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Bengaluru-based online fashion retailer Myntra is looking to become India’s first profitable e-tailer. It's targeting a positive bottom line as early as the second half of 2016, nine years after it was founded in 2007.
Most e-tailers are struggling even to clock substantial revenues, let alone profits.
Myntra, acquired by e-tailer Flipkart last year, is aiming at a gross merchandise value (GMV) of $1 billion (Rs 6,436 crore) by 2016 and $5 billion (Rs 32,182 crore) over three to four years, against $400 million (Rs 2,569.7 crore) now. GMV is the value of merchandise sold over a year through an e-tailer’s site.
“There are 30-35 million people who shop online in India, and in over five years we will see the number going up to 150-200 million,” said Mukesh Bansal, CEO, Myntra. “Fashion will make for a $100-billion market, of which 25-30 per cent will be online and serviced by both marketplace and vertical players. Our aspiration will be to have at least 50 per cent of that.”
With revenues of most e-tailers small, companies have refrained from sharing their top line numbers. They only disclose their GMV. Net revenue is only a fraction of GMV. Flipkart is said to be losing Rs 2.23 for every Rs 1 of revenue, according to Trak.in. The blog says Amazon loses Rs 1.90 and Snapdeal Rs 1.72 for every rupee. “It is not an unrealistic target and one of the key areas of major spends, brand promotion, is coming down,” said Harish V of Grant Thorton on Myntra. “Consolidation in mobile platform would have a positive rub-off.” On Tuesday, Myntra said it will shut its desktop site from Friday, and become an app-only e-tailer.
Nearly 95 per cent of Myntra’s current traffic and 70 per cent of sales come from mobile devices. Myntra’s mobile app has clocked nine million downloads so far, and the company hopes to see five million downloads over the next four months.
“There has been a tremendous growth of smartphones in India and it will continue to multiply over the next few years,” said Sachin Bansal, co-founder and CEO of Flipkart. “Consumers are shifting fast to smart phones for commerce and information consumption in a big way.”
While a single-channel approach might help Myntra establish itself in the fast-growing mobile-internet space, it is a rather big risk considering the fierce competition where companies are all going out with a multi-channel approach. However, Mukesh Bansal said: “Short-term market share is not what we factor in for our business decisions. You cannot be competition-driven. For us, it’s about how we understand our customers and how we give them the best offering.”
E-FASHION
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July-December 2016 Time by which Myntra aims to turn profitable
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$1 bn (Rs 6,436 cr) Gross merchandise value (GMV) seen by 2016 vs $400 mn
- $5 bn (Rs 32,182 cr) GMV targeted in three to four years
