We went for a Snapdeal - Fashion sponsored event yesterday. Realized the metamorphosis of tech enabled e-comm businesses to capture more of the offline marketplace - chasing hypergrowth through taking away market share of the offline vendors, creating new supply/demand which did not exist and haemorraging cash to grow market share and/or not allow the gap in market share to increase vis-a-vis the market leader. News of Amazon (fashion business) and Jabong are doing the rounds... Expect more consolidation by Flipkart/Myntra, Amazon and Snapdeal -likely targets : Fashion&you, Baby Oye, etc. Valuation : 5 times (3yr forward) sales. E.g: flipkart valuation of $12 B with a GMV run rate of $ 3 B and actual sales of $ 100 M in 2015E implies 4x GMV (1 yr fwd) and 120x net sales (1 yr fwd). Assuming 4-6 times growth y-o-y, this translates to $ 2.5 B sales in 2017E hence valuation is around 4.8 x (3yr fwd) sales. Forget profitability benchmarks, but they should very profitable at these levels if they focus on building the Fashion business (highest profit margins). Amazons newly founded Amazon Fashion is the proof of the pudding which may or may not include Jabong. Whether it is consolidation or cashing out through sale, fashion business is the new growth engine for e-commerce. And when you get an invite to watch technology firms evolve to fashion design, dont grudge them the valuations !!! Anyone know the Myntra Valuation benchmarks ?
Posted on: Sun, 25 Jan 2015 06:31:52 +0000
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