MakeMyTrip set to upset e-commerce order

Along with ibibo, it clocked air travel and hotel bookings worth $1 billion in April-June quarter

Flipkart and Amazon, the two dominant players in the Indian e-commerce world, are now facing competition from MakeMyTrip — as far as the pecking order is concerned.

In the April-June quarter this year, the travel portal — which has merged with rival ibibo — has done air travel and hotel bookings worth $1 billion (about Rs 6,400 crore). If it can keep up the momentum, its annual figure could stand at $4 billion (about Rs 25,600 crore). According to the latest numbers, Flipkart’s annual gross merchandise value (GMV) is $6 billion (about Rs 38,400 crore); for Amazon, it about $3.2 billion (Rs 20,400 crore). Paytm’s GMV is reported to be about $5 billion (Rs 32,000 crore).

April-June was the first full quarter after the MakeMyTrip-ibibo merger. Announced in October last year, the merger process was completed in February this year. Of the $1.02-billion GMV in the quarter, $650 million was from air ticketing; hotel bookings and packages contributed another $374 million. 

The GMV of MakeMyTrip, without ibibo, in the corresponding quarter of the previous year was $565 million. Unlike most e-commerce companies where valuations are a function of the limited investors, the Nasdaq-listed MakeMyTrip has a market-driven value of $3 billion. 

“We are proud of this milestone, driven by all the brands — Goibibo, MakeMyTrip and redBus,” said Ashish Kashyap, co-founder and president at Go-MMT, the company formed by the merger. It is also an undisputed leader in the domestic online travel space.

MakeMyTrip’s revenue stood at $192.1 million for the quarter, up 59 per cent from last year, all thanks to the merger. However, like every top e-commerce player operating in India, the company reported a loss. Net loss for the quarter was $68.5 million against only $14.2 million in the corresponding quarter of the previous year. It was a result of marketing and promotion expenditure. 

“We want to optimise costs in the long run. But we don’t want to compromise on moving the offline to online, especially in hotels. That will bring us a network effect. People mistake offers as discounts, but it is a tool of market creation,” said Kashyap. 

The two companies have integrated different areas of business as part of the merger. They have checked into a common office in Gurugram and have also started drawing synergies in areas of alternative accommodation, bus-ticket booking, and intercity cab transportation. The management, however, has decided to retain all the brands — MakeMyTrip, Goibibo and redBus — to exploit their respective strengths.

The online travel market in the country has been expanding rapidly on the back of a rise in the number of internet and smartphone users. However, online booking is yet to reach a large percentage of the population, especially in smaller towns and rural areas. While more than 60 per cent of the domestic air ticket booking is estimated to come from online channels, for hotels the number is just about 10 per cent. 

“There is a huge opportunity waiting to be tapped across segments such as hotels and bus bookings, and as market leaders we need to expand the segments,” said Kashyap.