After announcing the “biggest deal in Indian e-commerce”, co-founders and chief executives of the two Indian e-commerce biggies — Mukesh Bansal of the just-acquired Myntra.com and e-commerce leader Flipkart’s Sachin Bansal — sat down to share their thoughts on market consolidation, the question of profitability, and the decision to keep both businesses and platforms independent. Excerpts:
Post this acquisition, do you see yourself moving closer to profitability, the big question that looms over e-commerce in India?
Sachin Bansal: Profitability continues to be second priority compared to our growth. This acquisition is not about profitability or getting there. This is about scale, getting more market share, and gaining dominance in the market.
Mukesh Bansal: I’ll answer that differently. I think fashion gives a huge lever to drive profitability because of bigger margins. Similarly, scale also gives profitability...as we build scale together, lot of economies of scale start to kick in.
Today, it makes sense to dominate the market space, invest deeply into technology, supply chain, and building differentiated brands. In the future, profitability will be a lever that we can pull whenever we need to.
Your biggest vertical today at Flipkart is electronics. Do you see this change with this acquisition?
Sachin Bansal: From a transactions point of view, we foresee in the near-term that fashion will be the biggest segment. However, in terms of revenues, electronics will continue to be bigger.
Why have you decided to not have any synergies in terms of content or even go-to markets?
Mukesh Bansal: Myntra is a household name. We are on top-15 list in Alexa, in the league of Google, LinkedIn and Facebook. We invested a lot into building this traffic, so we’d like to preserve that. We want to be greedy, and own both pies. Staying independent allows us to dominate two different ways of retailing fashion.
Do you think FDI in e-commerce, which is currently listed to the marketplace, will be the next game-changer?
Sachin Bansal: I don’t believe that opening up FDI in inventory-based e-commerce will make a difference. We have seen marketplace e-commerce attract more than $3 billion of FDI in the last few years. I believe that for inventory-based FDI, it is going to be immaterial. I think this is up to the government to decide.
A lot of this churn in the market is being attributed to Amazon. But with Snapdeal catching up, do you think that the real battle will be between the domestic players here?
Sachin Bansal: Over time, we will find domestic players doing better than global players. In the short-term, we will see international players throwing money like crazy into the market, but in the long-term it will settle into a battle between the domestic players. There will be all sorts of players coming up, and currently, we are not focussing on our competition. We are focussed on the data we have from our customers, and what they want. Even this acquisition has come from what customers wanted, that is a differentiated fashion shopping experience.
