Myntra's Jabong buy might reduce the discount frenzy

Don't be surprised if you start to get lower discounts for your favourite shoes, shirts, et al. That's because with Flipkart's Myntra buying its biggest rival Jabong, the online fashion market would be heavily dominated by this duo.

This deal would make the three portals - Flipkart, Myntra and Jabong - together account for the largest chunk of market share in the fashion and lifestyle category, which is the highest growth category for e-commerce companies.

The fact also is that the acquisition is likely to reduce operating costs for the fashion brands. "This could leverage on a 'multi front-end integrated back-end' e-commerce model. If the brand experience and promise are protected for customers, and supply chains are integrated, this could help in significantly reducing costs and enhancing growth in this category, says Sreedhar Prasad, Partner, E-Commerce, KPMG.

The move is part of Rocket Internet's strategy to exit its India portfolio companies. The German Internet company had earlier sold its online home furniture store FabFurnish to Kishore Biyani's Future Group, which owns a home and furnishing brand HomeTown.

Jabong is a multi-brand e-store with more than 1,500 international high-street brands, sports labels and designer labels. For the first quarter of 2016, Jabong reported an increase in revenue by 14 per cent to around Rs 244 crore.

On the acquisition, Myntra's CEO Ananth Narayanan said, "We see significant synergies between the two companies especially on brand relationships and consumer experience. We look forward to working with the talented Jabong team to shape the future of fashion and lifestyle e-commerce in India."

With this deal, Myntra and Jabong together will have a combined base of 15 million monthly active users and a range of global brands exclusive to both the platforms, such as Dorothy Perkins, Topshop, Tom Tailor, G Raw Star, Bugatti Shoes, The North Face, Forever 21, Swarovski, Timberland and Lacoste.