Flipkart-Myntra to bring in a dozen more international fashion brands to India

Touted as an iconic deal in India’s e-commerce story, the Flipkart-Myntra merger is an acquisition to scale rapidly and capture the minds of customers, said the co-founders of Flipkart. “It is a bit too early to optimize costs,” said Sachin Bansal at a press conference held in Myntra’s office in Bengaluru today where both parties announced the merger.

“Profitability is not a goal now. If we stop investing in supply chain and logistics, it will be a wrong strategy. We should continue to invest to be the leader and to stay ahead of the curve. Investments will dominate our thought process rather than profitability,” Bansal stated, adding that present aspirations go beyond taking on Amazon.

Their role model, he informed, is the Alibaba group that recently went public. “We believe India is different and so we are going to be different. Alibaba is a better suited model for India as both-Alibaba and Flipkart-Myntra-have similar markets and customer base. There is a lot of learning from the Chinese e-commerce market. We believe local players will play a large role in e-commerce going forward, just like how it has happened in China, Brazil and Russia.”

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Commenting on the strategy to dominate the fashion space in online retail, Myntra’s Mukesh-who will be heading this vertical post the acquisition-told Firstbiz that they aim to reach a $2 billion gross merchandise volume (GMV) in fashion by 2016. “We will get there a lot sooner. The overall fashion category in e-commerce is worth $60 million and within that, brands are increasing. Alongside, Myntra is building its own brands. Together we have an ambitious agenda,” Mukesh informed.

Both parties together hold over 50 percent of the market share in fashion e-commerce and Mukesh said that they plan to grow this to 60-70 percent, “to dominate the space in a big way.” Fashion, they predict, should contribute 20-40 percent of the company’s overall topline.

Sharing a few plans on his agenda, Mukesh said that they are in the process of bringing a dozen odd international brands to India by the end of this fiscal year. In keeping with the future of e-commerce and the role of local players, Mukesh mentioned that they aim to expand their fashion palette by bringing in many local players, smaller boutiques and designers.

“Our larger strategy would be for Flipkart to be a one-stop-shop for fashion with the largest selection of catalogues from value to luxury brands where customers can get the best price, choice and service. Myntra, on the other hand, will be about the whole experience where they get the ambience, fashion advice, be able to see look-books, and a selection of merchandise that we handpick with a higher fashion quotient. We are scaling both ways of retailing fashion so we can dominate it. There will be no clash in operations or in models,” Mukesh affirmed.

For customers, both platforms will exist independently as they do now while collaboration will take place at the back-end viz-a-viz supply-chain and technology. “There will be a lot of knowledge, platform and technology sharing. Wherever we see synergies, we will leverage technologies off each other,” the founders said.

Though some brands overlap between both portals, that is not seen as a problem by both parties. Flipkart offers over 15 million products across 70 categories, has 18 million registered users, 3.5 million daily visits and 3,000 sellers on their platform. Myntra has partnered with over 650 fashion and lifestyle brands in the country, received over 50 million visits every month and services more than 9,000 pin codes across the country.

“Acquisition is an important strategy for us in all areas such as technology, supply-chain automation, et al. E-commerce will be one of the most dynamic industries in the next ten years with companies scaling up, shutting, or going public,” Sachin said, adding that an IPO is something they would look at in the future, but is not a top priority at the moment.