Flipkart invests another Rs338 crore in Myntra2 min read . Updated: 11 Mar 2016, 12:59 AM IST
Fresh funds come at a time when fashion store's nearest rival, Rocket Internet-backed Jabong, is struggling
In an attempt to boost its leadership position in the fashion segment, Flipkart has infused ₹ 338 crore into online fashion store Myntra, according to documents filed with the Registrar of Companies.
Myntra Designs Pvt. Ltd in January received the funds from Singapore-based FK Myntra Holdings Pvt. Ltd, a unit of Flipkart Ltd, the documents show.
The fresh funds come at a time when Myntra’s nearest rival, Rocket Internet-backed Jabong, is struggling—it recently underwent a management overhaul following the exit of founders Praveen Sinha and Arun Chandra Mohan in September. The company subsequently roped in former Benetton executive Sanjeev Mohanty as its chief executive officer.
Myntra, which was acquired by Flipkart for $330 million in May 2014 in the biggest domestic consumer Internet deal at the time, is targeting gross sales of $1 billion in the next fiscal year. Gross sales do not include discounts and returns.
The company has also set a target of achieving operating profitability by March 2017 and plans to increase sales of higher-priced products and charging customers for deliveries of certain items to reduce losses, Mint reported on 8 December.
For the year ended 31 March 2015, Myntra’s revenue grew 77% to ₹ 758 crore from ₹ 427.26 crore the previous year. Losses, however, almost tripled to ₹ 1,126.60 crore in fiscal 2015 from ₹ 386.10 crore the year earlier, according to documents filed with the Registrar of Companies.
Gross sales for the year ended 31 March stood at ₹ 2,569 crore. In comparison, Jabong posted losses of ₹ 454 crore on sales of ₹ 811 crore for the year ended 31 December 2014.
Flipkart and Myntra did not respond to emails seeking comments.
Online retailers such as Flipkart, Snapdeal (Jasper Infotech Pvt. Ltd) and Amazon.com Inc.’s Indian unit have been increasingly focusing on the high-margin fashion category.
According to industry experts, gross margins in fashion could be anywhere between 25% and 50%, as against 3-10% in electronics.
Myntra, however, had a few hiccups last year after it announced that it will become an app-only platform starting May. The move was criticized by analysts and consumers alike, who described it as anti-consumer and restrictive. The firm witnessed a temporary slump in sales in the following months.
Myntra, on its part, maintains the customer experience is significantly better on apps than websites.
“We believe apps will be the way mobile transactions happen. Our repeat rate in terms of repeat purchases by consumers is the highest in the industry, north of 80%. This means that what we are doing on the app, as far as the experience is concerned, consumers seem to be loving it. To do that, you need to be focused on consumers and that’s what our app-only strategy is allowing us to do," Ananth Narayanan, who joined Myntra as chief executive officer in October, had said in an interview on 8 December.
The company, however, rolled back its decision to go app-only and relaunched its mobile website in February. Myntra claims to have an active monthly user base of 8 million.