Indian e-commerce major Flipkart's online fashion retailer Myntra has acquired its smaller homegrown rival Jabong for $70 million in cash. The acquisition will strengthen Flipkart's fashion segment against Amazon, which has been doubling down on its investments in the country.

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Started by the Germany company Rocket Internet in 2012, Jabong was once a major player in India's online fashion retail industry. However, it had recently taken a backseat with poor sales and the exit of its top management. It also lost its market share after Flipkart acquired its competitor Myntra in 2014 for $300 million and invested considerable money on the fashion portal to attract customers.

Jabong's valuation had decreased from $1.2 billion in 2014 to $100 million in 2016. Its owners had been looking for a buyer for over a year, and had held talks with Flipkart's rival Snapdeal, the Future Group, and Indian industrialist Aditya Birla's e-commerce venture Abof.

"The acquisition of Jabong is a natural step in our journey to be India's largest fashion platform. We see significant synergies between the two companies especially on brand relationships and consumer experience," Myntra CEO Ananth Narayanan said.

Jabong has more than 1,500 international high street brands and Indian labels on its platform. The merger of Myntra and Flipkart is expected to have 15 million monthly active users.

"Fashion and lifestyle is one of the biggest drivers of e commerce growth in India. We have always believed in the fashion and lifestyle segment and Myntra's strong performance has reinforced this faith," said Binny Bansal, CEO and Co-Founder, Flipkart. "This acquisition is a continuation of the group's journey to transform commerce in India."

Flipkart's journey with Myntra has been bittersweet, after the company experimented with turning Myntra into an app-only platform before relaunching its website in less than a year. The retailer now plans to open physical retail outlets as part of an omni-channel strategy to increase sales to $1 billion by next year.

Flipkart's acquisition of Jabong consolidates the e-commerce market for a showdown between Amazon and Flipkart.