Myntra to invest $300 million in 3 years to boost buisness

With fashion being the second-most important category after smartphones for the Flipkart Group, its Myntra and Jabong units plan to invest $300 million over the next three years to improve market share, according to people familiar with Flipkart’s three-year outlook.

Myntra-Jabong also expect to triple their gross merchandise value a proxy for gross sales—to $4 billion in three years, from $1.2 billion in fiscal year 2017-18. The retailers intend to triple their combined customer base and improve their share of the domestic online fashion market to 50%, from an estimated 35% now, these people said. Myntra chief executive Ananth Narayanan recently announced that Myntra and Jabong had garnered 5,00,000 new customers in their recently concluded flagship sale End of Reason Sale (EORS). Myntra acquired Jabong in July 2016.

The fashion units also plan to launch 100 offline stores over the next two years in a bid to become profitable. Myntra expects to become Ebitda positive in the next three years, the people mentioned above said. Myntra declined to comment for this story.

Experts tracking the online fashion space believe that while private labels, offline stores and franchise stores will improve Myntra’s turnover, it is also imperative to change customer mindset when it comes to online shopping.

“Online commerce players will not be able to build a profitable business if they don’t change consumer mindset about shopping online, as most users in India still shop online if there are deals available,” said Devangshu Dutta, chief executive of consulting firm Third Eyesight.

“That said, Myntra and Jabong combined have been the go-to site for fashion and the company will have to be on its toes to maintain the lead, given that Amazon is an aggressive player.”

Amazon India has an estimated 15-16% of the online fashion market share.

Myntra’s three-year-old private label business has been growing strongly and accounts for about 25% of the firm’s overall revenue, according to analysts. In September, Narayanan announced that Myntra’s private label business, which includes brands Roadster, Dressberry, Anouk and HRX, had turned profitable.

The domestic online fashion market, which is about 5% of the overall fashion market in India, is pegged to grow at 38.2% CAGR from 2017 to 2022, according to industry estimates.