In one of the most exciting news to come from the world of ecommerce, it is reported by Times of India that two of India’s biggest online retailers – Flipkart and Myntra, may the tie the knot. It would seem that this marriage is being arranged by the common investors of both these entities. The complete report can be read here
A brief analysis of things to come
Let us think of the scenarios that can unfold from there. The first and the most important question is “Will Myntra take this offer of merger?” The report makes it clear that it is Flipkart which has approached Myntra for this deal. While Myntra has been in the lookout for a round of funding, it is not clear if Myntra’s co-founder Mukesh Bansal would be interested in entering this coalition which could be seen as an acquisition in the garb of a merger.
“The Flipkart offer is essentially an acquisition but involves keeping Myntra as a separate unit, with the current management running the business with synergy benefits of controlling the domestic online fashion ecosystem. The Indian e-commerce poster boy has also been talking to several smaller players in the fashion apparel space for a possible takeover.”
If the merger somehow gets completed without hurdles, the results may not be as congenial as there has been mergers in the past in the online fashion space in India itself which haven’t worked that well. One may infer this from the ill-fated merger between Fashion&You and Urbantouch which ended with the closure of the complete business of Urbantouch and the resignation of then CEO of Fashion&You Abhishek Goyal (
Though this may not be the case with this particular deal as Flipkart will do well to not let the Brand Value built by Myntra over the years go waste and let it operation independently and leverage the existing business that it has in the existing categories. Myntra will also be helped by the huge infrastructure that has been built by Flipkart over the years.
Pros of the merger (if it happens)

  • Synergies between the two ventures: Both the ventures have created huge brand values and do share synergy in the online business. The merger can exploit this synergy in creating greater value as a whole
  • Ease of raising funds: Both Myntra and Flipkart have been trying hard to raise funds for expanding their business. The combined entity may find it easier to approach potential investors who might be lured by the combined marketshare these two may provide across categories
  • Shared Infrastructure: As mentioned in the article already, Myntra and Flipkart can leverage their existing infrastructure to provide better service and increase customer base
  • Increased leverage with the Vendors: Combining their sales, the merged entity would gain a leverage over their common vendors who could be negotiated with to provide greater margins
  • Other indirect benefits: Such as talent acquisition, geographic expansion if required in future, better deals for the consumer (such as combos in electronics and accessories) etc..
Why it may fail
  • Management issues: As mentioned in the article before, the merger could go the way of Fashion and You and UrbanTouch merger which eventually ended with the exit of top talent from Fashion&You
  • Increased risk for common investor: The common investors in both the entities may not find it entirely advantageous to combine two high performing ventures in their portfolios which would increase their risk profile. Think of it this way: If one of these two fails they are left with at least one that worked. But if the combined entity fails then they lose everything

Disclaimer: Aristotle Consultancy is a service provider to Jabong, a leading ecommerce service provider in India.
Update: Myntra has opted to refuse this merger deal and instead has raised the funds that they required from Premji Invest. You can read the news here
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