Since inception, Flipkart has evolved from an e-store selling books into an online marketplace with several product categories and providing a platform to connect sellers and buyers pan India. Over time, product categories according to consumer demand have been added accounting for Flipkart’s expansion and popularity.
Started a few months back, the then-said-to-be rumour of a Flipkart-Myntra merger has picked up momentum lately with buzz of an announcement soon about the concluded deal of an acquisition or merger, yet to be confirmed. In the wake of this, there is fresh buzz about Flipkart’s IPO (Initial Public Offering) likely to go on the floors next year.
Flipkart is expected to offer its shares on the NASDAQ stock exchange in the United States of America. It raised $360 million in two rounds in 2013 when it was valued at about $1.6 billion in July 2013. However, its valuation is estimated to be significantly more now.
With Amazon’s steady entry and expansion into the Indian ecommerce market, Flipkart along with the other home-grown online retailers saw the need to sharpen their operations. Now with Amazon’s lead in just eightmonths, even Flipkart might be taking the Amazon route in certain aspects. Before setting up its own marketplace in India, Amazon acquired and operated Zappos in 2009, a leading fashion and shoe retailer. Zappos operates as an independent portal even today.
Similarly, buzz is that once the Flipkart-Myntra merger is finally through, Mukesh Bansal would be given independent responsibility of the combined fashion unit of Flipkart and Myntra. Also, with Amazon’s tremendous growth and likely entry into fashion soon, it only seems advantageous for Flipkart and Myntra to merge to take Amazon head-on in the competition.
Individually, Myntra’s founders have said that the company requires around $100-150 million (Rs 600-900 crore) in the next three years to achieve its goal of being a Rs 20,000 crore fashion retailer by 2020. Flipkart is likely to pump in $100 billion (Rs 600 crore) into the company which will help it to compete with other fashion retailers like Jabong and stay ahead in the race. Fashion is one of the most contested product segments in ecommerce with an operating margin of 35%. Many players have emerged in the category like Jabong, Limeroad and Fashionara, including web-only brands like Yepme and Zovi.
Amazon’s current dominance on the Indian ecommerce market indicates the need for such a merger between major players so that Amazon and eBay have will have strong domestic contenders to compete with. The Flipkart-Myntra merger will create the first Indian e-tailing powerhouse and boost the growth of Indian ecommerce.
An IPO indicates expansion, meaning more capital as also increased exposure, public image and prestige. It also opens door fir more financing opportunities and take-overs.
Flipkart’s plan for IPO indicates the owners’ unwillingness to sell the company and eagerness to expand and continue its growth, and probably pick up on the pace of growth. The merger and the IPO buzz mean ideal time for sellers to sell their products through Flipkart and take advantage of the increase in efforts to smoothen operations and widen customer base.
After dwindling with her family business, into travel and hospitality, for more than 3 years, Pooja Vishant found her true love in writing. Happy-go-lucky and cheerful, she loves pink; so pink is the way to go if you want to get into her good books. The Associate Editor keeps track of even a leaf that has moved in the ecommerce world!
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