Bangalore-based Myntra Designs Pvt Ltd, which runs the lifestyle e-commerce site Myntra.com, claims to be clocking gross merchandise value (GMV) of Rs 60 crore monthly. The company was looking to double sales to Rs 800 crore in FY14, and according to Mukesh Bansal, co-founder and CEO, Myntra, it can surpass the target.
In an exclusive interview with Techcircle.in, Bansal talks about the company, its increased focus on private-label brands, acquisition plans, and more. Here are the excerpts.
Earlier this year, you had mentioned that Myntra is looking to double sales to Rs 800 crore in FY14. Are you on track?
We are on track and can even exceed the Rs 800 crore target. We are already doing around Rs 55-60 crore of gross sales monthly, and have a big festive season ahead of us; so this number will only increase going forward. Currently, the online fashion market (on the basis of run rate) is close to Rs 2,000 crore, and we have a leadership position with around 30 per cent market share.
How many visitors are you getting monthly? How many transactions are you doing?
The site is currently getting close to 15 million visitors monthly, and is doing 12,000-13,000 transactions daily.
Which are the top three categories for you? How many SKUs are you currently offering?
The top-selling categories for us remain sports and casual wear, while the fastest-growing category is ethnic wear and accessories, because of the increasing number of women shoppers on the site. As of now, the site is offering close to 600 brands and over 50,000 SKUs while an addition of 25 per cent happen every month, as fashion is a fast-moving category.
How are your private brands faring? Are there additions?
Around 15 per cent of our total revenues come from our private-label brands and this number is growing quarter over quarter. A couple of them like Roadster and Dressberry are doing pretty well, and our ethnic wear brand is also starting to see traction. In addition, Sher Singh already has a loyal following. We feel quite happy about how the private label portfolio is shaping up, and will continue to focus on the same.
You had made two acquisitions in the last 12 months. Where do they stand now? Is the integration complete?
We have completed the integration of the Sher Singh brand with our own portfolio of private label brands, and are also coming out with a new range of Sher Singh branded apparels. While the founders of Exclusively.in were with the company in the transition period, they have now moved on and are no longer a part of Myntra. In comparison, Fitiquette is being integrated in phases, and as part of phase one, it is powering the technology used behind the sizing of products on the Myntra site. We will add more visualisation to the same going forward.
Also, after absorbing the key resources of both Exclusively.in and Fitiquette, the Myntra team now stands at 1,200, and we will increase this number to 1,500 by year-end.
Are you in active talks with anyone for a potential acquisition?
A lot of consolidation is happening in the e-commerce space and we are continuously in talks with other companies for a potential acquisition. While I won't be able to name the company (since talks are still at preliminary stages), we may acquire a firm that is active in the e-commerce space in three to six months.
How much funding have you raised to date? Where have you invested the same?
We have raised funding of about $73 million to date. Most of that was invested in building the Myntra brand, the technology platform, as well as in the back end, building our supply chain infrastructure. We have been fairly conservative in burning cash and our earnings before interest, taxes and amortisation (EBITA) percentage has also been improving quarter over quarter. We have enough cash for 15-18 months, which is more than enough to get us to profitability.
What is your return rate? Are there plans to completely outsource logistics?
We use a mix of company owned as well as third-party logistics for delivery. However, there are no plans to completely outsource delivery; instead, we plan to expand company owned logistics over time. This is because we have seen wherever we deliver ourselves, delivery is faster and cheaper with a lower return rate and better customer experience. We will continue to do the same. Also, we will start our own logistics in any city where we reach a run rate of 100 orders per day.
As far as return rate percentage for orders is concerned, it has been constant at 12 per cent. We are comfortable with the number as long as it does not increase, and we are also trying to lower it even further with new initiatives like the recently introduced 'product exchange offer'.
How is customers' purchasing pattern emerging? How is mobile faring?
While Delhi, Mumbai and Bangalore remain the top individual cities for us, tier II cities are growing a lot faster (than the top 10 cities) and total revenues from them have already surpassed the 53-54 per cent mark and continue to rise. This is because offline distribution is not that robust in these cities. In addition, mobile is growing at a very fast pace and it now accounts for 20 per cent of the total traffic and 15 per cent of our total revenues (we see this increasing to 20 per cent by the end of this year).
There is a debate on convenience of shopping online vs. faster purchasing timeframe offline. What is your take on that?
e-commerce can reach a point where it can replicate the purchasing timeframe of the offline world, in the sense delivery being done in three-four hours (the time it takes the consumer to go to a mall, make a selection, purchase it and return home). In fact, we did an experiment of one-hour delivery in Bangalore recently. It was kind of a test for us, since going forward we want to offer four-, six- and 24-hour delivery options in various cities; we wanted to check the boundary constraints for the same. The phase one for this will be launched in the next quarter.
How did customers react to your experiment?
They were pleasantly surprised because they could not believe that a portal could deliver within an hour. The learning was that fast deliveries require lot of technology innovation as well as a lot of innovation at the back-end such as co-ordination of various segments involved in delivery, route optimisation, etc.
You recently hired Nestle India's Vikas Ahuja as CMO. What value does a person with experience in a brick and mortar ambience bring to an e-commerce company?
At Myntra, we are trying to build a national brand and we feel that Vikas' experience with large brands will help us build a very strong marketing foundation and brand architecture. Also, for most positions the online space (especially in retail) is fairly new in India and hence it is rare to find someone talented who has worked only in the online space, except in cases where people have worked in the US earlier and have come back to India.
How big is the offline apparel market in India compared with the online one? How much can the online segment grow?
The offline apparel market is Rs 2 lakh crore, a lot of that is unorganised but the branded portion is Rs 35,000-40,000 crore. Of that, the online portion is only Rs 2,000 crore; so it's a very small percentage, but we feel it can increase to 5-10 per cent (of the branded portion) in the coming years.
How will Amazon's entry effect the e-commerce space in India and Myntra, especially since it is planning to foray into fashion as well?
We are not threatened by Amazon's entry into the fashion segment. In fact, we feel it will actually help grow the size of the market and also raise the standards further. The Indian e-commerce market is set to grow five-six times in the coming years; so there is room for everyone. It is a welcome sign.
(Edited by Joby Puthuparampil Johnson)