In a surprising move, Aditya Birla Group has decided to shut its two year old fashion e-commerce venture Abof.com. According to information, company’s top executives held a brief meeting earlier this week and decided that 31st December would be the last working day for Abof.com. All the 240 employees of the company would be duly paid their salaries before winding up.
Santrupt Misra, HR director at Aditya Birla Group, cited the unfeasibility of e-commerce business owing to heavy discounting as reason for Abof.com’s sudden closure. He quipped that the Indian e-commerce market, which is often touted as a fast growing market, will struggle to make sizeable profit in coming years.
Abof’s closure will mark Aditya Birla Group’s second failed e-commerce venture, after it decided to wind up Trendin.com last year.
Riding high on Aditya Birla’s brand name, many industry experts felt that Abof (short form for Aditya Birla Online Fashion) could have made the splash on India’s e-commerce if it had chosen to do so. After all, not many e commerce ventures (including Flipkart & Amazon) could boost the financial prowess like Aditya Birla backed Abof. The nearly $50 billion Aditya Birla Group is India’s third largest and one of the world’s largest industrial conglomerate.
But Birla’s evidently were not very serious about India’s e commerce market to begin with. Abof’s lack of marketing efforts partly demonstrated the group’s casual approach towards e commerce business, especially when Amazon & Filpkart were spending millions. In fact, Abof never looked serious about taking on Flipkart & Amazon nor did it seriously pursue any acquisition efforts during the last two years. The company apparently missed on some really hot acquisition properties including Ebay & Jabong, which were later acquired by Flipkart.
Some analyst claim that any profit from Abof.com would have been too frugal for a big conglomerate like Aditya Birla and hence the group may have thought that the investment & wait is simply not worth it.