Myntra, Jabong cede online fashion market share to Flipkart, Amazon, Snapdeal

While Myntra has lost out after going app-only in May, Jabong has seen growth slowing after the exodus of several senior managers

Bengaluru/New Delhi: Flipkart, Amazon and Snapdeal have seen a surge in demand for apparel, shoes and jewellery this year, helping them gain significant market share from specialty firms such as Myntra (owned by Flipkart Ltd) and Jabong, which once dominated the online fashion space.

While Myntra has lost out after going app-only in May, Jabong has seen growth slowing after the exodus of several senior managers.

The beneficiaries have been the fashion businesses of online marketplaces (also called horizontal marketplaces) such as Flipkart, Snapdeal, and Amazon, which have quickly expanded their product offerings and added new features to build a large fashion businesses.

Now, Flipkart’s fashion business has become larger than Myntra’s, three people familiar with the matter said, speaking on condition of anonymity. Snapdeal, run by Jasper Infotech Pvt. Ltd, too, is growing faster than expected and will touch $2 billion in gross merchandise value (GMV or cost of goods sold) by December this year.

“Fashion is the fastest growing category for us. The move by competitors to go app-only has helped us accelerate faster, though it has not been a game-changer," said Rahul Taneja, vice-president, category management, Snapdeal.

Amazon India (owned by Amazon Seller Services Pvt. Ltd) said sales of fashion products grew nine times in the first quarter compared with the year-ago period.

“Fashion is among the top three categories of Amazon with over 5,000 brands … we continually look for different avenues to provide the best of fashion to our consumers," said Susan Saideman, head of fashion at Amazon India. “We work hard to meet the varying tastes and style preferences of all our customers by providing a broad selection of designers and brands so that customers can easily and instantly find and buy exactly what they are looking for."

Electronics and fashion are the two largest product categories in e-commerce. Fashion also offers online retailers juicier margins than many other categories and plays an important role in driving traffic to horizontal marketplaces.

“Fashion is the largest contributor in (terms of) driving traffic to our website. Once customers have a good experience, they end up shopping for other categories too," said Taneja.

Still, the growing dominance of online marketplaces in the fashion space contrasts sharply with the situation two years ago when Myntra and Jabong dominated the space.

In 2014-2015, sales growth at Myntra accelerated sharply after its $330 million-plus takeover by Flipkart, India’s largest e-commerce firm, in May 2014.

While rival Jabong didn’t grow at the same pace, it still reported sales growth of 135% in calendar 2014. During this time, some analysts said Myntra and Jabong would be able to hold their own against their larger marketplace rivals.

Jabong co-founder and managing director Praveen Sinha attributes this to irrational metrics in the market.

“Right now everyone is bleeding in the process of gaining share and the market is playing on irrational metrics, making it difficult for vertical (focused) companies to compete with the heavily funded horizontal marketplaces," he said.

Given the size of the fashion space, horizontal marketplaces can’t ignore it, he explained. “But vertical companies will always do better once the market reaches a certain scale," he added.

Although “very few categories demand a vertical play, there is definitely space for players in women’s fashion", said Abhishek Goyal, co-founder of Tracxn, a data analytics firm. “However, it isn’t easy to build a company in the fashion category as it requires a lot of funds to create a product that can solve the problems of sizing, returns, and recommendations. Those that manage to do this will succeed."

Mint learns that after 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. Myntra has said it expects to generate annualized gross sales, excluding discounts, of $1 billion by 2016. By next March, Flipkart has said it expects to generate annualized gross sales of $10 billion. Fashion products may account for anywhere between 25% and 35% of that, analysts said.

“With 100% year-on-year growth, Myntra continues to be the market leader among the vertical players in the e-commerce fashion space," a Flipkart spokesperson said in an emailed statement. “Other than having the largest fashion product catalog in the country, Myntra also offers a highly engaging and personalized shopping experience and is well positioned to cater to the increasing demands of the growing shopper base in the country."

Jabong, which is looking for a new chief executive officer, has reported a slump in sales growth, hit by an exodus of top leaders. 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 Rocket Internet. Jabong’s troubles have prompted its owner, Global Fashion Group (in which Rocket has a stake), to seek a buyer for the company, Mint reported on 21 September.

Online marketplaces have pounced on the troubles faced by Myntra and Jabong to grow their fashion businesses.

There is little product differentiation between the specialty online retailers and marketplaces such as Flipkart and Amazon, which have been able to cross-sell fashion to customers who shop on these sites for all kinds of products including phones, laptops and books.

E-commerce sales, including those of fashion products, are still largely driven by discounts and marketplaces are offering deep discounts and extensively advertising their fashion offerings to attract customers.

Amazon India has set up creative teams that curate and publish trend guides, look books and style guides on its website and on channels such as YouTube to attract fashion-conscious customers.

Flipkart added a feature called image search in July to try and make it more convenient for customers to browse its fashion assortment. The feature, which was designed for fashion products, allows users to click a picture and search for similar products on the company’s mobile app.

Meanwhile, Myntra and Jabong are trying to differentiate themselves by launching exclusive lines of merchandise to attract customers.

On Tuesday, Myntra launched actor Deepika Padukone’s private label brand “All About You" exclusively on its app. Last year, Jabong introduced a clothing line from actor Alia Bhatt.

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