Jabong's growth rate halved in Q2

The pace of growth for Indian fashion and lifestyle e-commerce venture Jabong almost halved last quarter and it remained the top money losing proposition for German emerging markets and Europe focused internet company Rocket Internet.

Jabong, one of the two large fashion e-tailers in the country besides Flipkart-controlled Myntra, saw its net revenue growth slipping to 18.5 per cent in the second quarter ended June 30, 2015 over the year-ago period against a robust 35.9 per cent rise in Q1 and a staggering 135.7 per cent growth in 2014 as a calendar year. Its sequential quarterly growth was pegged at just 6 per cent.

The firm did relatively better in terms of gross merchandise value (GMV) that includes sales generated by third-party vendors through its site. GMV growth in Q2 was 30.7 per cent, but this again almost halved compared with a much swifter 54 per cent rise in the three months ended March 31, 2015. Sequential quarterly growth for GMV just about crawled up 2.7 per cent.

Third-party vendors now represent close to 40 per cent of all transactions on Jabong.

Jabong, which has seen a slew of top management changes with founding team members moving out, has also been in the radar of other e-commerce majors. Last November, as first reported by VCCircle, e-commerce giant Amazon.com, Inc was in talks to acquire Jabong where the asking valuation was $1.1-1.2 billion. But later, the deal was called off due to a valuation mismatch between the prospective buyer and its shareholders.

Now media reports have linked it to prospective buyers such as Paytm and Snapdeal, citing sources. It was brought under an umbrella of fashion related internet properties of Rocket Internet early this year, christened Global Fashion Group.

Meanwhile, Jabong is still losing over half of what it earns with its operating loss margin pegged at (-) 55 per cent in the first half of this year against (-) 48 per cent in H1 2014. In the same period last year, Jumia and Zalora were bigger money losing ventures in terms of EBITDA (earnings before interest tax and depreciation and amortisation) loss margin among the 'proven winners' of Rocket Internet.

Operating or EBITDA losses capture what a firm loses from its operations or day-to-day business activity factoring out other aspects like interest on loans (including working capital) and depreciation or accounting for loss of value of assets through wear and tear. EBITDA margin refers to EBITDA as a percentage of revenues.

Click here for Jabong's numbers in Q1.