Myntra and Flipkart are two most common names of Indian e-commerce. Both started their journey in 2007, grew exponentially in terms of products, business verticals, fund, consumers, market share by changing their model continuously as per market demand and finally both merged together in 2014. The market exit of Myntra in 2014 is one of the successful and remarkable exits in Indian startup eco system.

Why the online fashion industry has gained so much weight? Flow of money and rising per capita income (middle class) has fueled Improving standard of living. Easy access to internet and explosive progression in the number of  smart phones users, availability of much wider range of product – domestic and imports, competitive prices, development of million dollar startups have increased the acceptance of e-commerce in India since last decade. Myntra, Jabong, Snapdeal, Flipkart, Paytm etc are shining due to acceptance for solving the cost, time, quality and delivery concerns of people.

How Online Fashion and Apparel Industry Evolved with Myntra

Entry of Ecommerce and its acceptability to customers paved a way for boom in online fashion market. Number of players emerged and competitive pricing ensured that middle class consumer would now be presented with fashion related products which were earlier out of their reach. General public of metro cities, which was riding on the wave of better standard of living, was now able to think beyond brick n mortar stores and was ready to experiment by buying cloths and beauty items from virtual stores.

Once word of mouth pick the pace and it swept the tier 2 and tier 3 cities. Myntra brought the branded products in the reach of common people and their inventory based model ensured lesser failure in meeting delivery demands. By exploring private labeling they altogether presented customers with quality products on 30-40% lesser price than branded products. It ensured Myntra became darling of Indian Fashion and apparel industry.

Myntra’s customer service was fabulous and its “champions” ensured they never left any customer’s problem unattended. Serving customers as they ask, before time delivery and giving benefit of doubt to customers was the methodology which set the tone to bring Myntra to the top of Fashion and apparel online sale.

FS Labs Myntra - Typical Timeline

Myntra – Typical Timeline

2007 – Myntra was founded by MukeshBansal, AshutoshLawania and VineetSaxena with a focus on on-demand personalization of products, gifts and merchandise. In the time span of 3 years, Myntra claimed to offer personalized products like T-Shirt, Mugs, Mouse pads, Calendars, Watches etc across 33 categories and ship to 900 locations across 40 countries worldwide.

2011 – Myntra changed its business model from personalized gift items to fashion and lifestyle products. Myntra offered products from 350 Indian and International Brands by 2012.

2012–Myntra acquired SherSingh, the private label online brand specializing in sports-inspired lifestyle apparel for man and women and Exclusively, a boutique ethnic wear portal and also the parent company of SherSingh.

2013 – Myntra acquired Fitiquette, San Francisco based technology solution which is a virtual fitting room to expand its technology platform and drive transformational change in the online shopping space in India by providing world-class experience to its customers.

2014 – Myntra was acquired by Flipkart with the deal value being approx US$ 300 million, though no official data was disclosed by any of the companies. Myntra still continued to operate independently. In 2014, Myntra’s portfolio included about 1,50,000 products of over 1000 brands ranging from international brands to designer brands and distribution area of around 9000 pincodes in India.

2015 – In May 2015, Myntra shut down the transactions via its website and moved to App-Only business model. Myntra claimed to have 95% internet traffic and 70% sale by mobiles users. Also, in May 2015, Myntra acquired Native5, Bangalore based mobile app development platform to strengthen its mobile technology.

Myntra Merger with Flipkart – A Win-Win Deal for Both

FS analyzed and comprehended the major factors that forced Myntra and Flipkart to merge their ventures –

[A] Flipkart and Myntra Merge – Business Expansion and Market Consolidation

Flipkart has already acquired a large consumer base in e-commerce of Books, Electronics Goods etc. So instead of struggling with its rudimentary vertical of Fashion and Lifestyle Products,  the acquisition of well trusted player of same domain, Myntra, was upright choice for Flipkart. More than 150k product catalogue of Myntra helped Flipkart in enhancing its business vertical of Apparel.

Flipkart co-founder and CEO Sachin Bansal stated about this acquisition that they, at Flipkart, believed that they wanted to be leaders in every segment and fashion was a category of the future, this acquisition would help us become leaders in this category.

Mukesh Bansal, Founder of Myntra, stated that they wanted to exploit their mutual synergies (like the technology at Flipkart and market leadership of Myntra) in order to accelerate their growth.

