Rocket Internet is reportedly looking to sell its top e-commerce firms Jabong, Foodpanda, and FabFurnish amid intensifying competition in the Indian online retail sector.
The Berlin-based Internet company is now planning to change its strategy and form a venture capital fund to invest directly in firms in India rather than "incubating startups".
"Rocket Internet just failed to anticipate the depth of competition in India. The internet business in India is a different beast altogether," a former senior executive at one of its companies in India told The Economic Times.
Some analysts said that a shift in the company's strategy underlines that its model of operations in India has been unsuccessful.
Its top companies -- fashion retailer Jabong, food services aggregator Foodpanda and furniture retailer FabFurnish -- are facing tough competition from new entrants, as they eat into their business by constantly streamlining their operations.
Startups like TinyOwl and Swiggy, which have come up in the past one year, are now challenging the business model of Rocket Internet companies in India. These companies have also attracted massive funding from various investors.
Besides this, established players such Flipkart, Snapdeal and Amazon are fast expanding into segments like fashion and furniture, resulting in increased competition for Jabong and FabFurnish.
While four of five founder-managing directors of Jabong have already left the firm, the top management at Foodpanda India is seeing a constant reshuffle. Foodpanda now faces competition from a new online food ordering firm, Zomato.
Meanwhile, FabFurnish founders Mehul Aggrawal and Vikram Chopra have washed their hands of from responsibilities of overseeing day-to-day operations. FabFurnish competes with Urban Ladder and PepperFry.
"(Rocket Internet's) model of owning 90% of a venture simply doesn't motivate the founders, who, for obvious reasons, are not going to have the same values as that of Narayana Murthy or a Nandan Nilekani. The risk is imminent," said a fund manager.
While current and ex-entrepreneurs at Rocket Internet have confirmed the developments over the company's exit plans, Rocket Internet spokesman Jan Christoph Bohnerth denied commenting on the developments saying that were just "rumours".
"Rocket Internet continues to believe in the Indian internet consumer market. We will continue to be invested," said Foodpanda India chief executive Saurabh Kochhar.
