With all that has happened, and continues to happen in the turbulent and ever-changing world of mergers and acquisitions, Flipkart is all set to be the owner not only of its own brand but also of Snapdeal, eBay, Myntra and Jabong.
Sachin and Binny Bansal — both Chandigarh boys and later IIT-D alumni — sold a copy of the book Leaving Microsoft To Change The World to a customer from Hyderabad in 2007. In the process, they launched what is today known as India’s top e-commerce destination, and brand — Flipkart.
Along the way, the Bansals acquired WeRead, a social book discovery tool in 2010. In October and November 2011, in quick succession, Flipkart acquired the websites Mime360.com and Chakpak.com. Mime360 was a digital content platform while Chakpak was a Bollywood news and content site.
In February 2012, Flipkart launched Flyte Digital Music Store, a legal music download service similar to iTunes, but this shutdown in June 2013.
The year 2012 also saw Flipkart acquire Letsbuy.com, an e-retailer of electronics, for $25 million.
In 2014 came the $310 million acquisition of Myntra.com.
In 2015 came Appiterate, a mobile marketing start-up, that was folded into Flipkart. The company also invested that year in MapmyIndia to help improve its delivery prowess.
Then, in 2016, Flipkart’s Myntra acquired rival fashion shopping site Jabong for $70 million. The year also saw Flipkart acquire payment start-up PhonePe.
Earlier this year, in January 2017, Flipkart paid $2 million to fund parenting network, Tinystep.
In April 2017, eBay agreed to make a $500 million cash investment and sell its business to Flipkart. Last month, all major stakeholders gave a green signal for Snapdeal to be sold to Flipkart.
Coincidentally, Amazon.com, too, commenced business by selling its first product, a book, Douglas Hofstadter's Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought in 1995.
Founder Jeff Bezos who was previously employed with D E Shaw & Co. launched Amazon based on ‘regret minimization framework’ which described his efforts to fend off any regrets for not participating in the booming internet business of the day.
Born as Cadabra (misunderstood by lawyers to be ‘cadaver’) and then almost christened Relentless.com, Amazon was so named because Bezos felt it was ‘exotic and different'.
Moreover, Amazon river being the ‘biggest’ river in the world was similar to what the founder wanted his new enterprise to be.
Bezos also preferred a name beginning with ‘A’ due to the probability that it would always be placed at the top of any list that was alphabetized.
Since June 19, 2000, Amazon's logotype has featured a curved arrow leading from A to Z, representing that the company carries every product from A to Z, with the arrow shaped like a smile.
In early June 2013, Amazon.com launched their Amazon India marketplace without any marketing campaigns. In four short years, Amazon has been assertive and aggressive and today stands eyeball-to-eyeball against Flipkart.
Amazon’s conquest of India started innovatively with the Amazon Chai Cart: mobile tea carts that navigated city streets, serving refreshments to small-business owners while teaching them the virtues of e-commerce.
The Chai Cart team reportedly travelled more than 9,400 miles across 31 cities and engaged with more than 10,000 sellers. To help these sellers reach online customers quickly and address their objections to e-commerce, in the past year Amazon created Amazon Tatkal, a self-described “studio on wheels” that provides a suite of launch services, such as registration, imaging, cataloguing, and sales training.
Besides bringing its 'Fulfillment by Amazon' platform to India, Amazon also sharpened its competitive edge by introducing Easy Ship and Seller Flex. With the former, Amazon couriers pick up packaged goods from a seller’s place of business and deliver them to consumers. With the latter, vendors designate a section of their own warehouses for products to be sold on Amazon.in, and Amazon coordinates the delivery logistics.
This “neighbourhood” approach is convenient for sellers and has benefited Amazon by speeding up delivery of some products.
However, the battle has now started to centre around, carving out space in the consumer mind.
Flipkart has its own equity in mother brand Flipkart, built and nurtured over the past decade. Also, strengthened by the much touted, and highly successful, Big Billion Sales.
Flipkart will soon have Snapdeal in its fold. Snapdeal may not have been quite as successful as its acquirer but did still build up some reservoirs of goodwill and customer preference/loyalty.
eBay never really had either a visible or successful run in India, quite contrary to the phenomenal powerhouse that its global parent is.
