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It always happens so that when a large company merges with a small company, it is always the small company that ends up taking the big hit. This most certainly seems to be the case with the impending merger between Myntra and Jabong, with Jabong being the smaller company and is expectedly feeling the maximum heat.
Jabong has already announced that it is laying off 150-200 employees as part of the restructuring process. Now rumor mills are buzzing with the reports that Jabong is planning to hand over pink slips to another 250 employees. This will take the total of the laid out employees to almost 400.
There has not been any confirmation from official sources about the same. However, sources privy with the matter claim that these layoffs will be completed in the span of next three months. The decision to go for further layoffs was made at a brief meeting in Jabong’s headquarter in Gurgaon on Friday.
Myntra (Flipkart’s subsidiary company) had bought Jabong for nearly $70 Mn in 2016, after beating worthy contenders like Snapdeal and Future Group. Flipkart had pursued the acquisition with an aim to achieve edge in the highly lucrative fashion segment.
The Walmart effect
The merger between Jabong and Myntra is certainly the effect of Walmart takeover. U.S retail giant Walmart had bought majority stake in Flipkart earlier this year, which till date is one of the biggest deals in the online retail space.
Following this acquisition, the Indian e-commerce industry is poised for a fierce battle between two American retail giants – Walmart and Amazon. With Amazon being one of its main rivals, Walmart surely can’t afford to take the Indian online retail battle for granted. And the merger between Jabong and Myntra serves a sure indication that Walmart is all set to take the Indian e-commerce battle head-on.
