The E-Commerce War is On in India!

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Source: http://news.entecity.com/flipkart-acquires-myntra/

These are some exciting times for E-commerce in India. Today, Snapdeal raised $100mn in its latest round of funding and Flipkart acquired Myntra for reportedly $300-330 mn. It is yet to be announced whether Myntra will work independent or merge with Flipkart. Lets look at the major repercussions of the acquisition –

  • Myntra claims to be the biggest fashion portal in India’s e-commerce industry. In case of merger of the two identities, it will be adding Myntra’s customers to its current set. This is important since Flipkart’s customer acquisition cost is quite high.
  • Flipkart has presence in a lot of categories but was a later entrant in the apparel market.
    Apparel is one of the largest categories online with estimates varying from it being Rs 1,200-1,500 crore a year – See more at: http://www.businessworld.in/news/economy/5-reasons-why-the-flipkart-myntra-deal-makes-sense/1372822/page-1.html#sthash.wXXUEYho.dpuf
    Apparel is one of the largest categories online with estimates varying from it being Rs 1,200-1,500 crore a year – See more at: http://www.businessworld.in/news/economy/5-reasons-why-the-flipkart-myntra-deal-makes-sense/1372822/page-1.html#sthash.wXXUEYho.dpuf

    Apparel is one of the largest categories online value at Rs. 1200-1500 crore. It will gain an easy stronghold in that category.

  • The acquisition will increase the barrier of entry by helping Flipkart establish itself as a major Indian player. If the FDI gets into e-commerce, the local players will have to compete with the global ones.
  • While it seems like a zero-sum game, Myntra also has its benefits from the merger. It receives access to Flipkart superior supply chain. In addition to that, it gets chance to access more funds which would have been denied if it had disagreed to the acquisition. The acquisition was being pushed by Flipkart and Myntra’s common set of investors – Tiger Global and Accel Partner.

In the meanwhile, Amazon is also gearing up for the war. The marketing budget for Amazon this year rivals those of Indian retail giant Future Bazaar. It has gone on an advertising blitzkrieg with full page advertisements, TV spots and outdoor hoardings.

Snapdeal is also getting ready to wage the digital war backed by some heavyweights – eBay Inc, eBay Inc., Kalaari Capital, Nexus Venture Partners, Bessemer Venture Partners, Intel Capital and Saama Capital.

We have our ears to the ground. The troops are lining up and we hear the echo of the drums. Let the battle begin!

Related readings:

http://tech.firstpost.com/news-analysis/flipkart-acquires-online-fashion-retailer-myntra-for-rs-2000-crore-224118.html

http://www.bgr.in/news/flipkart-acquires-myntra-snapdeal-raises-100-million-to-compete-with-amazon-in-india/

http://www.businessworld.in/news/economy/5-reasons-why-the-flipkart-myntra-deal-makes-sense/1372822/page-1.html

http://www.iamwire.com/2014/04/4-reasons-flipkart-myntra-stop-flirting-married/#_am05hx12

Jumpin’ onto the social media bandwagon

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“Amazon buys Goodreads for $150 million”

“Flipkart acquires WeRead”

Some of the biggest acquisitions in the recent years have been of social media sites or apps. Why are companies suddenly interested in social media and willing to shell out good money for it?

Reason #1: Feeling the pulse of the customer

The question can be answered by another question. What do we do before purchasing a book, a cellphone or a laptop? Don’t we Google the reviews? Ask friends on Facebook and Twitter? The answer to the previous question is the same – access to the pulse of the customer.

More and more customers have started relying on word-of-mouth rather than advertisements and banners. Image

Source: http://www.theatlantic.com/business/archive/2013/04/the-simple-reason-why-goodreads-is-so-valuable-to-amazon/274548/

Amazon’s recommendation engine is now powered by the ratings and reviews of Goodreads users, making it much more accurate.

Reason #2: Mobile presence

“Watsapp is on the path to connect 1 billion people. It processes 50 billion messages a day across seven platforms.”

The potential displayed by mobile apps- Watsapp and Snapchat to connect the people in developing countries like India and Mexico has encouraged erstwhile social media companies to jump onto the acquisition bandwagon.

Reason #3: Complimentary Products

Vine – a six- seconds video sharing site was acquired by Twitter since it went hand-in-hand with its philosophy of short and crisp content. Microsoft acquired Yammer to add it to its suite of Enterprise Office tools. Companies are in process of picking up products that will add benefit their existing strategy.

This was my first attempt at understanding the top 3 reasons behind some of the high value social media acquisitions in the recent years. Hope you like it.