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Puma

Jabong was an Indian fashion e-commerce company founded in 2012 that aimed to provide customers with a broad selection of products from over 1,000 brands at competitive prices through a superior online shopping experience. A key part of Jabong's early success was heavy discounts on PUMA products that helped drive sales and customer acquisition. However, as PUMA shifted away from providing discounts, it created challenges for Jabong in balancing customer demands for discounts with supplier desires for brand value and exclusivity.

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Ankit Verma
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187 views3 pages

Puma

Jabong was an Indian fashion e-commerce company founded in 2012 that aimed to provide customers with a broad selection of products from over 1,000 brands at competitive prices through a superior online shopping experience. A key part of Jabong's early success was heavy discounts on PUMA products that helped drive sales and customer acquisition. However, as PUMA shifted away from providing discounts, it created challenges for Jabong in balancing customer demands for discounts with supplier desires for brand value and exclusivity.

Uploaded by

Ankit Verma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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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, in its entry to the Indian market in 2009, was, but it smartly managed to
increase the sales and gain market share as seen from the Exhibit 4 in 2010 it had
a 10% share by 2013 it had 20% share. They did this by utilizing the opportunity of
reebok’s downfall and partnering with major e-commerce companies. That gave
them a platform to sell their products
Jabong was a critical strategic partner of the puma, so it used the inventory model
they use consumer analytics to optimize the product portfolio carefully and
allowing them to store only high selling or the core products.
To maintain steady growth in the e-commerce market puma gave extra margin as
support to their online partners .in return the puma got better visibility of their
products to the consumers.
To attract customers to their platform, Jabong gave extra discounts. they were
using the puma brand to acquire new customers and in return, the brand was
getting popularized. Puma helped Jabong to convert more site visitors into buyers.
Puma's new discount policy will increase the puma’s aspirational value with the
customers which will help Jabong in improving its profitability and customer reach
and profile.
Puma was not sure how the other e-retailers competitors will react to its policy
but Jabong knew puma would give them the best commercial offer initially because
of the high sales offered by them to Puma .

Q3. What would be the long-term implications of PUMA’s


decision on the footwear channel in India?
A3. After Reebok’s downfall in India in 2009, PUMA used e-retail aggressively to
increase sales and market shares. To maintain this growth PUMA offered high
margins and discounts to e-retail companies. By early 2014, it was facing dissent
from conventional retailers and distributors as their business was being affected
because of the high discounts of the e-retailers. PUMA decided to decrease or
outright stop the discounts it provided to the e-retailers by October 1, 2014.
PUMA framed new guidelines which stated that:
 The core articles of PUMA could not be discounted or paired with
promotional coupons by channel partners.
 Specially Manufactured Units (SMU) for all e-retailers
 Exclusive products for some key online partner channels.
 Discounts could be given on old season merchandise by retailors at their
discretion.
As a result of a lack of discounts, the sale of PUMA on Jabong fell by 20% to 800
units per month.
By launching SMU’s, there is a high chance that they will cannibalize the sales of
core articles by the aggressive pricing of SMU’s by e-retailers.
The long-term implication of PUMA’s decision will not be drastic as retail stores
amount to 64% of the revenue of PUMA and e-retail amounts for 16% of the
revenue. So even if there is cannibalization of sales of core articles by SMU’s there
will be not much effect on retail sales.

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