Bangalore-based lifestyle e-commerce firm Myntra is one of the most funded players in the business, having raised around $40 million since it started operations in 2007 from some of the most active early stage investors in the digital commerce space in India. However, it is also competing with a slew of other well-funded names, which makes it a tough business to be in.
Myntra, which has 21,000 unique product offerings spread across 350 brands, counts Puma as its highest selling brand and has an average transaction size of Rs 1,250. In a conversation with Techcircle on the sidelines of Myntra's annual brand meet 2012, the company's founder & CEO Mukesh Bansal shared insights about the growth of e-commerce in India, state of business at Myntra and the way forward. Excerpts:
Myntra recently raised $20 million in its series C round of funding from Tiger Global, IDG Ventures and Indo-US Venture Partners. Where did the company invest the money?
We raised money from different investors in multiple rounds quite recently and a major chunk of it was spent to enhance our supply chain and the technology.
By when do you think the latest funding tranche of $20 million will last and by when would you look at next round of funding? Would it be another VC round or PE round or an IPO?
We are currently well funded and will not be looking for funding in the immediate future.
There are many players in the lifestyle e-commerce segment. What is your USP?
We have the largest selection of brands. From a customer point of view, he gets the best and the largest selection of brands in the shortest possible time.
What do you have to say about the rising competition in the lifestyle and fashion apparel vertical in e-commerce space?
We are seeing a lot of new entrants in the sector some operating in very niche verticals as well. We will certainly see some consolidation in future and see emergence of 2-3 category leaders in each category. The companies that will manage to provide exceptional customer experience, build scalable infrastructure and get the business basics right will survive and grow. Myntra is the number one player in fashion & lifestyle category and is significantly ahead of its competitors. Hence, we are comfortably positioned in the market. Being an early entrant in the space, we have thorough understanding of the market and its expectations.
We understand that Myntra has a hybrid logistics operations using both third-party logistics firms for delivery and building your in-house team. Could you share some facts related to the latter?
We have been investing to build our own legacy capability in 10 cities, which account for about 50 per cent of our order volume, and we will continue to do that. We are also planning to expand our business to 20 more cities in a certain time frame. We already have a presence in almost 500 cities.
How many orders do you get on a daily basis, how has the order book grown and how is the size of order book?
We currently get around 8,000 orders a day. Since we are exclusively into fashion and lifestyle, we are holding almost 20-30 per cent market share in this segment. Myntra has been doubling in revenue every 5-6 months consistently for the past 15 months. We used to average about 4,000 transactions about 5 months back and today we have doubled this figure. Our average transactions have also grown by over 25 per cent as compared to last year.
What are the milestones you are aiming at?
In the immediate future, we believe in maintaining the same pace, at which we have grown so far. As we grow further, we expect to double the pace in the next 6-9 months. We are aiming for a 200 per cent growth. I hope we can become close-to-a-billion dollar business in the next 4-5 years.
Recently Accel Partners' Prashanth Prakash, who also happens to be an investor in Myntra, said that there was no room left for new e-com companies in India and there was no real differentiator in most of the e-commerce companies operating in the country. What is your view on that?
By and large his statement is correct because in order to start an e-com venture, it requires a lot of investment. Several companies operating in this vertical have already made their mark in India. Investors are now looking at companies which have already proven their potential and have gained a lot of traction. If somebody starts a new business now, investment will be hard to come by, unless he comes up with something innovative. Ventures with a focus on niche areas, such as books or electronics retailing, will get investment.
If you look at the 3-4 large e-commerce companies in the country, they are being able to provide some USP to their customers. I know Prashanth very closely and I don't think his comment was about the e-commerce companies as a whole. He might be referring to the companies that are not able to bring something unique to the table.
What are the new trends that you see in the sector?
A lot of last-mile delivery is coming up. Digital marketing is getting sophisticated and companies are innovating on payment side. They are also looking at retention rates more closely. Overall, the e-com business is getting mature and the infrastructure is growing.
(Edited by Prem Udayabhanu)