Recent market reports project the Indian e-commerce market to grow 33% this year to $9.5 billion. Within e-commerce, online travel was the biggest-selling segment, with a 47% market share, followed by sale of apparel and footwear, which accounted for 20% of the market. Books came a close third with a 19% market share, and mobile phones and accessories commanded a 17% market share. Another report estimates the market to grow to $76 billion by 2021.
Jabong is among the popular online shopping destinations in the Indian market. It was launched in 2011 by Arun Chandra Mohan, Praveen Sinha, and Lakshmi Potluri. Jabong not only sells products on their own through an inventory that it manages, but is also an online marketplace for third-party sellers. They primarily cater to apparel, footwear, jewelry, and accessories and carry more than 50,000 products across 700 brands.
Jabong is known for the speedy delivery of products. The company has established its own logistics network to ensure fast delivery. In select areas in New Delhi, Jabong delivers products within 24 hours, and in most major cities it is able to deliver within 48 hours of order placement. Most products are shipped free of charge, while those offered by third party-vendors are delivered at a nominal charge. Like other e-commerce portals in the country, Jabong also offers payment options such as cash on delivery in addition to accepting online banking and credit card transactions. According to a comScore report, as of June 2012, Jabong was the second biggest online vendor in India, with more than 6 million unique visitors.
Jabong is also trying to expand its presence internationally. Through its site, JabongWorld.com, it ships Indian apparel and accessories to international businesses and end customers in all countries.
Jabong’s successful penetration in the Indian e-tail market is helped by various partnerships. Because of its success, Nike partnered with Jabong and launched its new range of cricket gear on Jabong’s site. Given the influence of the Indian film industry, Bollywood, on the Indian psyche, Jabong has also partnered with big banner films such as “Bhaag Milkha Bhaag” to offer exclusive products inspired by the movie.
Jabong has managed to give competition a tough run for their money. Other Indian e-commerce players like Myntra are worried about their potential. Jabong is largely backed by German firm, Rocket Internet, which is known for their capabilities to clone Internet models and turn them into large-scale operations within a short time.
Details of Jabong’s funding are not known, but analysts estimate that Rocket has pumped in $50 million-$100 million in funds into the organization providing it with the capability to spend heavily on customer acquisition and market expansion. The inflow of funds has helped Jabong established a 24/ 7 customer support center and poach employees from other organizations. According to market reports, Jabong spends nearly Rs. 2,000 (~$22.57) on customer acquisition per customer compared with the industry average of Rs. 1,500 (~$16.93). It is also expected to have budgeted more than Rs. 75-80 crores (~$8.5 million-$9 million) towards online advertising.
Analysts don’t expect Jabong to remain independent for long. Rocket is known to sell off its properties at big valuations soon after they attain a target scale. As international interest in the Indian e-commerce market increases, Jabong is likely to see greater interest in its operations.
One thing becomes clear as we continue our coverage of the Indian e-commerce industry: the logistics and delivery network is key to success. Players with significant ambitions in the e-commerce business have all created extensive delivery networks that are capable of handling not only the good delivery but also secure payment processing without getting into theft and other leakages. Jabong is no exception.
Going forward, however, I’d like to see a set of horizontal logistics service providers develop that will perform this function for the large number of small to medium e-commerce vendors that cannot possibly afford to build such networks from scratch.