Flipkart also ensured the sector consolidation of e-commerce by acquisition of Myntra. It’s like becoming one single known name when online shopping comes into mind. So the best strategy for market consolidation of e-commerce is by incorporating all possible verticals into one single business model.

FS Labs Myntra Merger with Flipkart - A win win deal for both

[B] Consumer Base – Loyalty, Sharing and Acquisition

Before the Deal though e-commerce had made a remarkable presence in startup eco-system ,  loyalty of consumers was still in doubt. The availability of large number of players of same domain, cash burn tactics for attracting customers, discount oriented mindset of public etc were some of the reasons that were creating large turbulence in penetration and loyalty. Also, since the acquisition cost of consumers was high for e-commerce players and switching cost was non-existing so they both needed a large pool of loyal customers. Through the deal Myntra and Flipkart were able to combine their loyal consumer base into a common pool.

Myntra claimed to have 8million registers and loyal user base while Flipkart has 18 million. So the deal developed a large loyal market volume for both of the players.

Addressing the consumer behavior and acquisition, Sachin Bansal stated that Cost synergies were not their priority for this deal, it was about scaling the two businesses in much faster to expand market share in fashion.

[C] Market Competition – Biggies, FDI and Future

Market competition that both of the players, Myntra and Flipkart were facing was huge. All the marketing capturing strategies could easily be replicated by biggies like Snapdeal, Amazon, E-bay – strong enough in terms of funds, technology and manpower.

Also, the regulation of FDI was a big concern for both of the player. As the government was planning to allow 100% FDI in retail, players like Amazon, Ebay, Walmart could have introduced their own products and shifted to an inventory based model. Earlier model of Flipkart was also inventory based before they faced capital issues and shifted to market based model.

The combined market share of both the players was already 50% which was expected to increase up to 70% after this apparel concentrated acquisition. So the deal was a win-win situation for both to stand against the market competition in long run.

[E] Loss Reduction by Combining the Services – Technology, Consumers, Logistics

So far, none of the e-commerce player had reported to achieve profitability in their business model. High cash burn, forward and reverse logistics cost in poor infrastructure, technical backend cost etc were the factors contributing to this continuous loss of money for these Ecommerce firms.

In 2013, Flipkart lost Rs 281 Crore (US$47 million) on revenues of Rs 1,180 Crore (US$197 million) while Myntra lost Rs 134 Crore (US$22 million) on revenues of Rs 212 Crore (US$35 million).

Combined services of both the players, shared logistics, technical backend, consumers would help them in reducing this loss over revenue. So the deal was a win-win situation for Myntra and Flipkart.

[F] Investors Long Term Vision – IPO

Fashion is the business which is most profitable amongst the all products which are being currently sold in online market places. And all other verticals introduced by Flipkart were nowhere near the margins which fashion vertical was generating.

According to Indian stock exchange, a company that is losing money can’t come in picture for Initial Public Offering. So Myntra as well as Flipkart were not able to go for IPO listing due to their money loss and also have threat of running out of cash in near future.

IPO being the ultimate goal of VCs and the investors of both the companies Myntra and Flipkart are same, Tiger Global, Accel Partners etc, the combined entity would be able to run longer with their available funds and reduce their loss and become profitable in coming future.

So the deal would help investors to offer IPO sooner than running separately and make return on their investments earlier.

[G] Rise of private label players – High profit margins

One major advantage to the retailers in India, and which works in favor of private labels, comes from the fact that Indian consumers are less brand conscious and more quality and freshness conscious. Retailers have increased their profits by offering private label products since there are huge margins to be achieved from private label products, which are 30-40% higher margins than branded products. Retailers are not any more offering low quality products for a lesser price, but they are creating new level of differentiation, better pricing for a good quality product and new merchandising and promotion strategies.

Flipkart which was earlier into branded product selling saw a better option through Myntra’s private labeling strategy. Myntra’s association with numerous private label players was another added advantage.

Stay tuned with FS Labs to know more.

Fuckedup is a phrase that captures all the emotions associated with the startup journey.

If no concept clicks in your mind, you feel frustrated. If you are not able to manage a proper team for your startup, you feel irritated. If funds, revenue, expansion etc don’t take place as per planning and expectation, you feel infuriated.

To keep you away from all these feeling, FS is continuously providing you to the best guidelines, practices and market trends. Please share your feedback at