Flipkart• Flipkart is an Indian E-Commerce company established in 2007 by

Sachin Bansal and Binny Bansal. The business was formally incorporated as a company in October 2008 as Flipkart Online Services Pvt. Ltd

• It operates exclusively in India, with headquarters at Bangalore, Karnataka.

• It started as an online book store and later it diversified and introduced other product segments.

• The first product sold by them was the book Leaving Microsoft To Change The World.

Acquisitions made by Flipkart• 2010: WeRead, a social book discovery tool.

• 2011: Mime360, a digital content platform company.

• 2011: Chakpak.com, a Bollywood news site that offers updates, news, photos and videos.

• 2012: Letsbuy.com, an Indian e-retailer in electronics.

Beginning of

Myntra was established by Mukesh Bansal, Ashutosh Lawania and VineetSaxena in February 2007.

Myntra’s headquarter is in Bangalore, with regional offices in New Delhi, Mumbai and Chennai.

It began its operations in the B2B (business to business) segment with the personalization of gifts, which included :-

• T-shirts,

• mugs

• Caps

• Mouse pads etc

In 2010, the company shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its catalogue to fashion and lifestyle products. Myntra is India’s largest online fashion store.

Myntra currently offers products from more than 200 Indian and international brands.

Myntra left its mark of innovation through online coupons. They were the first Indian E commerce company to introduce coupons.

REASONS OF THE MERGER

Process of the merger

• Two of India’s biggest e-commerce companies Flipkart and Myntra have merged creating an entity with annualized sale of $ 1.5 billion.

• It is the biggest M&A deal in India’s e-commerce story to date, surpassing the $100 million that the Ibibo Group spent to buy RedBus. The transaction was initiated by the common investors Tiger Global Management and Accel Partners.

• As both the companies are privately held, the details of the deal between Flipkart and Myntra has not been disclosed but analysts estimates that Myntra has been valued at around Rs. 2,000 crores ($ 330 million) conducting.

• After the merger, both the entities will exert as independent units with no change in the structure, employees and functioning of the companies. Flipkart will invest US $ 100 million in its fashion business prior to the merger.

Advantages merger

• With the merger, Flipkart becomes the largest e-commerce player by a fair margin in the India.

• For Flipkart, the biggest selling category has been electronics, but with this deal, the company hopes fashion will be the biggest within a few months

• Myntra will leverage Flipkart's logistics network.

• Flipkart will bank on Myntra's fashion expertise and expanding its base of vendor brands.

• Flipkart 21000 PIN CODES Vs Myntra 9000 PIN CODES

Comparison between two companies

Financial part

Biggest M&A deal in India's e-commerce for $300 Million

Deal mainly through the process of stock swap

Has been a private deal influenced by common PE investors like Tiger Global, Accel Partners

As part of the acquisition, Myntra co-founder Mukesh Bansal will join Flipkart's board and will also oversee Flipkart's fashion business

Financial details of the deal, including Myntra'svaluation, were not disclosed by the two companies, but Mukesh Bansal said: "It is a fair valuation."

Additional investment of $100 million in Myntra

• Case in point: the Rs 1,000 crore fine imposed on Flipkart by the Enforcement Directorsate on allegations of FEMA violations. But Myntra refuses to be needled.

• “We are in compliance with the law of the land and we have not violated anything. This is not something we spend time discussing. We have been collaborating with authorities and will continue doing that,” Bansal adds.

• The next one and a half yrs after the merger was a crucial for Myntra as it was gearing up to grab a bigger chunk of the fashion retail pie... especially with competition heating up from the other biggie Arvind, which is getting into the personalised styling space as well .

POST MERGER

Myntra was bought by India’s largest e-commerce firm Flipkart in May for an estimated $330 million in a deal that significantly increased Myntra’s spending power

After its takeover by Flipkart, online fashion retailer Myntra is accelerating its sales growth by widening its product offerings, increasing warehousing capacity by four times and spending more on marketing

“We’ve seen a big jump in customer acquisition (number of new customers) over the past six weeks,” chief operating officer Ganesh Subramanian said in an interview. “This is because we increased our selection by 30-40%, particularly in women’s wear, and we have been marketing heavily across mediums.

