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Exclusive: Flipkart’s Myntra diversifies into B2B fashion, rejigs existing entity

24 July, 2017

In a move likely to supplement its private label business, Flipkart-owned fashion e-tailer Myntra renamed one of its associated entities in March this year to become a business-to-business seller, filings with the Registrar of Companies show.

The renamed entity, Myntra Jabong India Private Limited (MJIPL), will act as a B2B seller of fashion and fashion-related merchandise to e-commerce marketplaces Myntra and Jabong, apart from other such companies, the filings reveal.

“The company, which currently operates in the space of providing services to customers through an online platform, now intends to diversify its business by providing services to other businesses and carry on ‘Business to Business’ selling,” the company stated in one of its filings. Myntra expects this new line of business to be its major revenue driver and growth vehicle.

Myntra Jabong India Pvt Ltd was earlier known as Quickroutes Internet Private Ltd (incorporated in March 2015), a wholly owned subsidiary of Singapore-based FK-Myntra Holdings Pvt Ltd, which, in turn, is a subsidiary of Singapore-based Flipkart Pvt Ltd, the umbrella holding company of India’s largest e-commerce firm.

The company’s decision to change the name and diversify into the B2B space was effected by altering the Memorandum of Association through a board resolution held on March 9 this year. However, Myntra, which applied for the name change on March 8, received regulatory approval on March 31.

FK-Myntra Holdings Pvt Ltd now becomes the holding company of Myntra Jabong India Pvt Ltd with 83.33% stake through a share allocation exercise from Myntra Jabong India Pvt Ltd on March 20 this year. Both Myntra Designs Pvt Ltd, which owns the trademark name Myntra, and Jade Eservices Pvt Ltd, which owns Jabong, are now fellow subsidiaries of FK-Myntra Holdings.

It is not clear how the contours of this B2B strategy will evolve going forward and whether the company has plans to extend this beyond Flipkart and its associated entities. It is also not clear whether this rejig is a compliance exercise that can potentially take advantage of the prevailing foreign direct investment norms that allow 100% FDI in B2B e-commerce.

A detailed e-mail query has been sent to both Flipkart and Myntra seeking more information in this regard.

However, in one of its filings, the company has cited that there is a lack of transparency in pricing prevailing in the B2B wholesale environment. Myntra Jabong India Pvt Ltd has observed that while drafting the customer-supplier relationship, wholesalers tend to give discounts on specific terms, causing large price discrepancies. This is because most wholesale players lack a good online channel and remain hidden in a protected environment.

By venturing into the B2B business, Myntra hopes to bring increased transparency to the pricing mechanism by creating and streamlining online channels for wholesale businesses. Such transparency will benefit mature e-commerce players with strong online channels and improved value propositions, the filings stated.

“[Myntra] hopes to gain a larger market share of the B2B business by passing on the manufacturer discount to the retailers and bring transparency in B2B business,” the company stated in the filings.

The development comes at a time when Flipkart launched its own private label for women Divastri, which was released in June, and men Metronaut, which was launched earlier this month. The fashion category is a segment which has been crucial for Flipkart to maintain its lead, however slim, ever since Amazon managed to catch up with it in just four years of its Indian launch.

After the acquisition of Jabong last year, Flipkart reportedly holds 70% market share in the online fashion segment.

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Exclusive: Flipkart’s Myntra diversifies into B2B fashion, rejigs existing entity

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