Myntra’s dominance is now clear. It can’t afford to screw up

Myntra is the top dog in online fashion in India. Photo credit: Mark Holiday.

Flipkart’s online fashion unit Myntra is planning to test brick-and-mortar waters. Not just that, it has some concrete plans to shape how India shops for clothes and shoes in the future.

In about three months from now, India’s biggest clothes ecommerce site will open physical “experience stores” as it experiments feverishly with how to bring the “offline experience closer to its consumers,” the company said today.

The company is also going to end this year with an annualised gross merchandize value of US$1 billion, chief executive Ananth Narayanan told reporters.

Gross merchandize value is the total value of goods sold on its platform, and a key measure of ecommerce health, since most do not reveal sales figures.

While the eye-popping US$1 billion number is a big milestone for Myntra, which recently bought rival Jabong to command about 15 million monthly active users, the more important story is in how the Bangalore-based startup is planning to become profitable by the next fiscal year.

See: Flipkart just acquired Jabong. Here’s what it gets with the big buy

“2016 is going to be watershed year for us… not only are we going to get to a US $1 billion run rate, we are going to do it in a healthy manner, ” chief executive Ananth said.

To do that, Myntra has been cutting back on discounts (which have gone down about 10 percentage points) and increasing its NPS, or customer satisfaction scores.

From the looks of it, Ananth, who took over in July, is also steering the company towards a more omnichannel route.

See: Flipkart in biggest ever shake-up as Mukesh Bansal quits

The idea for an online retailer to open physical stores is not new – Amazon has done it. Even in India, startups like Zivame and Pepperfry have had physical stores for a while.

But none of the Indian names mentioned above have the muscle of what the Flipkart unit can do. Jabong+Myntra (Flipkart bought Myntra, and then Myntra bought Jabong) commands about 70 percent of the overall online fashion market, according to various industry analysts.

This puts Myntra in a place of unprecedented power in India’s ecommerce space, which will be worth US$119 billion market by 2020, as per Morgan Stanley estimates. In the broader ecommerce scene, there is a fierce competition between Flipkart, Amazon, and Snapdeal, which presumably keeps the companies on their toes.

But when it comes to fashion, Myntra is the sole leader.

It naturally follows then that what this mega-startup does today, the industry will do tomorrow. In this case, it inevitably means fewer discounts and hopefully, better customer service. Once Myntra opens physical touchpoints (“experience stores” as they like to call it), it would also mean a big step towards introducing Indian retail and truly omnichannel shopping.

Photo Credit: Bea Serendipity.

“Now we have the two brands, we believe we can shape how customers buy,” Ananth said.

Myntra has already been experimenting with services like “try-as-you-buy,” which allows customers to order multiple things but only keep and pay for the ones they like, exclusive design ranges, as well as home furnishings and jewelry.

If these work, India’s online fashion industry, long leaning too heavily on a discounts driven model, might just be redeemed. But if Myntra screws up, the effects will be felt far and wide.

For starters, it could potentially derail investor confidence in the many other smaller online companies that have sprung up since Myntra and Jabong launched. Secondly, and more importantly, if Myntra+Jabong fail to deliver on Ananth’s promise of more value-added services and better customer care, it runs the very real risk of single handedly bringing down India’s online fashion industry and putting off customers.

As is expected of a startup, Myntra has in the past experimented with some not-so-great moves. It took time to accept those faults, and make good to customers.

This time however, the stakes are higher. For the customer, there is no longer another option to fall back on if Myntra disappoints them with misguided company policies. While Jabong will continue to exist as a separate entity, as a Myntra subsidiary, it won’t be a rival any longer.

Moreover, as online commerce grows, once-reticent traditional stores have been placing more bets on this sales channel.

As industry leaders, Myntra (and Jabong) are the biggest beneficiaries.

“Four years ago, we had no sales from ecommerce. Today, it is about 15 percent of overall business,” Siddharth Bindra, managing director of Biba, a popular women’s clothes brand, said.

In the absence of a worthy competitor, companies (as well as customers) are only going to lean more on Myntra.

It becomes all the more important, therefore, that the Flipkart unit does not falter in the next few months as it charts its growth trajectory. Or worse, let its mega-stature go to its head.

This is an opinion piece.