With Flipkart acquiring Myntra in one of the biggest consolidation in the e-commerce sector in the country, industry experts believe this is just a harbinger of the tides to come. Analysts are unanimous in their opinion that consolidation in the over-crowded e-commerce industry in India is bound to happen and will continue till clear leaders emerge.
Akhilesh Tuteja, Partner, KPMG in India, said going forward it was important that consolidation happened. Like in any market/industry, there needs to be lesser number of large players for it to grow. Additionally, Indian players need to be stronger if they want to compete with giants such as Amazon.
According to Mr. Tuteja, “the consolidation will continue to happen over the next two years at least, post which we might be left with about 4-6 general players (dealing across categories) along with several niche category players.”
Echoing similar views, Paresh Parekh, Tax Partner-Retail and Consumer Products, EY, said, “Consolidation, as predicted, was and is inevitable, especially as global players start entering.”
Sandeep Ladda, India Technology leader, PwC India, said, “The Flipkart-Myntra deal, which is estimated to be valued at around $250-350 million (to begin with, Flipkart will invest $100 million), has come at a time when the sector was gearing up for consolidation due to stiffening competition.” E-commerce industry has seen a lot of new and small online companies mushrooming every other day — more like the ‘me-too’ ventures. Mr. Ladda, however, said, quite a few of them struggled and failed to remain attractive to the investors.
On the impact on the supply side, Vijay Shekhar Sharma, CEO, Paytm, said, “Consolidation is great for industry as it will bring more sustainability to business. Suppliers need diverse platforms to sell so we believe it won’t have much impact there.”
Swati Bhargava, Co-founder & CEO, Cashkaro.com, a cashback and coupons website, said, “Flipkart-Myntra together also become a more formidable competitor to international brands like Amazon that are aggressively establishing their foothold in India.”
“It remains to be seen whether the customer will ultimately benefit from this marriage of two of the five largest e-commerce brands in India. It could translate into lower prices for shoppers as joint logistics and associated costs could decrease,” she said. However, she cautioned that early consolidation and lack of competition could hurt the still-evolving e-commerce economy.
Suchi Mukherjee, CEO & Co Founder, LimeRoad.com, an e-commerce portal, said, the sequence of events in the Myntra fund raise journey and the Flipkart merger makes it clear that the lifestyle segment in online commerce is attractive on size, economics and margin pool relative to electronics etc, traditionally the mainstay of Flipkart.
