Flipkart acquired Myntra yesterday and put together, they control 50% of the online fashion vertical. That being the case, we spoke to several investors to understand what this means for the e-commerce industry in India and other players in the fashion vertical.
Shailesh Vikram Singh, SeedFund
Flipkart-Myntra deal has not changed much as both entities will continue to operate as separate brands and will share resources and synergies are more on paper than driven by consumer integration. This merger is more to create war chest for Amazon than anything else.
My view is that there is no space left for any e-commerce entity focused on marketplace and one of the two, FK-Myntra or Amazon, will fight and be winner in long run. But when two elephants fight, it’s grass which suffers and hence this war will almost wipe out all also ran market places. However I think that though there won’t be any opportunity in market places, brands-focussed play will continue to evolve and grow well as DNA for private labeles / brands is very different from running a market place.
Avnish Bajaj, Matrix Partners India
The Myntra founders themselves say that there’s space for more e-commerce players. It was a low period for e-commerce between 2012-13, when we saw some shut downs and some were consolidated. Now, e-commerce has become a hot area for investors. The Myntra-Flipkart deal is a merger of strengths, not weakness.
Small e-commerce players have enough room to succeed, but they should have some demand-side or supply-side reason for existence. We’ve seen many horizontal and vertical e-commerce players co-exist in the same space in the US and in China.
Harish Bahl, Smile Group
This will only make it better for smaller players. Myntra was not a company that was not going away, so now finally everyone is building company to acquire or for an IPO. So there are that many fewer options for potential acquirers.
That said, it’ll be tough for new players to start afresh, but existing players will do okay. Jabong is at a reasonable scale and they can grow at good scale.
There is a difference between catalogue and flash retailers. In flash sale model, there has to be enough surplus stock in the market and India is closer to China, where flash sale model is doing well as opposed to US. China is a market where the share of unbranded companies is disproportionally higher than branded ones.
What works against and for flash sale model in India is that the market is going through a blood bath now. Even bigger players are heavily discounting and offering products in flash sale model, while incurring losses. At some stage they will focus on profits, which is when the difference between models become more stark. What I don’t know is how long this blodbath will go on.
Raul Chowdhry, Helion
I think there is room for other players despite this merger. Fashion will see other players emerge, including the ones in private label. Other large sectors like Home, Grocery, Jewelry, B2B products and marketplaces will continue to survive.
Vani Kola, Kalaari Capital
Absolutely. There will be space for innovations in e-commerce. India is going online and many opportunities will come up, and in almost every vertical. Their strategies will set them apart from the rest.
Ravi Gururaj, Serial Entrapreneur
It’s worth looking at the US landscape – you see more mature dominant players co-existing with a relatively several vertical and niche players. These data points suggest there is room for smaller profitable ventures even after we achieve a state of maturity.
To succeed as a smaller player, the venture must identify a niche or vertical where they can create and capture value, that the bigger players are forced to ignore due to structural hurdles like lack of scale, fragmented supply chain, dynamic pricing, high curation-needs, customisation requirements etc.