Amazon (NASDAQ:AMZN) Plans on Buying Jabong.com

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The American internet retail giant is planning to set its feet in the Indian market. As for the start the company is thinking about buying an Indian fashion based website Jabong.com. This will be Amazon’s (NASDAQ:AMZN) first acquisition in India. Reports suggest that Amazon has made this purchase for some 1.2 billion dollars. The Jingbo.com is being funded by the Rocket Internet Company.

 

However, the discussions with the company are still in the beginning stages. The Indian online shopping market is mostly captured by two online retailers i.e. Flipkart and Myntra. Both these online stores share nearly 50% of the market whereas, Amazon’s (NASDAQ:AMZN) latest attraction Jingbo.com has a market hold of nearly 25% while the remaining industry is held by various smaller retailers.

 

The company (Jingbo.com) has a market value of almost 609 crore INR with more than 3 million sales during a 6 months short period. This was quite amazing as the company enhanced its growth by nearly three times. Moreover, Amazon’s (NASDAQ:AMZN) recent act to buy Jingbo is considered as a reaction to Flipkart’s acquisition of Myntra. Moreover, the overall Indian online fashion market is about $550 million.

 

The market is expected to make business of more than $3 billion in the coming 3 years or so. The Indian Internet market which is currently making about $2 – 3 billion is expected to make $32 billion by 2020 and probably hold 3 % of the total Indian market. Moreover, E commerce companies are planning to shift their attention towards the online fashion industries. This industry is currently the most profitable and fastest growing industry and investors are finding it quite useful at the moment.

This is the very reason why Flipkart bought Myntra. So, Amazon (NASDAQ:AMZN) has sought of Jingbo as an oppurtunity to capture the Indian Fashion market. Then we have Jingbo’s past records. Jingbo made almost Rs.202 crore i.e. about 50 times than its 2011-12 earnings which were only Rs.4 crore. Moreover, the companies losses fell down from Rs. 64 lakh to just Rs. 16 lakh.

 

Whereas, Flipkart’s losses increased to 400 crore while Amazon’s (NASDAQ:AMZN) losses were stagnant at 320 crores. However, the Amazon’s (NASDAQ:AMZN) spokesperson has not given any comments about the company’s (NASDAQ:AMZN) future plans and remains to stay silent. The Jabong Company has been pulling efforts in the fashion industry through the introduction of latest brands.

 

Besides that, the company has also bought three other companies i.e. Dorothy Perkins, River Island and Miss Selfbridge. Moreover, the company is also planning on starting some private brands and a few more designer brands. Moreover in E Commerce companies, have to show good incomes and assessed risk in order to claim their position. Although Amazon (NASDAQ:AMZN) has got quite a hold on the Indian market but there is time till the market accepts the company completely.

 

Some investors are still finding difficulty in coping with Amazon (NASDAQ:AMZN) but things will settle down soon.

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