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Myntra cuts costs, improves efficiencies as it eyes profits next fiscal

The company has touched $800 mn in annualised average gross merchandise volume in January, clocking 70% growth y-o-y

BS Reporter  |  Bengaluru 

Myntra, Flipkart
An employee works inside the office of Myntra in Bengaluru, India. Photo: Reuters

Myntra, the online fashion retailer of Flipkart, said it would report profits in the next financial year as it cuts costs, improves efficiency and gets more business from young customers buying clothes on their smartphones.

The Bengaluru-based online retailer, who will face fresh competition from the upcoming fashion e-commerce site of Reliance, is pushing for efficiency through improvement in supply chain and and focusing on better gross margins.

“Our focus for the year will be to attain positive gross profit while maintaining scale during the year. We plan to build on the momentum in the first month to touch $1 billion GMV (gross merchandise volume) by FY2016-17,” said Ananth Narayanan, chief executive officer of Myntra.

“Going ahead, we are hopeful of a further one-two per cent reduction in supply chain costs and another three-four per cent from further reduction of discounting.”

The company has touched $800 million in annualized average GMV in January, clocking 70 per cent growth year-on-year. In December 2015, it had reported a GMV of $500 million. The spike in annualised GMV has been primarily aided by the festive and year-end sales, he said.

Myntra did around six per cent reduction in discounting during the Diwali sales quarter sequentially and about five per cent in January on year-on-year. The supply chain chain costs reduced by five per cent in the last quarter.

He said that while Myntra uses a few third-party logistics players as well as Flipkart’s logistics arm eKart to meet its delivery demands, the topic of merging Myntra logistics with eKart is out of question. “This is because Myntra Logistics will stay focused on providing value added services such as try and buy, alterations, etc to our customers,” Narayanan said.

Myntra’s GMV of $800 million has proven that the company’s bet on bringing more brands online has been successful. ““Online fashion consumers are largely brand seeking. Brands will grow and define future of fashion. We expect the branded fashion market to grow twice as fast as the overall fashion market in the next five years. We now plan to be profitable at scale in FY 2016-17, with consistently high growth rates,” said Prasad Kompalli, Head – eCommerce Platform at Myntra.

Myntra has more than 2,000 brands on its platform. The top brands for the year were Roadster, Puma, Nike, Vero Moda & UCB. Myntra Fashion Brands, the company’s in-house fashion brands, led by Roadster, has contributed to about 20 per cent of the company’s revenue. Myntra looks to increase this to 25 per cent this year.

Currently, there are more than 30 international brands on Myntra, including Scotch & Soda, Harley Davidson, Ferrari, Desigual, Forever 21,The North Face, Timberland and Marks & Spencer. The overall contribution by international brands to the revenue was five per cent last year. Myntra looks to increase this to 15 per cent by FY17.

Myntra claimed it has about eight million monthly active users with each customer visiting its app at least 12 times a month.

First Published: Fri, January 29 2016. 00:31 IST