Ecommerce in India is consolidating, the latest being Zovi’s acquisition of Inkfruit. Although, there have been talks of merger in past few days, ToI reported today that Bangalore based online Fashion retailer has bought out Inkfruit.com its rival retailer.
Over last year or so, 15 such merger / acquisition deals have happened in Indian ecommerce space, clearly pointing towards strong consolidation!
This marriage has no doubt happened with push from their investors SAIF Partners and Tiger Global. On paper, the marriage looks good as there are couple of synergies that will help the combined entity to reduce the cash burn, which is probably the biggest reason for this acquisition. SAIF and Tiger have put additional USD 10 million of investment post this acquisition.
How will this acquisition help?
While Zovi and Inkfruit are in similar space, they operate differently. While Zovi has created its own private brand that it sells, Inkfruit is more of a traditional apparel retailer with its own network of brands and distributors. In addition to that Inkfruit is a more community based website where users can create and submit their designs for T-Shirts and other merchandize, which in turn Inkfruit puts up on its catalogue.
On the other hand, being a private label, Zovi does not have a distribution network, but its own design and manufacturing unit.
The unified entity thus gains on 3 different aspect –
Firstly, the userbase now stands to double as userbase of both the entities is similar (atleast from the traffic perspective they both are quite near to each other)
Secondly, the combined entity will be able to do away with units that overlap each like Logistics partners etc. thus bringing down the cash burn.
Thirdly, Zovi’s own private label and Inkfruit’s distribution network will complement each other quite well and help in increasing their catalogue of merchandize offered to buyers. In addition to this Zovi will benefit tremendously from the Inkfruit’s design and creative community!
What’s in it for founders?
According to ToI, Inkfruit co-founders will be part of the unified entity and will stay invested and have a active role in day to day operations.