When online fashion retail brand Myntra acquired competitor Jabong in July, the deal marked another major milestone in the storied world of Indian ecommerce. It’s an all-star cast yet again: Flipkart owns Myntra, and with this acquisition, India’s homegrown etail giant has once more made its growth intentions clear. Myntra aside, Jabong, which of late is battling its own set of challenges, has been an attractive choice for investors and online shoppers alike and the $70 million deal ensures that the Flipkart-Myntra-Jabong combine will now dominate the growing online fashion market (online fashion and lifestyle is set to be a $40 billion market in India by 2020). Though some observers say there’s a degree of overlap between the two entities in terms of customers, for Myntra, the deal appears to make eminent sense. Taken together, Flipkart, Myntra and Jabong have nearly two-thirds of the online branded clothing market and the Myntra-Jabong combine has 15 million active users a month. Besides, Jabong was Myntra’s closest rival anyway, and the deal ensures Myntra won’t have to worry about competition for a while.
(This story appears in the 02 September, 2016 issue of Forbes India. To visit our Archives, click here.)
Strategically the deal certainly seems to make sense for Flipkart. Especially in the scenario of down rounds and lack of viable funding options available. Creating a massive entity to corner the market should give them better control over their supply chain and much better competitive positioning. Especially against Amazon, who has very clearly been moving into fashion more aggressively and is not going to be out-spent in India. As with all mergers though, as Sourav has already pointed out, integrating cultural elements between companies is crucial. And if Jabong\'s culture can be brought together into the Flipkart-Myntra mix, is an interesting enough question. Implementation is going to be even more interesting!
on Aug 21, 2016