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Flip the fashion cart

Rashmi Pratap | Updated on: Feb 07, 2014
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Funding in place, fashion e-commerce portal gets down to business in style

From a loss-making personalised gifting venture to one of India’s most sought-after fashion e-commerce portals, Mukesh Bansal-led Myntra has come a long way. Braving losses and merger attempts by bigger rival Flipkart, Myntra has managed to secure a funding of ₹300 crore from PremjiInvest, the private investment venture of billionaire Azim Premji. Myntra can now strengthen its technology platform, delivery infrastructure and customer experience, Bansal told BLink on the day the the funding was announced. The money also allows the e-tailer to embark on future growth initiatives. He has faith in himself, he says, and in the potential of online fashion retailing in India. The Flipkart deal might have brought in the money, but would have resulted in Bansal losing his independence over his company. He wants to be firmly in the driver's seat, at least for now. The fashion-focused businessman, who does not see any threat from Flipkart or Amazon, talks about what it takes to build a successful e-commerce business and when Myntra can turn profitable:

Back in 2007, when internet penetration was far lower, what made you jump onto the e-commerce bandwagon? Did you see a possible boom coming?

I was in the US for 10 years, working for e-commerce start-ups in the Bay area. I knew it was a matter of time before e-commerce gathers steam in India. So we started in 2007 with selling personalised products online for both corporates and individuals. By the time the internet was ready for takeoff in India in 2010, we had gathered a good understanding of the market, and our team and back end systems were in place.

Why did you move away from personalised gifting to fashion?

We realised that it was a niche area and we could not build a large-scale business with personalisation. So we changed the model. We started with selling sports apparel. Subsequently, we added casual-wear and formal- and ethnic-wear over the next 18 months.

Any thoughts of moving to other categories?

We want to stay committed to fashion as it is a big category and there is a huge opportunity in the next few years.

What are the critical factors for the success of an e-commerce firm — both at the back end and front end?

The front end is all about user experience — you have to give them the best. A good backend is all about speed of delivery, predictability, 24X7 call-centre, and a reliable return-and-exchange policy.

How big is your logistics cost, and why is it the most important aspect of an e-commerce venture? How do you keep logistics cost under check?

Logistics is about 10 per cent of our operating costs and we are continuing to improve as we grow. We have a hybrid model — own delivery staff as well as third-party services. With more volumes and economies of scale, we are able to get better rates from third-party delivery companies. We have also expanded our delivery team to 500 people across 30 cities. They deliver 65 per cent of our orders.

The discounts offered by online retailers seem unsustainable. Do you see them becoming more realistic going forward?

The discounts are not offered on the entire catalogue. They are usually on old inventory. Latest collections are not on discount. But I believe that over a period of time, discounts should go down. As the market evolves, we will segment our catalogue.

What advantages does PremjiInvest bring to Myntra? And will you ever sell Myntra to an interested seller?

We feel the best way to build our business is by being independent. We want to build a unique fashion brand with strong back end capabilities. PremjiInvest has come for long-term investment and they believe in our business building, and I think it is the right path for us. It is difficult to say about the future right now. But our intention is to stay independent.

Do you think it is consolidation time in the Indian e-commerce space?

Consolidation has been happening in this space for a while. Some more M&As will happen this year. Any player not among the top two in its category will most likely find it difficult to raise money independently.

What makes Myntra bullish about its future?

E-commerce will be very powerful in India as modern retail is not very strong in the country. Moreover, we are a vertical destination and won’t face challenge from any horizontal player (like Flipkart, which deals in multiple categories). We give a different experience under a category, which cannot be replicated by any vertical player. So competition for us will be limited.

We want to be profitable by FY’15, and currently our revenue is about ₹100 crore a month. In the year ahead, our revenue run rate would be about ₹250 crore a month.

Published on September 12, 2014

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