Myntra targets 90% sales increase in FY17
Online fashion retailer Myntra has set an ambitious target of increasing gross sales by a massive 90 per cent to Rs.5,000 crore this fiscal. It expects to achieve the target by improving its product selection, adding new categories and re-launching its desktop website, while it cuts spending on discounts, logistics and other operational costs.
Myntra's CEO Ananth Narayanan said the company is on track to lower its cash burn rates for the year ending March 2017 after keeping them constant last year. According to documents with the Registrar of Companies, Myntra reported a net loss of Rs.729.2 crore for the year ended March 2015.
“We've streamlined costs in a big way. By improving our product selection, we've managed to cut discounts significantly,” Live Mint quoted Narayanan as saying.
Myntra which is owned by Flipkart, has also cut supply chain costs and improved its customer engagement rates, he said.
“We're also using surface transport a lot more than air (thus cutting costs). We're planning better in terms of when to increase and decrease our supply chain costs by aligning them with demand. When demand is higher we're able to scale up by working with external logistics players and not increasing our capital costs. The number of times people come to Myntra has also increased significantly, which lowers our customer acquisition costs,” said Narayanan.
If Myntra achieves its target of cutting spending on discounts and other operational costs, it will become one of the few online retailers to turn profitable.
Myntra is not the first one to target lowering operational costs. Others such as Flipkart and Snapdeal have made cost-cutting projections in the past but failed to achieve them. One major reason is that customers have a plethora of alternatives to go to in case a website cuts discounts or doesn't advertise itself aggressively. So, Myntra's projections of spending cuts will depend to a significant extent on how aggressively its rivals, such as Amazon India Ltd, Jabong and even its parent Flipkart, which now has a larger fashion business, court customers.
Myntra, which became an app-only platform in May 2015, has been forced to re-open its website because it had been losing customers to Amazon India, Flipkart and others over the past year.
The online retailer expects 15-20 per cent of its sales in the current financial year to come from the desktop website, underlining its misstep in going app-only last May.
To differentiate itself from Amazon, Flipkart and others, Myntra is trying to project itself as a “mass premium brand”. The company is carefully curating products from popular brands rather than simply offering the widest range possible, increasing its selection of women's products, adding to its collection of private labels, such as Roadster and Ether, and introducing fashion content to keep customers hooked.
“We've added top local and international brands like Louis Philippe, Forever21, and Marks & Spencer that are not available anywhere else and these brands are doing really well for us. We're using data to figure which brands and styles have the highest sell-through rates. The number of styles (200,000) in our existing categories has stayed the same and will stay the same, but our revenue per style has gone up dramatically,” Narayanan said. (SH)
Fibre2Fashion News Desk – India