No more low-margin products on Jabong as it switches focus from portfolio to profits

Jabong, the online fashion portal, has decided to discontinue several low-margin brands from its online platform, which includes three-fourth of its private labels. This is being done so that it can trim losses while positioning itself as a platform only for premium lifestyle products.

A unit of German e-commerce incubator Rocket Internet, Jabong will now focus only on top 200-300 brands, as per a top company executive.

"We had spread ourselves too thin and now we are shrinking our portfolio," Sanjeev Mohanty was quoted saying. Mohanty, who was earlier associated with Italian fashion brand Benetton, had joined Jabong as its MD six months ago. "We are sharpening our positioning and opting out of lower price point brands and labels," he added.

Jabong had managed to reduce its losses to about a third in 2015, and brought it down to Rs 46.7 crore from a year ago, however, sales growth were slowed down to 7% at Rs 869 crore.

Also read: Jabong has no buyers, not even at the unbelievably low price of Rs 663 crore

The lifestyle portal is also said to be expanding its ethnic and sports portfolio, Mohanty added.

Even though this move could mean an initial loss of customers, this would also mean that Jabong creates for itself a unique identity, like its competitors have done or are trying to do.

"It is good to consolidate the brand portfolio using analytics and understanding of customer preferences. This could even help in a clear value proposition to the customers. Brands need to provide either revenues or margins or variety to the platform" said Sreedhar Prasad, partner - e-commerce, at KPMG.

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