E-Commerce in India, is currently in a phase where almost every half-a-decade old brand is now looking to become profitable as their losses pile on. Same is the case with Myntra, the fashion-only e-commerce arm of Flipkart which recently reported a loss of Rs 740 crore on a revenue of Rs 758 crore.
Yes the revenues have increased from Rs 427 crores in the previous year but so have the losses which have nearly multiplied four times from Rs 173 crores. The increase in losses is attributed to the increased marketing and advertising costs along with the heavy undercutting of product prices for alluring customers by discounts.
This was revealed in its annual report for FY15 filed with the Registrar of Companies (RoC). In the filing, it was also revealed that Myntra is planning to enter the US market for which it has registered the name of its subsidiary, Myntra Inc. US, reported Financial Express.
In addition to it, the filing also mentioned that the company was expecting to achieve GMV (gross merchandise value) of Rs 6,436 crore (approximately $1 billion) by 2016.
The company had claimed GMV of $500 million in October last year, and recently clocked an annualised GMV of $800 million in January.
Reportedly, the US online apparel and accessory market is worth $60 billion and thus, can open up a new revenue stream as well as pave a way for the global expansion of Myntra. This may also be due to the rapidly increasing competition in the fashion e-commerce in the country which now also includes competition from big names such as Reliance and Aditya Birla Group.
Aditya Birla Group, which already has a formidable offline presence in the fashion with its brands such as Louis Philippe, Van Heusen and Peter England, has entered the fashion ecommerce with its All About Fashion platform at abof.com. Reliance is also planning to enter online fashion space with ‘LYF’, which it plans to launch alongside the 4G LTE services of Reliance Jio.
It is noteworthy that while most of the e-commerce companies are eyeing for profitability in the next 2-3 years, Myntra had announced that it is aiming to do so by the end of 2016. Last year, the company had brought a new CEO, the former McKinsey director Ananth Narayanan, as its founder Mukesh Bansal is now more involved with Flipkart.
Ananth had recently disclosed his plans of profitability by the year 2016 in an interview and said,
The nuance is that I will push for Ebitda (earnings before interest, taxes, depreciation and amortisation) profitability because that is important for a sustainable business model.
He had further said that they had stopped blindly offering discounts and were using technology to figure out what discount can be given to which product seeing its price and demand. “We don’t want to be a discount-led platform but a mass premium player,” Ananth said.
The company has also reportedly set up a new team to cut its supply chain cost by 5%. In addition to the cutting costs in the supply chain, Myntra also expects to promote more in-house brands for better margins as compared to the external brands.