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.dpufApparel 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!