a more sustainable organization and bring in fresh talent at all levels.
Finally, Jabong needs to improve its product assortment. For instance, rival Myntra has a bevy of private labels and exclusive brand partnerships. Private brands now generate more than a fifth of Myntra’s sales and help the company lure shoppers.
If Jabong finalizes the appointment of Sanjeev Mohanty, the company will gain a leader who has worked in the apparel business for nearly two decades.
Mohanty helped revive the fortunes of Benetton in India and made it into one of the top fashion brands in the country.
Turning around Jabong may prove to be much challenging.
