Home / Companies / Start-ups /  App-only Myntra missing chance to build near monopoly in online sales

Bengaluru: By going app-only, Myntra is missing an opportunity to build a near monopoly in online fashion sales, especially as rival Jabong struggles with an exodus of leaders and a slump in revenue growth.

Since Myntra shut its desktop website and became a mobile app-only shopping platform on 15 May, the company has seen a drop in sales growth, people familiar with the matter have said on several occasions. Myntra doesn’t disclose its latest sales numbers.

Before its app-only push, sales growth at Myntra accelerated sharply after its $330 million-plus takeover by Flipkart Ltd, India’s largest e-commerce firm, in May 2014.

At the end of the year ended March 2014, Jabong was neck and neck with Myntra, reporting sales of 438 crore against Myntra’s of 441 crore. But in the past financial year, the gap increased significantly between Myntra and Jabong. Bankrolled by the cash-rich Flipkart, Myntra spent heavily on discounts, advertising, increasing merchandise and expanding its private label business to pull away from Jabong and others.

Over the same time, Jabong, which is looking for a new chief executive officer (CEO), saw an exodus of top leaders and reported a slump in sales growth, especially this year. For the six months ended 30 June, sales at Jabong grew just 26.5% to 410.6 crore, according to the financial report of its parent filed on Wednesday. The increase of 26.5% contrasts sharply with the 135% revenue growth last calendar year. Jabong’s troubles have prompted its owner, Global Fashion Group (GFG), to seek a buyer for the company, Mint reported on 21 September.

The upheaval at Jabong presents a unique opportunity for Myntra to convert its market leadership into a near monopoly.

Why, then, would Myntra lose out on sales and alienate many customers by putting the shutters up on its website?

Myntra justifies the move by saying that it anyway generated more than 90% of its traffic from its mobile app before it shut its site. By focusing exclusively on its app, Myntra hopes to accelerate a consumer shift toward shopping on smartphones and avoid getting upstaged by a new start-up.

However, Myntra’s arguments in favour of its app-only move seem dubious, considering that many customers don’t shop only on mobile apps. At least some of these customers will shift to other shopping platforms, none of which have shut their sites.

Kunal Bahl, CEO of Snapdeal, Flipkart’s arch-rival, said in a recent interview with the Economic Times newspaper that Myntra’s app-only move helped Snapdeal expand its fashion business.

Myntra may soon regret shutting its site.

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