On June 1, online fashion retailer Myntra withdrew its much hyped app-only strategy and relaunched its desktop website. AS it felt that web would contribute 15-20% of its revenue in coming months. The company came up with new growth plans laying focus on maintaining positive unit economics with an aim to build a large, profitable business.
Market trends for Online Fashion and Myntra’s Strategies
Currently Online fashion in India has less than 1.3% penetration. In developed markets, it is 10-12%. Which implies that India is 10 times behind the world standard. Most estimates put e-commerce at $80-100 billion by 2020. About 35% of it will come from fashion. Interestingly, it is in the fashion category that a large and profitable business can be built, unlike other categories where they are both large and unprofitable, or niche and profitable. To make this possible, Myntra started focusing on unit economics cost. Myntra made sure that consumer value proposition is right. So that they could be the mass premium destination, targeting the women shoppers. Consumer experience was carefully monitored which resulted in improvement of Net Promoter Score (NPS) by 30% in the last six months. selection, service and engagement were also carefully monitored by Myntra. The observed that average customer comes to Myntra 11 times a month, which they targeted to elevate to 20. For achieving this content and commerce have been linked together, to make the app more social, which has increased engagement. The repeat rate was observed as 80%.
Reason for going to Desktop from app only?
India is primarily a mobile-first country. This e-commerce platform went app-only and reoriented the company to become mobile-first. App downloads currently stand at more than 10 million It really worked. However, given that their focus is on women and on mass premium, they found that many of their customers own multiple devices, and shop on these devices simultaneously. Also, Myntra recently added new categories such as home and jewelry, which needed bigger screens. Therefore, they relaunched the desktop version to cater to growing needs of multi-screen customers. Though Myntra is still, primarily, a mobile-focused company. App and mobile web contribute 85% of the revenue. Post the rollback, they are expecting the desktop to contribute 15-20% of revenue in coming months.
Today, Myntra earns about 55% of the revenue from tier-II and tier-III cities. They now have nine million monthly active users and are hoping to cross one billion in GMV (gross merchandise value) this financial year and are targeting a growth rate (CAGR) of 90%. Last year, they grew at 70%.
Myntra Acquires Jabong and what the future holds for it?
Myntra is a great platform to build brand image, given that its monthly active users stand at nine million. Strategically partnering with the brand is given more importance than the advertising by Myntra. Brands such as Nike and Puma have greater than one lakh followers on Myntra. The focus is on building brand followers on Myntra. Myntra currently serves 90,000 pin codes with focus on fast delivery having tie-ups with service providers on this front.
India e-commerce giant Flipkart has beaten rivals including Snapdeal and Amazon, to buy online fashion portal Jabong from Global Fashion Group. The purchase was made by Flipkart’s fashion unit Myntra, and the combination should help the company take on increasing competition from Amazon Fashion in India. However, it is decided that Jabong and Myntra will operate as separate brands. In its journey to be India’s largest fashion platform, acquisition of Jabong comes as a natural step feels the top brass of Myntra. Significant synergies are present between the two companies especially on brand relationships and consumer experience.
Global Fashion Group had been seeking buyers for Jabong for several months after its owners AB Kinnevik and Germany-based Rocket Internet expressed an interest to exit their investment in Jabong. The company was reportedly courted by several suitors including Future Group, Amazon, and Aditya Birla Group’s Abof in addition to Snapdeal, according to media reports.
Myntra is currently running a pilot program which caters same day delivery and next day delivery at nominal costs. For example, same day delivery costs just `50. Myntra at present is focusing on fashion specific logistics, the reason is they found that the biggest reason formal trousers won’t sell online is because of trouser length. They thought of counter attacking this problem by creating an alteration service at nominal cost. Currently, they are running a pilot in Bengaluru where they have tied-up with local tailors. The customer can schedule a pickup for alteration post-delivery. This e-commerce platform also introduced try and buy where customers can order multiple sizes.