Flipkart, Myntra Merge; Bullish On Fashion

In a 100 per cent acquisition, the two entities will look at making fashion the largest e-commerce category in the country. Will Amazon, which is yet to complete a year in India, feel the heat?

Flipkart, poster boy of Indian e-commerce, has acquired fashion e-commerce website Myntra, making it the first major consolidation in the Indian e-commerce industry. Recall that in February 2012, Flipkart had acquired LetsBuy.com.

The current development is a 100 per cent acquisition. Going forward, the two entities will look at making fashion the largest e-commerce category in the country. Flipkart and Myntra will operate as separate entities and Myntra founder Mukesh Bansal will head the fashion business for Flipkart and join the Flipkart board.

"We believe that the future of fashion in India is e-commerce. We have known Mukesh for a long time and are delighted to partner with him. Myntra has a strong team with excellent domain knowledge. It also has the best relationships with lifestyle brands. This partnership will strengthen both our positions in the fashion space. We will continue to work as independent entities and grow together as leaders in the Indian fashion and lifestyle industry," say Sachin Bansal and Binny Bansal, co-founders of Flipkart.

"We are excited to partner with Flipkart, the biggest e-commerce platform in India. Sachin, Binny and their team have built a pioneering e-commerce platform on a foundation of strong technology and customer centricity. Flipkart is the most powerful e-commerce brand in India and has a very ambitious agenda to build the next generation of retail in India. Leveraging mutual strengths, we will build Myntra into India's leading fashion powerhouse and create many original fashion brands," comments Mukesh Bansal, co-founder and CEO of Myntra.

Sachin Bansal says the merged entity will invest over $100 mn in the fashion business in the days ahead and will eye over 50 per cent market share in the fashion e-commerce space; Myntra alone is at 30 per cent.

The deal gives Flipkart a stronger hold in the fast-growing online fashion segment in India. In a recent article on Flipkart's recent ad campaign, afaqs! analysed how Flipkart, through its (then impending) association with Myntra, was making an aggressive attempt to position itself as a strong player in the online fashion segment.

Flipkart probably doesn't enjoy the same recall value as Myntra does, when it comes to fashion. Since its foray into the fashion e-commerce category last year, the site has been trying to push itself as a strong contender.

The strong perception of Flipkart as an 'electronics and gadgets' platform is the result of the site's market leadership in the consumer electronics space. However, this favourable perception may well be one of the reasons Flipkart isn't readily thought of as a fashion brand.

In January this year, Flipkart launched a lifestyle private label called Flippd that offers men's apparel and footwear. Following the merger, Flipkart and Myntra - now a combined entity - are expected to give American online retailer Amazon some tough competition. Amazon entered India less than a year ago.

For the record, Flipkart and Myntra have been backed by common investors, Tiger Global Management, Accel Partners and Sofina Capital.