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Flipkart Acquires Myntra

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information about deal of flipkart and myntra.what are the benefits of this merger.

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Started Sept 5 2007

Founders- Sachin and Binny Bansal.

Payment methods: COD

Revenue $11.8 billion

First company to start cash on delivery.

Flipkart sells 20 products per minute .

2 Established -2007

Owners- Mukesh Bansal, Ashutosh Lawania, Vineet Saxena.

Turn Over 800 Crore

Flipkart acquires Myntra in Indias largest e-commercedeal

Flipkart India Pvt Ltd, the countrys largest e-commerce firm, on Thursday 22nd May 2014 acquired rival Myntra.com in the largest-ever deal in the countrys e-commerce market.The two Bangalore-based companies merger amount, analysts estimates suggest the cash-and-stock deal is likely to value online fashion retailer Myntra at more than $330 million.The deal also comes at a time when the department of industrial policy and promotion (DIPP) has made a strong push for foreign direct investment (FDI) in e-commerce as part of its agenda for the new government. The current policy does not allow FDI in business-to-consumer e-commerce even as 100 per cent FDI is allowed in business-to-business e-commerce.The acquisition is likely to give Flipkart, not just a stronger foothold in the fast-growing online fashion market, but also the additional scale it needs to fight competitors such as Amazon.This acquisition helps Flipkart grab a bigger market share and compete better.

Myntra co-founder and chief executive Mukesh Bansal will head the fashion business of both Myntra and Flipkart, and Myntra will operate as an independent entity and retain its website, while Flipkart will continue selling apparel on its site.Tiger Global and Accel Partners first proposed the deal last year.Mutual SynergyTechnology at Flipkart and market leadership of Myntra in order to accelerate our growth.WHY???BIG DEAL.BIGGER REASONS.BUSINESS MINDS!!!!!!!!!!Cost Of Acquisition And Economies Of Scale - By joining forces, Flipkart and Myntra would realize huge cost savings on customer acquisition as they basically target the same customer and demographic base. Combined company would control the major E-Commerce of India resulting in significant economies of scales.Competition Amazon, with its well oiled machinery, is ready to fight against all players of E-Commerce in India which both Flipkart and Myntra would better be able to face as a combined entity.

GAME OVER EFFECTProfitability targets Accel Partners and Tiger Global are investors to both Flipkart and Myntra. Their merger would concentrate the investments from both the companies, helping them to reach revenue and profitability targets much quicker.

Pants into new business Apparel segment is one of the most profitable segments in e-commerce industry with profit margin varying from 20-50%. Flipkart would take advantage of Myntra being the strongest player in this industry, for its own growth and profits.

Facts of Flipkart Myntra acquisitionIts a 100% acquisition. The current investors in Myntra remain so and theres no exit taking place.Myntra continues to function as an independent entity and so does the fashion division of Flipkart.Only Mukesh Bansal from Myntra joins the Flipkart board. Hell head the fashion business for Flipkart.All the Myntra employees get the universal stock options.Facts of Flipkart Myntra acquisition$100 million to be invested in Flipkart fashion business in coming years.Together, Flipkart and Myntra will have over 50% share in the online fashion market in India (Myntras current share is ~30%).There are no immediate plans of integrating the duo but the possibilities will be explored in near future.Facts of Flipkart Myntra acquisitionThere are enough funds with Flipkart to sustain for long, hence there are no immediate plans for next round of funding.Flipkart is definitely eyeing for an IPO but not the priority as of now.Flipkart plans to go Alibaba way rather than the Amazon way due to more similarities in between Indian and Chinese consumers.Facts of Flipkart Myntra acquisitionTheres no threat to Myntras online fashion dominance by Amazon.Flipkart aims to grow its fashion/apparel business to an extent that it accounts to 30% of their revenue shares.Key stakeholders in Myntra have become millionaires with this deal.Myntra continues to hire and expand. Have global ambitions as well.

Myntra + FlipkartFlipkarts ReasonWanted apparel products specialization, deeper understanding of fashion, aesthetic presentation and experience.Fashion products to become the most popular category in the near future.

Myntras ReasonTo have a stronger distribution network with the present ratio being at 70:250To foray into the mobile platformTo increase warehouse capacity by 4 timesCHALLENGES

Benefits

-> Flipkart and Myntra together create the largest e-commerce stories and together will dominate the market.

-> online fashion market share Myntra 30% & Flipkart 20%at present.

FLIPKART MYNTRA THE GAME CHANGER-> Become leaders in the category of Fashion.

-> Flipkarts earned 4-5% by electronics & phones category, F&A will generate double digit margins.

-> 65% market share - online fashion segment by December 2015.

-> Myntra to adopt Flipkarts Operational model - Marketplace Model in order to overcome:

No need for Warehousing

No shipping Costs

Increased Profit Margins

Expand its reach to new customer.

26-> India's e-commerce market has seen huge growth in the past few years as more people log on to the Internet to shop. FlipMynt also needs to overcome the threat of small online retail markets.

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