India's e-commerce ready to recreate Alibaba magic?

If Mukesh Bansal, chief executive officer of Myntra, recently acquired by e-commerce major Flipkart, is to be believed, an Indian Alibaba is inevitable.

Bansal, who heads the fashion business at Flipkart and is part of the core management team running the Flipkart-Myntra combine, was speaking to Business Standard on the possibility of an Indian Alibaba in the near future.

That question has been around since the Chinese e-tailer notched a $21.8-billion Initial Public Offer of equity.

Its market capitalisation exceeds that of Amazon and eBay together.

Mukesh Bansal, the third one by that surname in the C-team of Flipkart-Myntra after Sachin Bansal and Binny Bansal, refused to say which the Indian Alibaba would be.

However, he noted the e-commerce leader in India was expected to hold 70-80 per cent of the market in the next four to five years.

In market share, Alibaba is at that point now, with an estimated 80 per cent of the Chinese e-commerce market.

On whether Flipkart-Myntra will be that leader in the Indian e-commerce space in four to five years, Mukesh Bansal said, “We are working towards that.’’

Currently, market estimates suggest the two entities jointly have about half of Indian e-commerce.

In the fashion space, the fastest growing segment, the two have been able to capture a little over 55 per cent of the total pie.

In India, there will be one or more $100-bn internet companies in the time to come, Bansal said in an interview to this newspaper from his designer Bangalore office on Sunday.

That was the same day Jeff Bezos, founder and CEO of American e-commerce company Amazon, was in the city, talking to the media about the potential of the country’s e-commerce sector.

And, Flipkart is very much a contender, he indicated. While there’s no timeframe set for achieving the $100-bn target, 2020 seems logical, if not sooner, Bansal said.

In spite of the mega IPO of Alibaba, Flipkart-Myntra is not thinking of a public offering at this point. “The Alibaba IPO was very inspiring for Indian e-commerce,’’ says Bansal.

But, the chance of an Indian Alibaba was based on the fact that online retail would perform much better than offline as the market grows and also that the e-commerce success is being fuelled by mobile phone transactions across the country.

Internet penetration (more so through hand-held devices and phones) is growing at a rapid pace, with retail offline finding it tough to keep pace, he said.

It’s been just about six months after Myntra was bought by Flipkart, and Myntra’s Bansal looked relaxed as he walked into 'Chanel’—the conference room named after designer Coco Chanel, known for Chanel No 5 perfume and the little black dress — in T-shirt and jeans on Sunday morning, before leaving for a multi-city tour through the week. How has it been post merger?

“There was some scepticism initially. But, retrospectively thinking, it was a great decision for the long term.’’

While he’s leading the fashion business, he’s one of the top people taking investment decisions for Flipkart-Myntra.

‘’So, it’s been good.’’ Bansal thought hard about the merger pangs, and then said, “There are some unexplored synergies between Flipkart and Myntra.

That has to be worked on.’’ Perhaps, once that’s achieved, the two could hit annual revenue of Rs 20,000 crore in fashion alone over the next three years, from an estimated Rs 3,500 crore (Rs 35 billion) sales in the segment currently.

That for Flipkart, which had recently raised $1 bn in one go recently, would be a significant step to having 70-80 per cent of the Indian e-commerce market, and also enter the $100-bn club to be a contender for the Indian Alibaba.