May 22: Flipkart, India’s largest online retailer, acquired fashion portal Myntra on Thursday and said it would invest $100 million (nearly Rs. 600 crore), in the fashion business.
“It’s a 100 per cent acquisition and going forward we have big plans in this segment,” said Sachin Bansal, co-founder of Bangalore-based Flipkart.
Financial details of the deal were not disclosed, but a source in the company told Reuters that the transaction was valued at close to $300 million, or nearly Rs. 1,800 crore. Flipkart has announced that it will keep Myntra as a separate entity.
The deal gives Flipkart a stronger hold in the fast-growing online fashion business in India. Bangalore-based Flipkart, set up by two ex-Amazon employees in 2007, has sought to grow its presence in this segment, where Myntra is the market leader.
Mr Bansal said Myntra’s cofounder Mukesh Bansal will head the fashion category for the combined group and will also be joining Flipkart’s board.
Bangalore-based Myntra was established by four IIT alumni – Mukesh Bansal, Ashutosh Lawania, Imran Khan and Vineet Saxena – in February 2007.
Tiger Global Management and Accel Partners are investors in both Flipkart and Myntra. E-Commerce companies like Flipkart & Myntra are, on an average, growing at 40-45 per cent annually.
The deal comes at a time when domestic online retailers are gearing up for tough competition after Amazon, the world’s biggest online retailer, last year slashed prices and rolled out next-day delivery in a bid to win market share in India’s fast-growing e-commerce industry.
The Indian e-commerce market was worth $13 billion, or nearly Rs. 75,000 crore, in 2013, according to a joint report by KPMG and the Internet and Mobile Association of India, with online travel accounting for over 70 per cent of consumer e-commerce transactions last year.
Online sales of retail goods totaled $1.6 billion, or nearly Rs. 10,000 crore, in 2013, according to research firm Forrester, and are expected to reach $76 billion, or nearly Rs. 4.5 lakh crore, by 2021, according to consultancy Technopak. (1$=59 Indian rupees)
