Why eBay trails Amazon, Flipkart despite first mover advantage?

NEW DELHI: US e-commerce giant eBay , which trails Amazon and Flipkart despite having the first-mover advantage in India, is looking at expanding its fashion and lifestyle categories and acquiring online fashion retailers .

So far, though, two acquisition attempts have failed. The company held unsuccessful talks for a possible buyout of Fashionara and Rocket Internet-backed Jabong, people familiar with the matter said. "There were talks going on for a possible sale of Jabong to eBay a few months ago. However, they failed as eBay asked Jabong to completely change to a marketplace model that eBay operates.

There has not been any such talks since then," the person added. Gurgaon-based online fashion and lifestyle portal Jabong, owned by Global Fashion Group (GFG), used to run a largely inventory-led model, which means the company bought stock before selling. However, lately it moved to a marketplace model to cut costs and expand faster. Apart from Jabong , the Indian unit of San Jose, California-based eBay was in talks with other online fashion and lifestyle retailers such as Fashionara for acquisition.

However, nothing materialised after reaching advanced discussions, one person said, adding that eBay is still in the market for acquiring fashion e-tailers. Fashion is one of the fastest growing categories in India's rapidly growing e-commerce market. In 2014, market leader Flipkart acquired Myntra.com for about $300 million to shore up its fashion and lifestyle portfolio. Amazon has been aggressively ramping up its own fashion category with heavy advertising of lifestyle products.

eBay India declined to comment on its talks with Jabong and Fashionara. "We don't speculate on acquisitions," a company spokesperson said. "eBay India is focused on providing a wider selection and choice of products to our 5.2 million buyers. We have over 30 million listings across 2,000 product categories including electronic, lifestyle, media and collectibles.

We remain committed to growing our lifestyle category, which includes fashion, home furniture and furnishing, baby products," the spokesperson said in an email. Fashion and lifestyle contribute close to 40% of eBay India's sales, ranking second only to electronics. "eBay seems to have simply lost the plot and watching from the side lines while everybody is doing whatever they are doing. These guys definitely have the pockets to do that. In a way, if they are able to pull it off through a couple of acquisitions, they will look much smarter than others.

The other people burned money to create those assets and now those companies are available for almost free," said Harminder Sahni, founder of retail consultancy Wazir Advisors. Fashionara co-founder Arun Sirdeshmukh didn't take calls or respond to text messages. Jabong did not respond to an email seeking comment.

eBay entered India in 2004 by acquiring auction site Bazee.com and was overtaken by late entrants Amazon, Flipkart and Snapdeal . eBay posted revenue of Rs132.10 crore in fiscal 2015 while Flipkart Internet, the flagship marketplace firm of the Bengaluru-based company, posted revenue of Rs 772.49 crore in the same period, according to documents available with the Registrar of Companies.

Source: techgig.com