Flipkart and Myntra, India's biggest e-commerce companies have merged to one to create an entity with an annualized sales of $1.5 billion, bringing them closer and in some cases emulating the much older offline retailers of those like Reliance, and Future Group. To take on Amazon which is growing rapidly in Indian Market and has been become increasingly aggressive in e-tailing market this merger and acquisition of Flipkart and Myntra might place them in better position from what they are now and this deal which was influenced by the two largest common investors, Accel Partners and Tiger Global.
Flipkart and Myntra did not reveal the actual details regarding the deal but the analysts estimated that the Myntra was valued at about Rs 2,000 crore which is the biggest Merger and Acquisition deal in India's e-commerce. The cash and the stock deal is expected to be more than $250 million.
…show more content… Myntra which is rumored to be raising funds from Premji Investments, Myntra is supposedly doing well and is scaling up. But the question is how about Flipkart and Myntra exploring synergies?
It is not that they individually are performing bad but in this current cut throat competition in this space and drying funds, the two companies can explore a deeper channel that will make 1+1, 11.
Here is why:
The Next big thing for Flipkart, was Fashion apparel.
Even after taking six months, the company could not manage to get into fashion apparel and is not doing well in this segment
For instance, give a look at tags extracted from Flipkart’s homepage
You will notice that there are not too many fashion/apparel keywords.
Why is Fashion (Apparel) Space producing a great deal of profit?
Simple it is because of the high margin business unlike electronics or other segments plus, private labels are catching up and this Fashion (Apparel) Space is driving margins up to whooping