 "Myntra set to hit profitability in FY18")
Myntra, which bought its rival Jabong in July from Rocket Internet for $70 million, says a combination of rationalising costs and cutting discounts while selling premium brands would help it to achieve profits.
"We are on track to achieve scalable and sustainable growth and will be EBITA positive in FY18," said Ananth Narayanan, chief executive officer of Myntra and Jabong. He claimed Myntra has already achieved its target of $1 billion revenue run rate in the current financial year.
With an overall monthly active user base of 18 million, (13 million and five million from Myntra and Jabong, respectively), the focus of the company for 2017 will be to provide more personalised services to its customers. In lines with the same, Myntra has already launched its 'Try and Buy' services across 25 cities and will soon integrate a personal assistant on its mobile app.
One of the first online retailers in India to talk about profitability as early as May 2015 when it went app-only, Myntra has reduced discounting by about 800 basis points on its platform and has cut down its supply chain costs by 300-400 basis points. "Discounts are important in India but need to be healthier," Narayanan said.
Myntra's Jabong acquisition has become a success when the latter turned unit economics positive for the first time in its history in October.
The company, which has witnessed an 80 per cent year-on-year growth, saw its growth slow down to 50 per cent in November, thanks to demonetisation. According to Narayanan, while having a short-term negative impact on businesses, demonetisation is "the best decision" from a long-term perspective. "For online players, there are huge logistics issues involved with cash-on-deliveries. Digital payments will reduce this," he said. He was optimistic that the despite a slow-down for two to three months, soon the demand will be back.
Prior to November 8, the company had about 60 per cent of its payments through cash-on-delivery of which only about five per cent was done through debit/credit cards. This has increased to about 50 per cent currently. Myntra also expects Recovery Time Objectives (RTOs) and return rates to come down due to online prepayments.