Online retail firm Xerion Retail, the parent firm of Jabong.com, turned profitable in FY16 for the first time since its inception six year ago. The company reported a net profit of R86 lakh against a net loss of R43.5 crore in the preceding year, according to company’s filing with the registrar of companies (RoC).
The company has kept its expenses under control with increasing it marginally by 3% to R1158.6 crore during the period. In an effort to keep losses under check, Jabong also cut its advertising and promotional expenditure to R1.2 crore from R1.6 in the previous year. As a result, sales of the company also took a hit as it grew only 7% to R1,156 crore during the period.
Jabong’s turnover is derived from sale of lifestyle products like apparels, footwear, jewellery, accessories, etc.
Meanwhile, offline retailer such as Shoppers Stop, Trent and Future Lifestyle reported combined net sales of R10,280 crore for the period.
Most fashion companies are exploring opportunity in private label to boost revenues as it offers better margins to the tune of 50-60%. Other fashion e-tailers such as Myntra, YepMe, FabAlley, Craftsvilla, and Voonik, are also involved in the private label space.
With PE and VC investments drying, e-commerce companies are increasingly focusing on measures to curb losses.
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In July, Jabong was acquired by Flipkart through its fashion portal Myntra for $70 million and is operating alongside Myntra. Jabong and Myntra combined hold about 70% of the market share in the fashion industry.