Myntra’s daily orders have risen by at least 50-60% over the past four weeks on a sequential basis, a person familiar with the matter said, speaking on condition of anonymity

Myntra has a target of generating $1 billion in gross merchandise value—value of goods sold on its site—by 2016. It gets to keep a cut of that. Myntra reported net sales of over Rs.212 crore for the year ended 31 March 2013

Sales growth has also been boosted by increased discounts as Myntra, flush with funds after its $50 million equity infusion in January and with access to Flipkart’s large cash war chest, has been regularly offering price-offs of as much as 30-40%, compared with earlier levels of 25-35%.

1. Calibrated aggression for survival:

2. SME focus for marketplace growth:

3. VAS for better customer loyalty

http://www.businessinsider.in/Life-AfterFlipkart-Myntra-Deal-Will-These-3-Trends-Rule-E-commerce-In-India/articleshow/37075286.cms

PRESENT SITUATION

Finance

• On 26 May 2014, Flipkart announced that it has raised $210 million from Yuri Milner’s DST Global and its existing investors Tiger Global, Naspers and Iconiq Capital.

• In early July 2014, it was also highly speculated that Flipkart was in negotiations to raise at least $500 million, for a likely listing in the US for 2016.

• On 29 July 2014, Flipkart announced that it raised $1 billion from Tiger Global Management LLC, Accel Partners, and Morgan Stanley Investment Management and a new investor Singapore sovereign-wealth fund GIC.

• On 6 October 2014, Flipkart sold products worth INR 650Crore in 10 hours in a special one-day event - "The Big Billion Day", claiming they had created e-commerce history, but their hard-won reputation for good customer service suffered because of technical problems, and angry reactions on social media from buyers disappointed with the pricing and availability of products.

• On 20th December, 2014, Flipkart announced filing application with Singapore based companies' regulator ACRA to become a public company after raising USD 700 million for long term strategic investments in India following which its number of investors exceeded 50. The USD 700 million fund raised by Flipkart added new investors - Baillie Gifford, Greenoaks Capital, Steadview, Qatar Investment Authority - on company's board.

In-house Products

• In July 2014 Flipkart launched its own set of tablet, mobile phones & Phablet. The first among these series of tablet phones was Digiflip Pro XT 712 Tablet.

• In July 2014 Flipkart launched its first networking router, under its own brand name named Digiflip WR001 300 Mbit/s Wireless N Router.

• In September 2014 Flipkart launched its in-house home appliances and personal healthcare brand Citron. The label includes a wide range of cooking utilities and grooming products.

Criticism

• On 6 October 2014 Flipkart launched Big Billion Day with intention to increase the popularity by targeting billion sales in 1 day. This even though helped Flipkart achieve the target led to public outcry and widespread criticism across consumers, competitors and partners heavily damaging its reputation.

• Many users couldn't place the order because the servers were not capable enough to take the load and was giving random errors to users which led to frustration among customers. Many users who placed orders got email saying that the order got cancelled.

• On 13 September 2014 a Flipkart delivery boy molested a house maid in Hyderabad. The house maid's employer has been fighting against Flipkart for justice on this issue, and also for making offline delivery services safe.

SYNERGY

Synergy comes from strong strategic planning.

3 basic types of synergy:

• Revenue synergy

• Expenses synergy

• Cost of capital synergy

Flipkart- Leader in selling multiple product categories

Myntra- Leading fashion retailer with strong brand recall

• Both to function separately. No integration of back end functions.

How do they contribute?

• Flipkart- Wants to boost margins. Fashion margins are 30-40%. It has the best logistics support system. Contributes the technology and customer support to meet nation-wide efficiently.

• Myntra- Leading fashion e-tailer. Private brands like DressBerry, Anouk, Roadster

• Together they form an e-tailing powerhouse.

• Flipkart will increase hiring to build better engineering teams, customer agents and logistics support.

• Currently, Myntra covers 9000 PIN codes and Flipkart covers 21000 PIN codes.

The Road Ahead

• E-commerce was worth Rs. 75000 crs in 2013 and is expected to exponentially double.

• Contribution to GDP: 1.6% in 2013, 2.8% in 2014 and 3.3% in 2015.

• Currently, internet ecosystem is very limited in India with 10.1% internet penetration.

• Industry is set to grow due to greater penetration, changing consumer lifestyles, rising disposable incomes, strong fundamentals and impetus of VC’s.

• As per surveys it is expected that e-commerce will contribute 4% of GDP by 2020.

• Offline stores to be the next plan of action.

• Expansion into Tier 2 and Tier 3 cities.

• Government support is needed in the form of a strong legal framework such as basic rights of intellectual property, prevention of frauds, consumer protection, confidentiality, etc.