Though Flipkart India Ltd, India’s largest e-commerce company, has said merger plans with Myntra, the country’s largest online fashion portal, were rumours, the industry is abuzz with news that the merger will be announced on Thursday. It will be the biggest e-commerce deal and a consolidation of sorts that would be able to meet the onslaught of the American giant Amazon, which entered India last year. It is interesting that the promoters of Flipkart are former Amazon employees. The e-commerce market is estimated at RS 12,000 crore of the Rs 2.4 lakh crore organised retail market. The unorganised retail sector is said to be five times larger. There are nearly half a dozen big online e-commerce players on the scene and more mergers could be on the cards as global competitors, like China’s Alibaba, and Walmart, eye the e-commerce space in India.
The e-commerce market is growing though players are still making losses. But since it is a nascent industry, the focus is currently more on growth. An increasing number of Indians are going online to order items ranging from grocery to electronics, household and fashion items as they overcome what is said to be essentially the Indian habit of seeing and feeling the product before buying.
While FDI in e-commerce is not allowed, there is a view that the huge investments that these e-commerce portals get from investors abroad amount to backdoor entry. Whatever the view on this is, Indian e-commerce sites can grow and strengthen till, and if, FDI is allowed.
