OBJECTIVE

To identify the reasons for acquisition of myntra by flipkart

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To understand market position of flipkart and myntra before and

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after acquisition
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To analyse the valuation of flipkart and myntra post acquisition

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E-TAILING INDUSTRY IN INDIA I I II

The Indian e-commerce industry has been on an upward growth

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trajectory and is expected to surpass the US to become the

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second largest e-commerce market in the world by 2034. The e-

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commerce market is expected to reach Rs 13,97,800 crore (US$

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200 billion) by 2027 from Rs 2,69,076.5 crore (US$ 38.5 billion) in

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2017. India's e-commerce market has the potential to grow more

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than four folds to Rs 10,48,350 crore (US$ 150 billion) by 2022

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supported by rising incomes and surge in internet users. Online

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shoppers in India are expected to reach 120 million in 2018 and

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eventually 220 million by 2025. Online retailers now deliver to

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15,000-20,000 pin codes out of nearly 100,000 pin codes in the

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country.
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E-Commerce and consumer internet companies in India received I I I I I I I

more than Rs 48,923 crore (US$ 7 billion) in private equity and

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venture capital in 2018. Online retail sales in India are expected

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to grow by 31 per cent to touch Rs 2,28,540.3 crore (US$ 32.70

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billion) in 2018, led by Flipkart, Amazon India and Paytm Mall.

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Online retail is expected to contribute 2.9 per cent of retail

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market in 2018.
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Much growth of the industry has been triggered by increasing

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internet and smartphone penetration and by 2022, smartphone

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users are expected to reach 859 million and e-commerce sector

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expected to grow 1,200 per cent by 2026. During April-June

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quarter 2019, smartphone shipment in India grew 9.9 per cent

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year-on-year to 36.9 million shipments.

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Internet penetration in India grew from just 4 per cent in 2007 to
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34.42 per cent in 2017, registering a CAGR of 24 per cent

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between 2007 and 2017. In FY20, internet penetration in India

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was 50.52 per cent. The number of internet users in India is

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expected to increase from 665.31 million as of June 2019 to 829

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million by 2021. Internet penetration in rural India is expected to

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grow as high as 45 per cent by 2021 compared to the current rate

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of 26.57 per cent. The e-commerce retail logistics market in India

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is estimated at Rs 9,435.15 crore (US$ 1.35 billion) in 2018 and is

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expected to grow at a 36 per cent CAGR over the next five years. It
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also received and investment of Rs 43,681.25 core (US$ 6.25

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billion) from January–May 2019. In the festive sale (September

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29-October 4, 2019), the e-tailers in India achieved US$ 3 billion

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of Gross Merchandise Value (GMV).

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A young demographic profile, rising internet penetration and

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relative better economic performance are the key drivers of this

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sector. The Government of India's policies and regulatory

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frameworks such as 100 per cent foreign direct investment (FDI)

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in B2B e-commerce and 100 per cent FDI under automatic route
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under the marketplace model of B2C e-commerce are expected

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to further propel growth in the sectors. As per the new Foreign

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Direct Investment (FDI) policy, online entities through foreign

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investments cannot offer the products which are sold by retailers

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in which they hold equity stake.

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In February 2019, the Government of India released the Draft

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National E-Commerce Policy which encourages FDI in the

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marketplace model of e-commerce. Further, it states that the FDI

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policy for e-commerce sector has been developed to ensure a

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level playing field for all participants. According to the draft, a

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registered entity is needed for the e-commerce sites and apps to
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operate in India. Government also proposed the National E-

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commerce Policy, set up the lawful agenda on cross-border data

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flow, no data will be shared with foreign government without any

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prior authorisation of Indian government.

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Through its Digital India campaign, the Government of India is

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aiming to create a trillion-dollar online economy by 2025.

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