BackMyntra expects gross sales of $1 billion by March 2016
Myntra expects to generate $5 billion in gross merchandise value in the next five years, up from $400 million now, says CEO Mukesh Bansal
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Online fashion store Myntra expects to generate $1 billion in gross merchandise value, or the value of goods sold through the website, in the year ending 31 March, more than double the annualized value of its gross sales in the first month of the current fiscal year.
Myntra, which has significantly increased its market share in online fashion after its takeover by India’s most valuable Internet start-up Flipkart in May last year, said the annualized value of the goods sold by it in the month of April was $400 million. Myntra will become a mobile-only shopping platform on 15 May.
Within the next five years, it expects to generate $5 billion in gross merchandise value (GMV), said Mukesh Bansal, chief executive officer (CEO) of Myntra and head of commerce platform at Flipkart. GMV refers to the value of goods sold and excludes discounts.
Bansal and Flipkart CEO Sachin Bansal met reporters on Tuesday to detail Myntra’s plans of becoming app-only. On Saturday, Myntra confirmed months of speculation about the company’s move and said it would shut its desktop website. Myntra already generates more than 90% of its traffic and 70% of its orders from its mobile app.
“Fashion is a very personal experience. We believe that only mobile can truly deliver this experience as it captures users’ lifestyle and context in a manner that no other medium does. Think of all the hardware and software features that one can leverage like camera, contact, location, etc., to understand the user’s context and deliver the experience that is deeply personalized," Mukesh Bansal said.
Flipkart, too, will shut its desktop platform over time, Sachin Bansal said. The firm already shut its mobile site in March.
“It’s more to do with our internal readiness. Flipkart has a more elaborate product line while Myntra delivers only fashion," Flipkart’s CEO Bansal said.
Myntra and Flipkart are betting that they will persuade a sufficient number of existing Internet users to shop exclusively on the mobile. New users over the next five years won’t need so much convincing as a majority of them are expected to access the Internet first through the mobile phone rather than the desktop, according to various studies.
The number of mobile Internet users in India is expected to reach 213 million by June, according to a 2014 report by lobby group Internet and Mobile Association of India and market researcher IMRB International. Another report, a joint effort by Google and A.T. Kearney, predicts that by 2017, India will have 480 million mobile Internet users.
Analysts and investors said Myntra and Flipkart are taking a risk by shutting their other platforms.
The online retailers are involved in an intense battle with Snapdeal and Amazon India for dominance of India’s e-commerce market and may not be in a position to lose out on any sales to these rivals, analysts said. And even though Amazon and Snapdeal get a large part of their traffic from mobile, these firms aren’t shutting their other platforms.
According to a report by Accel Partners, one of the investors in Flipkart, the online fashion, footwear and accessories market in India was valued at $559 million in 2013 and is projected to reach $2.8 billion by 2016, growing at a compound annual growth rate of 71%.
“Personally, it does not make sense; it’s like saying this is the only way to enter my shop," said Rutvik Doshi, director at venture capital firm Inventus Capital Partners. “The only sense I see is (that) in case prospective customers already have the app on their phones, it will save marketing and remarketing costs. At present, they are spending considerable money to make customers shop again. Saying all that, shutting down the website doesn’t make much sense."
Mukesh Bansal said the app-only decision wasn’t related to cost and rejected analyst claims that the company could lose market share because of the move.
“We will not lose out on any revenue share at all. Every single desktop user will have a smartphone. It may take a few months, but every single person will end up using and liking the mobile shopping experience than what they are used to in the desktop. It will also be a lot different than what is available in the market. We are going into this move with a whole-hearted conviction that it will help us grow our market share," Mukesh Bansal said.
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