Discounts have become so irrational: Jabong MD Praveen Sinha

Aug 05 2014, 09:15 IST
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Jabong co-founder and managing director Praveen Sinha tells how big-ticket investments by the money-spinners benefit niche e-tailers. Jabong co-founder and managing director Praveen Sinha tells how big-ticket investments by the money-spinners benefit niche e-tailers.
SummaryPraveen Sinha tells how big-ticket investments by the money-spinners benefit niche e-tailers.

The recent muscle-flexing by e-commerce majors Flipkart and Amazon — the global giant committing to investments of $2 billion for India, a day after Flipkart's $1-billion blitzkrieg — has triggered speculation on the fate of other e-tailers in the country. Jabong co-founder and managing director Praveen Sinha tells Sayan Chakraborty how big-ticket investments by the money-spinners benefit niche e-tailers and a price war, by way of deep discounting, will do more harm than good to the sunshine sector. Excerpts

Flipkart and Amazon have announced mega investments for India. What kind of pressure does it put on other e-tailers, such as Jabong, to raise funds quickly?

The way I see this, both Amazon and Flipkart are general merchandisers, hence it (raising funds and rethinking strategy) will be very relevant for companies that are into general merchandising, such as Shopclues or Snapdeal. This space will become difficult for another me-too player. To stay competitive, general merchandisers and others will need a similar strategy and investment like Flipkart and Amazon. The requirement of cash and uniqueness will be there for category-focused companies as well, but they will get space to evolve as the market will be created for many more. This has now become an equation of who has enough funds to compete with each other in branding exercise, technology etc.

How are you positioned to fight the battle, since both Flipkart and Amazon are expanding rapidly in the Indian fashion space?

We have raised over $100 million. There are enough investors to bet on the right business model. I don't see the need to raise $1-2 billion for fashion. On a practical note, things have not changed for us. Flipkart had started fashion one-and-a- half years ago. It is not that there was no competition before they acquired Myntra. At that time also, they had enough funding. It's not that if somebody raises $1 billion, they will spend it tomorrow. The investment is need-based and depends on what the competition does or whether we need to do that. We have a strategy and we will try to execute that.

When will you raise the next round?

We are well-funded at this juncture. There is a lot of interest in the industry and we will wait and see how it pans out. We have a strong set of investors believing in our model and the team. On top of that, a couple of new investors have also evinced interest

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