As India's ecommerce industry experiences a bloodbath, fashion portals are in the thick of it. This is evident from the fact that riding losses and falling sales forced the online fashion retailer Jabong to find a buyer and exit the business. It struggled to find a suitor for a year and reportedly even lowered its price tag before Flipkart finally stepped in this month to grab the opportunity.

Flipkart has agreed to buy the beleaguered online retailer Jabong, which is backed by Rocket Internet, for $70 million in cash, newspapers reported on Tuesday. The homegrown e-commerce major will merge the company with its Myntra shopping portal to end up with a base of 15 million monthly active users.

When Jabong offered itself to Amazon in 2014, it had quoted a price of $1 billion. But it brought the price down to a mere $100 million last year after failing to find a buyer, according to the Economic Times. Flipkart has managed to grab the company for an even lower price.

But, the clear winner in the online fashion retail segment is yet to be crowned.

With 300 million people online – more than the total population of the United States – India is among the world's fastest growing e-commerce markets. Fashion retail occupies about one-fifth of the total market, according to the Internet and Mobile Association of India.

Huge growth

The segment is expected to reach Rs 72,639 crore by the end of this year and sales recorded an astonishing 46% year-on-year growth in December 2015. Apparel is the most-looked up category by users online. This means that fashion retail could be the next big opportunity for loss-making companies trying to claw out of the red.

“By 2020, India is expected to generate $ 100 billion online retail revenue out of which $ 35 billion will be through fashion e-commerce,” Google India’s Director for E-commerce Nitin Bawankule said last year. "Online apparel sales are set to grow four times in coming years."

But there's also a downside. Consumers often choose clothes based on the quality and pattern of the fabric and size, and doing this online isn't everyone’s cup of tea in a country with a relatively nascent e-commerce market.

Moreover, it is particularly challenging to run a profitable business in a price-sensitive country like India. Just look at Jabong and Myntra.

Jabong suffered losses of Rs 100 crores in the last financial year before finally being folded into Flipkart. Myntra, on the other hand, was bought by Flipkart in 2014 but has been struggling to find a profitable business model.

It reported higher losses than Jabong in the last financial year ending March 2016 even as its revenue rose 70%. Moreover, the site did a flip-flop on its strategy by going mobile-only but then returned to a desktop website in place as well. The company is trying all tacks to improve its sales and cut losses – something it will find hard to do if the heavy advertising and discounts continue.

Scrambling for the top

While two big fashion retailers fought for users and profitability, bigger concerns like Flipkart, Amazon and Snapdeal are vying for the number one spot.

Flipkart’s Chief Executive Sachin Bansal told YourStory on acquiring Myntra that the company’s objective is to become a market leader across segments. This year, Flipkart has been hit by multiple devaluations by investors, so its old sky-high valuations won’t hold up if it goes out to raise funds.

Moreover, there have been several exits at the top level of the company’s management, further rocking the boat even as the nine-year-old company has not shared any road map to reaching the break-even point.

Meanwhile, Amazon is going all out to decimate all competition, including Snapdeal and Flipkart. The Hindustan Times reported on Friday that the e-tailer has managed to beat Flipkart on almost all counts including app downloads, monthly active users, traffic on desktop with the sole exception of Gross Merchandise Value of goods sold.

Apart from localising and starting in new categories like same-day delivery for groceries, the international e-commerce giant is investing a lot of funds to sarve off the competition. Amazon CEO Jeff Bezos has announced that the platform will invest $5 billion in India in three years while Flipkart has put in $3.2 billion in a period of nine years.

But the race is far from over – especially in fashion. The biggest players from the offline space are now lining up to improve their online presence. This includes brands like Max, Fab India and Pantaloons. At the same time, Conglomerates like Aditya Birla Group, Tata Group and Reliance have all entered the online fashion retail space with their own stores as the industry faces a thorough shake-up.

Flipkart’s decision to buy Jabong, hence, gives it some head-start in the space but the race is far from over. Experts bet on a thriving fashion retail space in the future with as many as 50 players competing for the same buyings. As V Ravichandran, Founder of Alive Consulting, wrote in the Deccan Chronicle:

“Whilst the smaller players will be hundreds in number and highly fragmented, I expect that around 50 of these players will become large and well-funded as the market expands. There will not only be online fashion retailers but also fashion curators with personalisation, aggregators.”