Taking on Amazon: Flipkart-Myntra Merger

Case Details Case Introduction 1 Case Introduction 2 Case Excerpts

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Flipkart: Leading E-tailer In India

Flipkart.com (Flipkart), often referred to as the ‘Amazon of India’, was started by two ex-Amazon employees, Sachin Bansal (Sachin) and Binny Bansal (Binny), (not related) in October 2007 with an investment of Rs. 0.4 million. The company started as an online book seller with 50,000 book titles and got its first order about four months after its launch. , Two years later – around December 2009, it had grown to become the largest online bookstore in India. Once it picked up momentum, Flipkart started offering various products under different categories.

. In 2010, it began selling DVDs/VCDs, mobile phones etc. In March 2011, the company was doing business with a Gross Merchandise Value (GMV) of around US$10 million. Gradually, it added more categories on its website, www.flipkart.com, such as cameras, laptops, home appliances, e-learning, healthcare and personal products, and clothing.

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Myntra: Leader In Fashion E-Tail

Myntra.com (Myntra) was founded by Mukesh Bansal (Mukesh) and Ashutosh Lawania (Lawania) in February 2007 in a three-bedroom flat in Bengaluru, Southern India. Vinneet Saxena (Saxena) and Raveen Sastry (Sastry) also joined the company as founders the same year. All four founders invested Rs. 5 million in the company. Myntra was started as an on-demand online personalization platform for products and gifts where the customer could personalize products such as mugs, T-shirts, calendars, key-chains, diaries, etc.......

Funding From Various Leading Venture

In October 2007, Myntra got an undisclosed amount of first funding from Accel Partners (Accel) and Sasha Mirchandani . After that the company generated a series of fundings from various venture capitalists at regular intervals. By February 2014, Myntra had generated funds of U$115 million plus in six rounds of funding .....

Acquisition By Myntra

In November 2012, Myntra acquired Exclusively.in Inc and its brand Sher Singh (www.shersingh.com) in exchange for cash and equity. On this acquisition, Mukesh said, “We have been working on a private label initiative within Myntra and wanted a team with strong design and inventory and Sher Singh has done that really well. It made sense to acquire the team.” In April 2013, Myntra went in for its second acquisition, buying FITIQUETTE for cash and stock. Mentioning the significance of this acquisition, Mukesh said, “Myntra aims to create the most compelling fashion shopping experience for Indian consumers at per or better than global standards. FITIQUETTE developed pioneering technology for solving the fit/size problem online. This acquisition will not only help us improve the experience significantly, but will also enhance our technology team with addition of top tech talent.....

Financal Growth Of Myntra

In 2008, Myntra reported revenues of Rs. 40-50 million with a customer base of 150-plus companies and 50 colleges. The company also reported a monthly growth rate of 10-30% with a gross margin of 25-60%, depending on the product. Myntra stated that it would break even by the end of the financial year 2010. In 2010, it was generating Rs. 10 million of revenue every month. In August 2012, Lawania stated that the company had close to 8,000 transactions per day and was shipping about 11,000-12,000 products every day with a margin of 35-40%. In Financial Year (FY) 2012-13, Myntra reported revenue of Rs. 4 billion.......

The Deal

In January 2014, The Times of India reported that Flipkart had approached Myntra with a merger proposal. Initially, the offer was to merge Myntra with Flipkart. However, later, Flipkart changed the offer and agreed to run both companies (Flipkart and Myntra) independently. Experts said that two common investors campaigned for the deal – Tiger Global Management, LLC (Tiger) and Accel. If the deal went through, then it would save both investors from injecting fresh capital into the loss making duo. In addition to this, the merger would create the undisputed leader in the Indian online space and keep the competitors of both companies, such as Amazon and Snapdeal (competitors of Flipkart) and Jabong (competitor of Myntra), at bay.......


Myntra was in the high margin fashion segment and was the leader in this category. Flipkart wanted to establish itself in this segment ever since it had launched men’s clothing in October 2012. Vijay Kumar Ivaturi, member of Indian Angel Network , said, “Flipkart wants to be a horizontal, multi-category, and scale player. Hence, it seems like a good strategy to acquire a category (fashion) player for scale and depth.” The deal helped Myntra gain access to Flipkart's logistics network and it was able to deliver its products to more than 9,000 PIN codes (before this deal it could do so only in 9,000 PIN codes) and cover more than 100 cities (before this deal it was only 30 cities). In July 2014, both websites (Flipkart and Myntra) had 26 million unique visitors followed by Jabong and Amazon with 23.5 million and 16.9 million unique visitors respectively. .......

Road Ahead

After the deal, Flipkart and Myntra had a total 50% share in the Indian online fashion segment. BS reported that both were looking to achieve a 65% share by late 2015 or early 2016. To achieve its target, the company had a plan. According to Mukesh, “Recently (around mid of 2014), we set up a fashion incubator, in which 15-20 people will be given support in manufacturing, sampling, supply chain, etc, to grow private labels. After a year, three-four private labels might be acquired by Myntra”. Both companies also planned to take over some private brands whether online and offline. .......


Exhibit I: Amazon: World’s Largest Online E-Tailer
Exhibit II: Acquisitions Made by Flipkart
Exhibit III:Brands Available at Myntra.com at the end of August 2014
Exhibit IV: Flipkart.com vs. Myntra.com
Exhibit V: Most Valuable Venture Backed Companies