Flipkart has made perhaps the biggest purchase in Indian e-retail segment so far, buying out its rival in the Fashion department, Myntra.com for an estimated price of ₹2000 crores, according to sources acquainted with the details of the deal.
“It is a 100% 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.
Asked about valuation, the companies declined to comment.
Sachin said Flipkart will invest $100 million (around Rs 600 crore) in its fashion business in the near-term.
“We, at Flipkart, believe that we want to be leaders in every segment and fashion is a category of the future, this acquisition will help us become leaders in this category,” he said.
Flipkart started out as an online bookstore, in 2007 and now sells products across categories, including fashion, electronics and furniture.
The move is expected to help Flipkart strengthen its apparel portfolio and compete more aggressively with peers like Amazon and Snapdeal.
Myntra co-founder and CEO Mukesh Bansal says that the company will continue to operate as a separate entity with its and he will be joining Flipkart board and heading their fashion business.
“It was very essential to keep Myntra a separate entity and preserve its culture. I’m here for the long haul and we will continue to grow in the market,” Mukesh Bansal 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 becoming huge.
The industry, estimated to be worth about $3 billion currently, has firms such as Snapdeal, eBay and Amazon which follow the marketplace model.
Due to increasing Internet penetration and youngsters shopping online, Flipkart’s annual sales crossed $1 billion (over Rs 6,100 crore) a year ahead of target in 2014 (It had estimated to reach the billion dollar mark for gross merchandise value by 2015).
Flipkart also operates under the marketplace model allowing retailers to offer products on its platform, and has since its inception raised over $500 million from investors including but limited to Naspers, Tiger Global, Accel Partners, Dragoneer, Morgan Stanley, Sofina and Vulcan Capital. Last year, Flipkart raised $360 million from private equity firms, one of the largest funding deals in the Indian e-commerce space.
Myntra sells products from over 650 brands like Nike, HRX by Hrithik Roshan, Biba and Steve Madden and clocked revenue of about Rs 1,000 crore in the previous financial year. Aiming to double its revenue in this financial year, it is expanding its seller base and adding products. Myntra presently has about 100 sellers on board and plans to increase this number to 1,000 by fiscal end.