Flipkart invests $35 million in Indian fashion brand to target youth

This week Flipkart announced a new $35 million investment in fashion site Myntra, as the Indian e-commerce juggernaut tries to stay ahead of rival Amazon. To some extent the move is in response to that company’s huge investment in fashion — and its success in penetrating into a young population that would never otherwise spend a dime on clothes. But I suspect Flipkart will still need to make more moves like this in order to ensure its survival.

The strength of Indian fashion e-commerce, which has powered Myntra’s growth, is that its customers tend to be old enough to shop online — but too young to be bothered by storing clothes in plastic bags. That’s a big problem for Amazon, which operates more strictly on volume and has tended to burn more cash in its quest to dominate certain retail categories. Myntra’s members can easily remember to return unwanted items, and often do so within days.

For all the hype surrounding India’s surge toward online commerce, my own experience suggests that the growing pressure for sellers to offer free delivery, and the hot competition for delivery slots that goes with it, have begun to have an effect. That’s partly because India’s Internet infrastructure is still nowhere near as developed as it is in other emerging markets, though the postal service’s reputation remains pretty good.

But Flipkart is facing yet another problem: last-mile delivery. Amazon has carved out its own huge territory, but Flipkart is still the dominant player. A widespread supply chain problem means that items sold by Myntra sometimes make it to customers, but not before they have gone through several steps. Complications, including express delivery and courier couriers who sometimes won’t agree to meet low prices, mean Myntra prices, which are usually lower than the ones on Flipkart, come out lower, too.

I saw an exchange recently on a professional economic forum in which I argued that Myntra and Flipkart should merge, not that they should merge into the next Amazon. I didn’t quite make the point, but the gist of my idea is that they’d be better together in the long run than apart.

Flipkart is a pretty good example of the challenge: It’s well-financed, and shows no obvious signs of financial strain. But in such markets, two well-financed players are still not enough, even if one of them is a very, very good one. And it’s worth remembering that the last e-commerce market to be effectively disrupted was China, and that the global financial crisis has not yet had its full impact.

Related posts

Leave a Comment