Online fashion retailer Myntra withdrew its much hyped app-only strategy and relaunched its desktop website on June 1. According to the e-tailer, web should contribute 15-20% of its revenue in coming months. In conversation with BrandWagon’s Ankita Rai, Ananth Narayanan of Myntra highlights the company’s growth plans and his focus on maintaining positive unit economics with an aim to build a large, profitable business. Excerpts:
You joined Myntra at a time when it was looking to scale up, post the acquisition by Flipkart. As you complete more than six months as CEO, what are the key strategic initiatives you have taken?
Online fashion today has less than 1.3% penetration in India. In developed markets, it is 10-12%. So we have 10 times growth ahead of us. Most estimates put e-commerce at $80-100 billion by 2020. About 35% of it will come from fashion. Interestingly, it is in the fashion category where you can build a large and profitable business, unlike other categories where you are either large and unprofitable, or niche and profitable. This was one of the reasons I joined this space.
In the past six-seven months, our focus has been on building a large and profitable business. To make this possible, we have focussed on unit economics cost. From October 2015, at a unit economics level, we are positive. Second, we have ensured that the consumer value proposition is right. We want to be the mass premium destination, with a focus on women.
Third, we have consistently worked on consumer experience. Our Net Promoter Score (NPS) has seen 30% improvement in the last six months. Other big areas are selection, service and engagement. The average customer comes to Myntra 11 times a month. The target is to grow it to 20. We have linked content and commerce together to make the app more social, which has increased engagement on our platform. The repeat rate is 80%.
Last year, when Myntra shut its mobile and desktop websites in favour of an app-only strategy, the reason cited was that more than 70% of its sales were coming from its mobile app. With the relaunch of the desktop site, has there been a change in Myntra’s mobile strategy?
India is primarily a mobile-first country. So last year when we went app-only, we reoriented the company to become mobile-first. Myntra app downloads now stand at more than 10 million. It really worked for us. However, given that our focus is on women and on mass premium, we found that many of our customers own multiple devices, and shop on these devices simultaneously. Also, we recently added new categories such as home and jewellery, which need bigger screens. Therefore, we relaunched the desktop version to cater to growing needs of multi-screen customers. We are still, primarily, a mobile-focussed company. App and mobile web contribute 85% of the revenue. Post the rollback, we expect the desktop to contribute 15-20% of revenue in coming months.
Currently, how much of Myntra’s business comes from private labels?
We launched our private label business three years ago. Today, private labels contribute to 20% of our business, and the aim is to build three to five nationally relevant brands going forward. We plan to increase the share of our private label to 30%. But we will not go to a point where private labels constitute 50% of our business. We are a curated brand destination. Today there are over 2,000 brands, 2,30,000 styles and 11 private brands and labels, which include Roadster and HRX. Roadster clocked Rs 400 crore in 2015-16, which is bigger than many offline brands. We are investing a lot on our design. India is a very unorganised market.
In fact, 60-70% of retail is unbranded. So the market opportunity is huge.
Currently Myntra has two wallets (Pay U Money and MobiKwik) listed on its app. Do you plan to tie up with more wallet players or plan to launch your own wallet?
Our wallet penetration is low. COD (cash on delivery) still is the preferred mode of payment — 70% of our transactions is through COD and around 2-3% is through digital wallets.
Eventually, e-commerce players are working on increasing the usage of credit cards, debit cards and wallets to facilitate faster returns and cut down on payment failures. Of course, mobile wallets and strong payment gateways can cut down on COD transactions.
Also we provide card machines at customer doorsteps for COD transactions.
Like Flipkart, does Myntra also have an ad platform to cater to brands and sellers? How is Myntra monetising through ads?
Myntra is a great platform to build brand image, given that our monthly active users stand at nine million. For us, it is much less about advertising and more about how we strategically partner with the brand. We are a fashion and lifestyle company. Brands such as Nike and Puma have greater than one lakh followers on Myntra. The focus is on building brand followers on Myntra. We expect international brands to account for 15% of our revenues in the next 12-18 months as we add more global labels to our portfolio.
What initiatives have you taken to reduce the supply chain cost? Furthermore, how much business do tier-II and tier-III cities ring in?
Myntra currently serves 90,000 pin codes. The focus is on fast delivery and we continue to work with service providers on this front. We have piloted and scaled same day delivery and next day delivery at nominal costs. For example, same day delivery is available at just `50. We are focussing on fashion specific logistics. For example, we found that the biggest reason you can’t sell formal trousers online is trouser length.
So we thought of creating an alteration service at nominal cost. Currently, we are running a pilot in Bengaluru where we have tied-up with local tailors. The customer can schedule a pickup for alteration post delivery. We have also introduced try and buy where customers can order multiple sizes.
Today, about 55% of the revenue comes from tier-II and tier-III cities. We have nine million monthly active users. We are hoping to cross one billion in GMV (gross merchandise value) this financial year and are targeting a growth rate (CAGR) of 90%. Last year, we grew at 70%.