Free Press Journal

Flipkart buys Myntra in Rs 2K cr deal as ‘Bansals’ join hands

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Bangalore: India’s largest online retailer Flipkart today acquired online clothing seller Myntra Designs for an estimated Rs 2,000 crore, in a deal that would give Flipkart control of roughly half of nation’s e-commerce market by sales.

Flipkart said Myntra’s chief executive Mukesh Bansal will head the combined company’s fashion division and have a seat on the company’s board.

While the two companies did not disclose the financial terms, the deal is believed to have valued Myntra at about USD 330 million and its shareholders will get a combination of cash payouts and stakes in Flipkart.


The acquisition gives seven-year-old Flipkart, set up by two ex-Amazon employees in 2007, access to Myntra’s customers and suppliers for a stronger foothold in the fast-growing online fashion market that has giants like EBay and Amazon sprawling.

India’s internet retail market is estimated to expand sevenfold to USD 22 billion by 2018 from current USD 3 billion. Flipkart had a 4.9 per cent share in 2013 while Myntra controlled a 4.1 per cent share. Amazon and EBay had 1.6 per cent and 1.2 per cent market share respectively.

“This acquisition helps us grab a bigger market share and compete better,” Flipkart co-founder Binny Bansal said adding the company will invest USD 100 million in the fashion business in the “near future.”

Bangalore-based Flipkart, which is popular for selling books and electronics online, hit the USD 1 billion gross merchandise value (GMV) mark in March this year, a year earlier than the company expected.

Myntra, which sells products from over 650 brands like Adidas, Calvin Klein and Levis, has a GMV of about USD 204 million.

Both companies will be run independently.

“It is a 100 per cent acquisition and going forward, we have big plans in this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market,” Flipkart co-founder and CEO Sachin Bansal told reporters here.

He added that the partnership was directed more towards sharing knowledge than financial reasons, where the two firms will use each other’s expertise in technology and fashion to enhance business for both entities.

The companies did not disclose the deal size but sources suggest it could be worth about Rs 2,000 crore.

Flipkart, which started in 2007 as an online bookstore, today sells products across categories, including fashion and electronics. It also sells white goods and furniture.

The move is expected to help Flipkart strengthen its apparel portfolio further and compete more aggressively with peers like Amazon, Snapdeal and eBay.

“This deal would help Flipkart to gain an upper hand in the fashion and fashion accessories segment which is Myntra’s core area.

Additionally, it is also seen that this segment (fashion) is one of the fastest growing verticals in the ecommerce space. It makes a lot of sense for Flipkart to go with this deal,” PwC India Technology leader Sandeep Ladda said.

There is overwhelming competition in this segment and only the bigger players like Amazon, eBay and Flipkart would be able to survive competition by adopting inorganic growth strategy, he added.

Stating that fashion is one of the most important categories for Flipkart, Binny Bansal, said “…. We feel that together we can build a huge successful fashion business in next 5-10 years and we will continue to run both the entities independently because we want to preserve both the cultures.”

Asked about valuation, Myntra’s Mukesh Bansal said: “We cannot disclose the amount but we are thrilled about the valuation. We think it is absolutely right.”

“Together, we have more than 50 per cent market share in fashion already….Myntra’s own market share is around 30 per cent,” he added.

Playing down analyst views that competition from Amazon was one of the main reasons for acquisition, Sachin Bansal said “I think there will be all kinds of players in the market. We are not focussing on the competition when we make our day-to-day decisions.”     “All that we are looking at is our customers and the data that we get from them,” he added.

Paresh Parekh, Tax Partner (Retail and Consumer Products) at EY said consolidation in the e-Commerce space is inevitable “especially as global players start entering”.

“E-commerce is generating far more excitement and real impact than what some of critics thought earlier. Like it or not, e-commerce is the future. I foresee many more young entrepreneurs tossing and experimenting with new and innovative ideas around e-commerce,” Parekh said.

India’s e-commerce market has seen huge growth in the past few years as more people log on to the Internet to shop. While apparel and electronics are bestsellers for most e-commerce firms, categories such as home decor and household items are also popular.

“It is a 100 per cent acquisition and going forward, we have big plans in this segment. Flipkart and Myntra are getting together to create one of the largest e-commerce stories and together we will dominate the market,” Flipkart co-founder and CEO Sachin Bansal told reporters here.

He added that the partnership was directed more towards sharing knowledge than financial reasons, where the two firms will use each other’s expertise in technology and fashion to enhance business for both entities.

The companies did not disclose the deal size but sources suggest it could be worth about Rs 2,000 crore.

Flipkart, which started in 2007 as an online bookstore, today sells products across categories, including fashion and electronics. It also sells white goods and furniture.

The move is expected to help Flipkart strengthen its apparel portfolio further and compete more aggressively with peers like Amazon, Snapdeal and eBay.

“This deal would help Flipkart to gain an upper hand in the fashion and fashion accessories segment which is Myntra’s core area. Additionally, it is also seen that this segment (fashion) is one of the fastest growing verticals in the ecommerce space. It makes a lot of sense for Flipkart to go with this deal,” PwC India Technology leader Sandeep Ladda said.

There is overwhelming competition in this segment and only the bigger players like Amazon, eBay and Flipkart would be able to survive competition by adopting inorganic growth strategy, he added.

Stating that fashion is one of the most important categories for Flipkart, Binny Bansal, said “….we feel that together we can build a huge successful fashion business in next 5-10 years and we will continue to run both the entities independently because we want to preserve both the cultures.”

Asked about valuation, Myntra’s Mukesh Bansal said: “We cannot disclose the amount but we are thrilled about the valuation. We think it is absolutely right.”     “Together, we have more than 50 per cent market share in fashion already….Myntra’s own market share is around 30 per cent,” he added.

Playing down analyst views that competition from Amazon was one of the main reasons for acquisition, Sachin Bansal said “I think there will be all kinds of players in the market. We are not focussing on the competition when we make our day-to-day decisions.”

“All that we are looking at is our customers and the data that we get from them,” he added.

Paresh Parekh, Tax Partner (Retail and Consumer Products) at EY said consolidation in the e-Commerce space is inevitable “especially as global players start entering”.

“E-commerce is generating far more excitement and real impact than what some of critics thought earlier. Like it or not, e-commerce is the future.

I foresee many more young entrepreneurs tossing and experimenting with new and innovative ideas around e-commerce,” Parekh said.

India’s e-commerce market has seen huge growth in the past few years as more people log on to the Internet to shop. While apparel and electronics are bestsellers for most e-commerce firms, categories such as home decor and household items are also popular.