Flipkart-owned online fashion portal Jabong is planning to keep only 25 per cent of employees out of its current strength, which is reportedly around 600 as a part of the integration process with Myntra.
It could fire an additional 200 of its employees in the next three months, said ET report quoting sources close to the development. Gurugram-based firm’s employees are also reported to move to Bengaluru.
Last Friday, Myntra’s chief executive Ananth Narayanan had announced that about 250 employees would lose their jobs as Myntra and Jabong are combining functions from finance, technology, marketing and creative teams among others departments. Narayanan had also dismissed the reports that he was leaving Myntra following Binny Bansal resignation.
The just-announced integration of the two brand’s back-office teams is a long-planned and one-off realignment that started since Myntra’s acquisition of Jabong in July 2016. We have no further restructuring plans at this time, said Flipkart Group spokesperson in a response to Entrackr.
The company believes integration is the best way to ensure that both brands can achieve long-term growth and success, it added. However, it did not make comment on the number of employees they are laying off.
Entrackr queries to Myntra and its CEO did not elicit any response.
Walmart, which acquired 77 per cent of stake in Flipkart, is now focusing on tightening operations to improve profit margins. Walmart does not see any logic in running two portals for selling premium brands.
The integration of both the fashion portals is part of the move, which would help Walmart cut losses and consolidate their functioning in the segment.
Two years ago, Flipkart had acquired Jabong from Global Fashion Group in a fire sale worth $70 million. Since the acquisition, the fashion portal is running independently.
Last fiscal, Jabong had seen its revenue dropped by 13 per cent. According to RoC documents, Jade Eservices, which is one of the largest sellers on Jabong, reported revenues of Rs 757 crore in the financial year 2017 compared to Rs 873 crore in the FY16.
In the online fashion segment, Flipkart along with both the firms’ command about 70 per cent of the market share.
Update: The news piece has been updated with Flipkart’s Group response.