Flipkart adds Myntra to its cart

Bengaluru: In a coming together of Bansal, Bansal and Bansal to take on rival and global giant Amazon, India’s largest online store Flipkart is all set to buy out competitor Myntra.

The announcement is expected on Thursday. Late on Tuesday evening, Myntra.com sent out an invite to the media saying CEO Mukesh Bansal would make an announcement on a ‘strategic development in the company’.

While Flipkart’s top duo Sachin Bansal and Binny Bansal did not take calls, sources within the company said its staff had been informed of the impending deal on Tuesday.

The terms of the deal are not known but news agency Bloomberg reported that Myntra, the biggest online apparel store in India, is being valued at $330 million, or close to Rs 2,000 crore. Flipkart is expected to pay for the deal through a combination of cash and stakes in the combined entity.

Myntra’s revenues are still in the sub-Rs 1,000 crore league; Flipkart reported a loss of Rs 281 crore on a revenue of Rs 1,180 crore last year.

By the end of this year, Flipkart expects to have sold $1 billion (around Rs 6,000 crore) of merchandise on its website since inception and the company is expected to go public in 2015.

While eCommerce is still at an early stage in India, the market is expected to grow rapidly and touch $22 billion by 2018 as more and more Indians get online.

The Flipkart-Myntra deal is essentially a push for revenues and size to take on Amazon, which is already making inroads into the Indian eCommerce market merely selling other Indian retailers’ wares.

Flipkart employees have been told that nothing will change at either their company or at Myntra, and that both online sites will continue as before, but the revenues will simply add up. 

If the incoming Narendra Modi government opens up online retail to foreign direct investment, Amazon will be a big threat to Indian players.

What’s more, Chinese giant Alibaba, too, is rumoured to be eyeing the Indian eCommerce space and is expected to arrive on the scene soon.