Leading online fashion retailer Myntra said it hopes to become profitable by 2016-17 as it phases out discounts and generates higher margins from apparel sale online.
“We are still in an investment mode. Given our business model and the margins we see, Myntra is poised to become profitable in a couple of years,” Mukesh Bansal, co-founder and CEO of Myntra, said. Myntra, which got acquired by Flipkart last year in a $370 million deal, competes with e-tailers like Jabong and Snapdeal in apparel retail.
All major Indian e-commerce companies including Flipkart and Snapdeal had a high burn rate on account of huge discounts they offer mainly to acquire customers. But the discounting trend is now on a decline with many e-commerce players selling most of the goods at regular prices.
Sachin Bansal, co-founder and CEO of Flipkart, said discounting as a sales strategy is waning.
Sachin and Mukesh were speaking to reporters at a press conference to announce Myntra’s decision to go ‘mobile app only’ from this Friday.
“We currently have an annualised revenue run rate of $400 million in gross merchandise value and expect to touch $1 billion by early next year,” Mukesh said. “I hope to see Myntra as a $5 billion company in five years,” he added.
Meanwhile, Flipkart’s Sachin said the firm is clocking more than $4 billion in annualised GMV: “It is fast changing,” he said.
From May 15, consumers can shop from Myntra only through its mobile app, making it probably the only e-commerce company in the world to conduct transactions exclusively on mobile phones.
“Simple reason is consumers are asking us to do this,” said Sachin, explaining the company’s decision. “Close to 95 per cent of traffic and 70 per cent of sales come through mobile devices,” he said.
Will a mobile app-only strategy backfire? Mukesh said he would not expect to lose customers due to this shift in its sales strategy. “We expect our market share to go up in the next six months,” he said.
As for Flipkart, it is still weighing its options whether it should go mobile app only. “We do not have a timeline to go mobile only in Flipkart,” said Sachin.
At the group level, there is an increased mobile focus now. Flipkart is enhancing its mobile commerce platform under the leadership of chief product officer Punit Soni and head of engineering Peeyush Ranjan. Both had worked with Motorola division of Google before joining Flipkart.
Myntra claims 9 million people have so far downloaded Myntra app, and it is targeting five million more downloads in the next three to four months.
Mukesh, who became board member and head of commerce of Flipkart post-sale last year, said the company is focused on innovations in mobile commerce and is expanding its technology team with the primary focus on enhancing customer experience of its app users.
To add to its tech muscle, Myntra will go as far as Silicon Valley to hire talent. Its CTO Shamik Sharma said the company will hire 10-20 engineers in middle and senior level from companies such as Google, Yahoo and Amazon in the US.
It will primarily target Indian tech professionals looking to return to their home country. The company hired 10-15 people from the US last year.
Myntra has been fast expanding its technology team which grew from 120 to 300 in the last one year. It will hire 200 more in the next one year.