Early last month, in an environment of consolidation-driven acquisitions in the domestic ecommerce market, Myntra decided to change lanes. It went to San Francisco to snap up a technology startup called Fitiquette to bring on board the capability of offering its customers a virtual fitting room. Strategic acquisitions, where the acquirer buys a specific capability rather than revenues and customers, are still somewhat rare in the Indian ecommerce market.
We reached out to Myntra founder and CEO Mukesh Bansal for more on the Bangalore-based ecommerce company’s acquisitions strategy. In his emailed responses, Bansal briefly touched on the integration of Fitiquette and Sher Singh and future plans for a hybrid ecommerce model involving a marketplace at Myntra.
1. Fitiquette was a strategic acquisition. Does Myntra plan to pursue more such acquisitions in the medium term? What could be the likely ticket sizes of such acquisitions ?
We are not actively looking out to acquire companies but will be open to acquisition opportunities which offer strategic advantage over competitors and help fulfill our long term business objectives. We will not be able to disclose the exact figures of the (Fitiquette) deal, but it was a part cash and part equity deal.
2. What kind of time frame have you set for the Fitiquette integration? What would the process involve at an organizational level?
We aim to have the technology developed by Fitiquette integrated into the Myntra.com website within the next two months. Andy (Fitiquette co-founder Andy Pandharikar) and the Fitiquette team will integrate this solution into Myntra.com and in the future set up an innovation lab in San Francisco where the Fitiquitte team will work towards developing technology tools to benefit Myntra.com’s shoppers.
3. Will the Fitiquette brand continue to exist post integration?
Fitiquette will become part of Myntra.com post integration.
4. Last November you acquired Sher Singh and Exclusively. At what stage are you in terms of the integration of those two properties? What kind of impact have those acquisitions had so far on Myntra?
The Sher Singh team and brand has been completely integrated with Myntra.com. All Sher Singh merchandize is now being designed and developed in-house and is exclusively available on Myntra.com. Sher Singh’s team has built one of the most innovative and trendy fashion brands, which speaks to the global marketplace and has significantly enhanced our fashion and design expertise.
5. Myntra, according to news reports, is targeting Rs 1,000 crore in sales this fiscal. What would be the contribution of inorganic sources (acquisitions) to that target?
As mentioned earlier, we are not aggressively looking at acquisitions this year. A majority of future growth will still come from existing channels and from organic and direct traffic.
6. Ecommerce in India is currently in a very active consolidation phase. Would you consider local players fairly attractive in terms of valuations from an acquisitions point of view?
The company did not respond to this question.
7. In your view, what kind of metrics would differentiate a long-term player from those that are likely to become acquisition targets in the short to medium term?
There has been a lot of action in the ecommerce space in the last two years with new players emerging every other month. However, to sustain in the long run ecommerce players need to clearly differentiate themselves from others by establishing a strong USP. It is also important to focus towards achieving break even and profitability without which sustainability will become difficult in the long run.
8. Several existing ecommerce companies here are currently exploring the marketplace model. Does Myntra have any such plans? If not, why?
We are not exploring the marketplace model at this point but will look at a hybrid model at a later stage. We believe that customer experience is a big challenge in the marketplace model especially in India with low fulfillment rates and delivery delays. Fashion is a category where it is very important to sell 100 per cent original branded products and create a coherent selection which would get diluted in the marketplace model.
9. Myntra raised a $20 million Series C round last February. Do you expect to raise or need a fresh round of funding soon? If yes, for what purpose broadly?
We are well funded for the next 12-15 months and don’t have plans to raise any funding till then.
10. You have several marquee investors on board at Myntra. What kind of strategic benefits have these investors brought on board, especially with respect to your acquisitions strategy?
Our board members have been very supportive and have guided us through both our acquisitions. They also bring in years of experience which benefit Myntra especially during critical decision making.