 "Online is going to disrupt offline business model: Mukesh Bansal")
After Flipkart, another Bangalore-based e-commerce company Myntra has also set its eyes to cross $ 1 billion in gross sales. The Bangalore-based online fashion retailer has also decided to offer marketplace model in addition to its existing model.
In an interview with Bibhu Ranjan Mishra, the company's co-founder and CEO Mukesh Bansal talks about the rationale behind such moves and the new areas of opportunities going forward. Edited excerpts ?
You recently completed three years in fashion space. Where do you see Myntra here on?
Most of our focus is going to be on building the scale. We really think that 2014 and 2015 are the years when e-commerce will become mainstream. Already, e-commerce is around 0.5% of retail, and by end of this year, it will cross one%.
If you compare that with organised retail, the later is just around 8% of the overall retail opportunities. Most of that growth in organised retail in India is happening online.
After your last round (of $50 million which was led by Premji Invest), there are talks that you are looking at one more round of funding?
There are number of investors who keep talking to us. We don?t have any plan now to raise any fresh fund. The last round (of $50 million) will take care of the investment into growth ? marketing, supply chain, technology. Right now, we have money for the next over two years.
When most of your industry peers were moving to marketplace, you did not consider it. Are you moving to it because of the pressure from investors?
The decision has nothing to do with the investors. It makes sense for the business. We have already saturated with the big brands; so we now want to go after the small boutique brands all across the country. The best way to get them on the platform is through marketplace model. We can?t engage with them under the ?buy and sell? model because they have very small inventory.
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Can you share the blueprint of your marketplace model?
In one year, we want to cross thousand boutique brands. Every city has certain local flavours whether it is Lucknow, Hyderabad or Bangalore. We are reaching out to those local markets and the dominant fashion brands there to replicate local city experience in the online world.
What will be the mix of your traditional model and marketplace business in next couple of years?
In the long term, we expect the marketplace model to contribute around 20 or maximum 25% of our business while the traditional 'buy & sell' model the rest.
Since you have your private labels also, don't you think those will face competition from the boutique brands?
Their (private labels) positioning are different and the price points are also different. So there is not too much of overlap between the two. Now that when the whole business is growing, the other brands will also grow with us. But private brands are growing at a faster rate, and they are priced lower also.
You have 7 private labels now. What is the reason behind going so aggressively after private labels?
Firstly, the margins they offer are much better. They also give us exclusive products which are not available elsewhere; it helps create differentiation.
Have you started focusing on profit? By when do you expect to be profitable?
We are not profitable today, but we are continuously making progress for profitability. If we want, we can be profitable today also. But that will mean, we will have to stop investing in new growth opportunities which is not the right thing for the company today. So, today we are not profitable by choice.
When do you expect to cross $1 billion in gross merchandise value (GMV)?
We are selling around Rs 100 crore per month which is Rs 1200 crore or almost $200 million per annum. Our target is to get to cross $1 billion in two years. And it is quite possible in our present growth rate.
Do the promoters hold majority in the company now?
No, the promoters don?t hold majority. It is less than 50%. But we are quite comfortable with it. We have a very professional board and our interests are aligned. So, there will be no issue at all.
What is your view on the warning made by few electronics goods manufacturers against buying from e-commerce companies?
In any new industry is disruptive for the existing industry, none of it is surprising. Online is a very powerful medium and it will be disruptive for the offline business model. It will also force the offline retailers to also rethink their strategy. Lot of them will also start their own online models as well. It is going in the direction as expected.
What are the areas in technology you are investing?
More and more people are now shopping through their mobile phones. Today, around 25% of our business is coming from mobile platform, and we do expect that number to cross almost 50% in next 18 months.
So there are lots of efforts on developing good user experience on mobile platform. We are soon going to launch a bunch of apps on various mobile platforms including android and iOS.