Fashion e-commerce company Myntra, which is owned by the country’s largest online retailer Flipkart, is aiming to clock a gross merchandise value (GMV) of $5 billion, 10 times its current run rate of $500 million, by 2018-20, company CEO Ananth Narayanan has said.
GMV run-rate is the total value of transactions of a particular month, where maximum value of transaction has happened multiplied by 12 in an attempt to annualise it.
Myntra’s claim sounds unrealistic, but they are not Narayanan said. A horizontal player like parent Flipkart has to spread investments and attention across all its verticals of business, fashion being one of it. However, being a vertical player, Myntra can plunge with all its resources into the fashion business.
Fashion and lifestyle is a $70-billion business in India, and only 1.5% of it is online. The potential is huge, given that China has 15% of its fashion retail coming from online channels, and for the US it is 12%. Parent Flipkart, which spent $300 million to acquire Myntra has planned another $100 million of investment in the fashion business.
If all goes well with Myntra, the company is tipped to become profitable at operating level in the next 18 months. However, with the kind of discounts online channels offer profitability seems to be a mirage. “Over a period of time we will have to rationalise discounts,” Narayanan said. Myntra, which has turned into an app-only platform is betting on availability of fresh stock on the platform, and providing the right brands. Other factors like increasing interaction through social experience like story telling about fashion and educating people about the latest trends and fashion will help in growing stickiness.
“Myntra is a unique combination of culture, technology and innovation, which no other e-commerce player has been able to provide in the fashion space,” said Narayanan. Its nearest rival Jabong, which is also up for grabs, he said, is half of Myntra’s size. The fashion online retailer boasts of 200,000 stock-keeping-units, with 70% of its stock as a fresh stock. This helps it drive repeat traffic that is over 70% and customers coming back to the app about thrice a month. Over 55% of its GMV and over 60% of its traffic comes from non tier-I cities. Myntra is also betting on private labels, which it calls Myntra Fashion Brands. Bollywood actor Deepika Padukone was the latest to launch her label “All About You” on Myntra. Padukone’s brand is one of the three celebrity co-owned brands on Myntra, and amongst the 10 private label brands Myntra has launched since its inception. Actor owns the other two brands — by Hrithik Roshan and cricketer Virat Kohli.
Private labels contribute 20% of Myntra’s over all revenue. Roadster, which is another in-house brand, makes $34 million (R200 crore) in revenue. These brands also have higher margins compared to other brands because of lesser overheads. “Our aim is to get three to four out of these 10 brands in the top 10 fashion brands in India,” said Narayanan. These brands are now available on Flipkart and Myntra.