SUBMITTED BY: GROUP 7

AMAN JHA
AAYUSH RAJ
ANTONY LAWRENCE PULIKOTTIL
SHREYA DALMIA
JIGYASA TIWARI
MANMOHAN TOSHNIWAL

SUBMITTED TO:
JABONG: BALANCING THE DEMANDS
OF CUSTOMERS AND SUPPLIERS PROF. RAMBALAK YADAV
 Summary

Headquartered in Gurgaon, the National Capital Region of India, Jabong was a fashion and
lifestyle e-commerce portal which was co-founded by Arun Chandra Mohan, Praveen Sinha
and Lakshmi Potluri in the year 2012. Jabong’s goal was to provide the highest level of
customer satisfaction and to achieve this they relied on a cutting-edge e-commerce platform, a
highly experienced buying team, agile warehouse system and a state-of-the-art customer care
centre. Jabong’s value proposition to the customer was a broad selection of products, a superior
buying experience, timely delivery, competitive prices and a quick resolution to problems. In
the inaugural year of its operations, Jabong recorded gross sales of more than US$100 millions
and numbers kept on pilling as the company started to grow. From shipping around 7000 orders
a day to 14000 orders, from listing brands like Dorothy Perkins, River Island, Mango, etc. to
partnering with Jack & Jones. The company was soon predicted to hit the $1 billion club in FY
2015/16. Their popularity became more when they introduced the digital fitness campaign
“Gear Up Buddy” in association with Puma. Jabong did significantly well in marketing their
site digitally as they were able to convert 1% of new visitors to its website into paying
customers. The company further invested heavily on marketing to drive customer traffic
irrespective of the sales outcome. Jabong offered more than 1,00,000 products from more than
1,000 brands to the customers. One of the main reason of Jabong being hot favorite among
customers was discounts available on PUMA products and this accounts heavily to the gross
sales. But when PUMA stopped giving discounts there was a challenge for the e-commerce
portal as suppliers wanted brand salience, premium price and exclusivity, on the other hand
buyers wanted assortments and discounts on premium brands. So through the case we shall see
how Jabong can balance the demands of customers and suppliers.
Q1. What should Jabong’s top priority be: sales, profits, customer base or investors?
Explain with justification?

A1. Jabong’s top priority should be its customer base. There has been a steady increase in the
customers and the orders placed by them. From exhibit 7, we can see that in the financial year
2013/14, the number of transactions was 8.7 million. This increased the gross profit for Jabong
by 31.42 $Million (from -5.26 to 26.16). From exhibit 3, we can see that the number of orders
from existing customers is also increasing. This shows that the customers played a significant
role in the growth of Jabong and they should make the customer base as their top priority.

Q2. Analyze the interdependency of puma and Jabong. How should Jabong interpret
PUMA’s new discount policy?

A2. Puma, after its entry into the Indian market in 2009, intelligently managed to increase
sales and gain market share, as shown in Exhibit 4. In 2010, it had a 10% share and by 2013 it
had 20%. They did this using the opportunity of the fall of Reebok and partnered with major
e-commerce companies. That gave them a platform to sell their products.

• Jabong was an essential strategic partner of puma, so it used the inventory model that
analytics use for consumers to carefully optimize their product portfolio and allow them
to store only high-selling or core products.
• To maintain a steady growth in the e-commerce market, puma started offering extra
margin to their online partners and in return PUMA got a better visibility of their
product to the customers.
• Jabong started using PUMA’S brand name to acquire new customers and were also
offering additional discount. PUMA helped Jabong to convert more visitors into buyers
• Puma's new discount policy will increase the aspirational value of puma with
customers, which will help Jabong improve profitability and reach and profile
customers.
• Puma wasn't sure how other e-commerce competitors would react to its policy, but
Jabong knew that puma would initially offer them the best commercial offer because
of the large sales they offered to PUMA.
Q3. What would be the long-term implications of PUMA’s decision on the footwear
channel in India?

A3. Following Reebok's fall in India in 2009, PUMA aggressively used e-retail to increase
sales and market shares. To maintain this growth, PUMA offered high margins and discounts
to e-retail companies. At the beginning of 2014, it was facing divergences from conventional
retailers and distributors as their business was being affected due to high discounts from e-
retailers. PUMA decided to completely decrease or discontinue discounts granted to e-retailers
by October 1, 2014. PUMA formulated new guidelines that stated that:
• Major PUMA items could not be discounted or combined with promotional coupons by
channel partners.
• Specially manufactured units (SMU) for all e-retailers.
• Exclusive products for some of the leading online partner channels.
• Discounts may be given on old season merchandise by retailers at their discretion.
As a result of the lack of discounts, Jabong's PUMA sales dropped 20% to 800 units per month.
By launching SMUs, there is a high chance that they cannibalize sales of top merchandise at
the aggressive price of SMUs by e-retailers.
The long-term implication of PUMA's decision will not be drastic, as retail stores account for
64% of PUMA's revenue and e-retail accounts for 16% of revenue. Therefore, even if there is
a cannibalization of SMU sales of main items, there will not be much effect on retail sales.
Q4. What is jabong value proposition to its customer and suppliers? Is there any inherent
contradiction? How can jabong resolve that?

Ans. Jabongs value proposition for the supplier were as follows

• Brand marketing
• Widespread and effective product visibility
• Premium prices

The value propositions for customers were as follows:

• On time delivery
• Broder selection and variety of products
• Better after sales service (i.e. problem handling)
• Competitive prices

The main contradiction that jabong faces is that it cannot fulfil the value proposition of
customer and supplier at the same time. This is because the customer wishes to buy exclusive
products at discounted prices, but the supplier wishes to stick to the premium prices.

This can be controlled if jabong maintains the availability of its exclusive and premium brand
products exclusively on its website. That are not available with other e retailers. Beside it
should give a profitable share to its supplier. Doing this can help the company to mange it
product line and also fulfil the value proposition for the customers and suppliers.