In a bid to eye profitability, Myntra is now finally looking to ditch the strategy which Indian e-commerce companies have so heavily relied upon — deep discounts.
Instead of providing heavy discounts, the company will be focusing on its services portfolio and will offer various services such as try-and-buy and alterations. Introducing such services will give it a major brand differentiation.
Commenting on this, Ananth Narayanan, CEO at Myntra, said:
Three drivers of unit economics in the short term include cutting down on discounts, and supply chain costs including returns and focusing on superior consumer experience.
To ensure that the customers stick to the company even after the company cuts down discounts, it is focusing on getting exclusive brands on the platform. As per the report, about 20% of Myntra’s sales comes from its private label brands, which it plans to scale up to 30% in the next one year.
On the supply chain side, Narayanan says that Myntra has already figured out a system to reduce the amount of travel a package needs to go through in a bid to cut costs.
These are not the first attempts though, by India’s largest fashion e-retail brand to turn profitable. Myntra has been experimenting with its platform ever since Flipkart acquired it in 2014 for around $370 million. Last year, Myntra shut down its website and decided to go app-only, claiming that it gets about 80% of its traffic and 70% of sales from its mobile app.
However, realising the customer base it is loosing upon and the fact that India might just not be ready for a mobile-only shopping experience, the company decided to relaunch its mobile website in November 2015 and it officially re-launched its mobile website last month.
Earlier this month, Flipkart has infused more than $50 Million into Myntra to further boost its market leadership in the fashion segment. It will use this fresh capital to make sure it achieves its goal of profitability by 2017. The company is also planning to expand its business globally and enter the US market, which is worth $60 billion — which if well-executed — could open up a massive new revenue geography for the company.
Myntra’s success and its vitalness in Flipkart’s revenues could be seen from the fact, that the latter has never really thought of merging the former — a step which could have resulted in huge brand dilution and losses. Former CEO Mukesh Bansal had earlier commented that Flipkart and Myntra are targeting two very separate consumer segments, thus the reason for non-merger. While the company is focussing on brands and experience buying, Flipkart targets more convenience driven shoppers. He had commented:
Flipkart fashion is focussed on long tail. The selection is massive but the average selling price is abo-ut 30-40% lower than Myntra.
Recently though, Myntra saw its founder and architect Mukesh Bansal leaving the company in pursuit of his own new venture in sports, fitness and healthcare.