In India’s biggest ever e-commerce deal, the country’s largest online retailer, Flipkart, has acquired the biggest fashion retailer online – Myntra – in a deal estimated at around Rs. 2,000 crore Reports NDTV.
Flipkart’s acquisition of Myntra was recommended by two common investors in the companies – Tiger Global Management and Accel Partners, which came as a response to Amazon’s entry into India.
Fashion is their next big bet. It’s an important business for e-commerce firms due to the high margins and faster growth potential. Online apparel retail gives gross margins of as much as 30 to 40 percent compared with lower gross margins in electronics and single to negative gross margins in books.
Flipkart also announced investment of $100 million in fashion business over the next 12 to 18 months, further highlighting the firm’s emphasis on this segment.
Other important consolidations in the e-commerce market included Ibibo buying bus ticketing service redBus in 2013 at an enterprise value of Rs 600 crore; that was termed the biggest foreign acquisition of an Indian internet asset.
Flipkart has been keeping up with Amazon’s moves, providing same-day delivery and even pre-empting Amazon by announcing Flipkart First, an annual subscription service that is expected to be similar to what Amazon Prime offers abroad. Flipkart achieved $1 billion in gross merchandise value in February. Myntra did revenues of Rs 1,000 crore last year and is aiming to double it this year.
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