In what is being touted as the biggest e-commerce merger in India, Flipkart announced its acquisition of fashion e-tailer Myntra. The move is seen by some as:
To counter the growing sales of Amazon and Snapdeal in India.
Scaling up, increasing market presence and dominance that translates into profitability.
What makes the acquisition stand out among the rest of the e-commerce mergers happening currently is that this is not driven by distress, as both companies are currently thriving on their own.
Both companies will still run independently, with no merging in the fashion business or content of the two portals.
While Myntra alone holds 30% of its market share, together with Flipkart it holds 50% of the market share.
Myntra CEO Mukesh Bansal will now join Flipkart’s board and head fashion business at both the portals. Myntra employees will remain in current position, and stock options in Flipkart will be offered to them.
In terms of transactions, fashion segment will rule the market. Flipkart is going to invest $100million in this segment hoping to translate that into the largest sales segment.
Although FDI in e-commerce is cropping up, it is speculated that over time the battle is going to be between the domestic players alone.