With three market places under its belt with not much to differentiate between them, Flipkart today is faced with the difficult decision on whether it should take on behemoth competitor Amazon with a unified single brand or use Snapdeal and eBay as flankers to the mother brand Flipkart.
Similarly, with two fashion portals — Myntra and Jabong — now under its banner, Flipkart has to walk the tightrope on positioning its two acquisitions either as continued separate entities or to eliminate one of them, or even both of them and fight the fashion battle as Flipkart versus Amazon.
1. It does not look like Flipkart will kill Snapdeal or eBay in a hurry. eBay, if newspaper reports are correct, by shareholder agreement, will continue to be a separate market entity in India.
Snapdeal, too, could have such provisions and protections when the final sale agreement gets inked. But supporting three separate brands in advertising and communication alone can be a very expensive and time-consuming affair for Flipkart.
Neither Snapdeal nor eBay have perhaps any deep-rooted customer loyalty and most e-purchases are made on 'the best deal' basis. In such a scenario, Snapdeal and eBay will need aggressive customer facing advertising and deal communication which when multiplied by costs over these two brands, and the mother ship brand, could prove to be highly cost-inefficient. And, we are not even getting into discussing cross-brand cannibalisation.
2. eBay in India has remained a business-to-business (B2B) marketplace, never quite developing roots at the consumer level. Strategically, if this brand has to remain separate, then Flipkart needs to segregate eBay into a specialist offering for just business and wholesale customers. This could be a good opportunity area to differentiate it both from Flipkart, as well as Amazon.
3. Snapdeal has been largely a North India brand by all accounts. Flipkart could decide to make this, therefore, a regional offering and not advertise it pan-India. Also, media reports say Snapdeal has been stronger than Flipkart or Amazon in Tier 2 towns. Flipkart would do well to focus Snapdeal on just these geographies without getting ambitious with continuing to nurture the acquired brand in bigger cities. This could mean a big strategy shift not just in advertising and media, but also impact product and logistics.
4. Myntra and Jabong are already trying to find the balance between them as brands. For starters, Flipkart seems committed to retaining and growing both brands in its portfolio. Recent advertising by Jabong on the IPL Finals used HD feeds to target more upmarket customers.
Also, Jabong is trying to focus on women through a ‘Be You’ approach using a newly created concept of mood stores. This is in contrast to Myntra which recently opened a brick-and-mortar store in Bangalore for Roadster, one of its private labels.
The moot question, however, is not how Flipkart will juggle its portfolio of five brands. But how it will face up to the unified strength of Amazon as it promotes just one single face, be it selling mobiles or fashion or Amazon Prime.
It is in this face-off that Flipkart will be disadvantaged in having multiple offerings that do not help in differentiation but add to costs. Amazon will have the advantage of communicating its brand values without diversion or dilution.
Flipkart, on the other hand, will need to either create distinct brand entities and nurture them at high costs, or will have to decide that some of the brands will not receive visible brand support leaving available funds for just the mother offering for it to combat the savvy global competitor.
1. Flipkart has no choice but to have no more than one or max two mass promoted brands. Otherwise, it will spread itself too thin.
2. Flipkart’s portfolio is much of a sameness. Unless each brand can be differentiated sufficiently, its best bet is to fight just Flipkart to Amazon.
3. Flipkart’s Myntra has a slight advantage over Amazon Fashion on imagery and consumer recall. Hence trying to prop up Jabong may not be strategically very wise. Already Myntra as a brand name is a distraction that does not automatically cue Flipkart. Being ambitious in pushing Jabong too may well be an effort to achieve too much against a seasoned global player like Amazon.
4. Actually, the ground battle has always been an active play of private labels. Amazon has excelled across markets with this strategy. Flipkart could do well to drop its other portfolio brands to private label status and leverage past goodwill through that strategy.
Right now, Amazon has an advantage. Their single brand gives them both leeway and flexibility. It is also more cost efficient. Flipkart has a lot of head-scratching and heart-searching to do in the days ahead. It has literally problems of plenty.
Sandeep Goyal is a Mumbai-based veteran communications professional. He is ex-Group CEO of Zee Telefilms and former Founder Chairman of Dentsu India. He can be reached at sandeep@goyalmail.com.