Myntra looks to turn its AI platform into a billion-dollar business
Bengaluru: Myntra is aiming to turn its ambitious Rapid technology platform into a billion-dollar business by 2020-21, even as the Flipkart-owned online fashion retailer builds out new offerings using the technology product, including selling it as a service and outsourcing it to big brands both in India and abroad, a top company executive said.
Rapid is Myntra’s new in-house artificial intelligence platform, which is capable of a wide variety of functions, including helping the retailer’s designers come up with designs for clothes and even help shrink the manufacturing process for Myntra’s fast-fashion products.
In an interview, Myntra chief executive Ananth Narayanan said the fashion retailer is planning to create a separate organization of sorts for Rapid, with a different leadership structure, internal processes and even its own human resources team. Myntra has tasked two senior leaders, Manohar Kamath and Ambarish Kenghe, with overseeing the growth and development of Rapid.
“If I look at Rapid as a business, if I take a 2020 view, I expect Rapid to be a billion-dollar business in itself. And the components of that are the following: There will be private brands of Myntra that are actually done completely through Rapid. These are brands like Moda Rapido, Here&now, etc. Secondly, we expect to actually do brands jointly with other brand partners even globally and we are in discussions with them, using this tech and even distributing globally,” said Narayanan.
Through Rapid, Myntra is looking to create a huge alternative source of revenue and exploring several ways to leverage the platform—including outsourcing it to other retailers and selling it as part of an software-as-a-service or cloud-computing-like offering. According to Narayanan, Myntra’s bet on Rapid in some ways will mirror Amazon’s bet on cloud computing through Amazon Web Services, which generates massive profits for the world’s largest online retailer.
So far, Myntra, which has been working on the Rapid project for nearly three years, has held talks with more than five retailers and brands to sign up to the platform.
“(We want to) offer Rapid as a service, which is basically to offer it as a paid software-as-a-service to a bunch of brands. We’re actually close to closing three of them. These are paid, multi-year deals. That also is a 70-80% margin business. It’s very profitable as a business... It’ll likely be a subscription type service and we’ll offer it based on the number of styles. So it’ll be pay per style,” said Narayanan.
Narayanan said Myntra is working on building out at least two new private brands, with the help of analysis from the Rapid platform. Myntra has already created two private brands called Moda Rapido and Here&now, using insights from Rapid. Over the past six months, both Moda Rapido and Here&now have emerged as the fastest growing private brands in Myntra’s portfolio of private label brands, which also includes Roadster and HRX. Following the success of the two brands, Myntra has decided that all new private brands will be created using Rapid.
Moda Rapido and Here&now together bring in sales of Rs14-15 crore every month, making them among the top 15 brands at Myntra. The two account for 13% of Myntra’s private brands sales.Those numbers are set to increase significantly over the coming months, Narayanan said.
He added that the firm will expand the Rapid team to at least 60 people from 35 currently over the next few months—most of the team will comprise technology and product specialists, as well as data scientists. A significant percentage of Myntra’s annual technology spending budget is being earmarked for investments in Rapid.
“We’re building two-three parts right now. We need the tech and business development—we’re actually engaging a lot of consultants outside, as well as putting a team together to actually go and do business development, because this is not what we do….We’re actually building up the talent pool both internally and through contractors, both in India and globally because the US and Europe are big areas for us to focus on because there are lots of brands that are wanting this technology,” said Narayanan.
“Thirdly, we’re putting a bunch of capital in. We’re going to invest ahead of time both in terms of hiring, in terms of capex, etc. We’re putting in a whole bunch of money to crack the back-end technology... so the supply chain changes dramatically. We’re able to do much smaller batch sizes and much faster. That by the way, will allow us to build the second part of our business, which is, for instance, we can go to big retailers and offer to do all their private brands for them using this tech. Even an offline retailer globally. We’re also putting in a bunch of money against the tech, which is basically investing in specialized cloud services, servers, etc, hiring data scientists, etc.,” he added.