The Indian fashion industry today is Rs 165 billion, growing at about 11 percent. The online industry itself is between US $4 to 5 billion, which is equivalent to 4 percent penetration in comparison to the other parts of the world. In five years, the e-commerce industry will be at anywhere between US $20 and 25 billion and there is a reasonable chance that almost half of the organised retail in the country will be somehow be powered through technology in e-commerce.
One company which has pioneered the growth of fashion in India and is here to stay is Flipkart-owned Myntra. Myntra and Jabong combined now account for a little over one percent of India’s US $100 billion fashion and apparel industry with more than US $1.2 billion in gross merchandise value (GMV) growing at over 50 percent in the last fiscal year. It’s private brand business, Myntra Fashion Brands (MFB), is gaining in scale and Head MFB, Manohar Kamath is bullish on maintaining growth and expansion rates.
In an exclusive interview with IMAGES Retail, Kamath talks about MFB’s plans to open more Roadster experience stores and bring in more international brands like Mango and Esprit to India. Edited excerpts:
Tell us about your journey with Myntra.
I joined Myntra a year-and-a-half ago and I lead MFB, which is a private brand business for the company. It’s a very exciting business, nothing like what I have been exposed to in my 24-year stint before I came on board here. We use a lot of technology. Our mission statement is ‘democratizing fashion through technology and making people look good’. The MFB journey is to make this mission statement a reality, essentially by making fast fashion a way of life in India. MFB typically delivers 1,600 fashion styles every single week on the platform for the consumer.
Which region makes up the largest consumer base for MFB?
Fortunately, we are a pan-India company. We serve 19,000 pin codes, which means we have stores in 19,000 areas. We have almost 40 million consumers. We typically have a mix of 45 percent contributed by Tier I cities, while Tier II and III cities contribute 55 percent for us – where there is no space for malls, but people want access to brands.
You’ve recently tied up with Mango to relaunch the brand in India. Any more brands that Myntra is bringing in to India?
Not just Mango, we also brought in Esprit post that. We are looking to strategically collaborating these brands for both online and offline retail. We strongly believe that currently we are the best partners for any international brand looking to foray into the Indian market and also gain scale because of 2 reasons:
– Online fashion is growing very fast. The rate of growth for online fashion is 5X of brick-and-mortar.
– Our ability to provide the right direction to the brand in India mostly because of our data-centered approach, our ability to understand the customer and targeting right.
For now, I will not reveal the names of the brands we are in touch with, although I want to assure audiences that we will not just launch any brand. We want to bring in brands which we believe have potential in India and which has not been marketed well. One reason for relaunching Mango was that their first stint didn’t do well, but we believed that they could do much better in a market like India. Between Myntra and Jabong, we own nearly 50 percent of the online fashion place and we want to use this strength and advantage to help deserving fashion brands.
How does launching brands like Mango and Esprit offline aid brand Myntra?
It’s a combined effort – at a point in time, we will move on to deliver a combined Omnichannel experience for the consumer, so we are establishing brand touchpoints. With these partnerships we are defining how the brand is built in India, from store openings to selection. We launched the first Mango store in Kolkata because the most search results for Mango came from that city.
We are doing this for private labels too – for example we’ve opened an experience store for Roadster in Bengaluru. However, our stores will not look like any ordinary store. Technology is the major driver of these stores. There will be a clear difference between a brick-and-mortar store and a brick-and-mortar store run by Myntra.
Do you plan to open any more Roadster stores soon?
Yes, we will come out with a couple of more Roadster stores in sometime, within the next few months and those will be very engaging technology experiences. The technology that we are planning on unveiling is under wraps for now, but it will be worth the wait, I promise.
Are you planning on launching private fashion labels this year?
Yes, we have identified three four areas, where we will launch private labels in 2018.
Do private labels have the power to drive e-commerce towards profitability?
Private brands for anyone are a great help because of multiple reasons:
– They help bridge the white spaces which are not catered to by the brands which are already available
– They build exclusivity bringing people back to your platform
– They build loyalty among customers, and build repeat customers who keep coming back for that private label
– If it is done well, a private label is a profitability driver. It can become a superduper success. Conversely, and here is an area retailers need to be very careful at – it can be a huge drain as well. This depends on how well the brand is placed and marketed and of course, how good the product is.
What kind of technological innovations have you initiated in the last one year?
Technology is happening in real time. The Myntra team is constantly working to improve our app experience, and also on personalising content for the user. We are working towards giving the user his store on the app. This means we shall map data to make a store on our app for the user, which will house all goods of his choice. When the user logs in, he will first see this store.
There is technology involved in our supply chain – robotics to increase speed and efficiency.
Apart from this, there is technology in our brick-and-mortar store front, from proximity marketing to RFID to VR experiences.
Then there is the whole area of Artificial Intelligence. We use an inhouse program called Vorta Intelligent Fashion, referred to as Rapid at Myntra. Here, we work with machines, learning how to analyse data. With the use of this technology, we can sift data on social media sites, look for the latest trends, corelate them what consumers want and then give them something fashionable, trendy and in vogue.
Machines easily sift through this huge amount of data and will help us better understand our customers. Technology like Natural Language Processing, Computer Vision, and Machine Learning, when used properly can cut down the design lead time from months to days and make designs more intelligent.
We have two brands which are fully made out of using this technology – one is called Moda Rapido, which is a Rs 100 crore brand, with 20+ percent IBIDTA and the second one is Here&Now, which has become the No 2 apparel brand on our platform within seven short months of launch.
How much do you typically spend on building technology in a year?
We are a technology company, and we have huge teams which are dedicated to taking us into the future in as far as technology is concerned. Most of the technology that you see used by Myntra is developed inhouse – almost 98 percent, including our app. We want to give shoppers the best there is to offer.
Talking about shoppers, who’s your main TG?
Our audience today is anywhere between 16 and 35 years of age. The core of the customer, may be from 18-28, a healthy mix of men and women.
Do you plan on capitalising on luxury fashion?
In most developing countries, luxury shopping typically evolves after GDP growth of 8.5 percent, over four to five years. After this, luxury really sells, and we are ready to tap this segment. If you have seen Jabong, we already have a luxury platform there. We have Ralph Lauren, and Hugo Boss. We hope that there is political stability for luxury shopping to take off.
In a country like India, where e-commerce is associated with deep discounting, how does luxury shopping fit into this scenario?
E-commerce is not only synonymous with deep discounting. It’s about value. At a point in time asa customer, you will have seen the value coming to you and then you will start experiencing a change in your shopping behavior. E-commerce is ready for this change in consumer behavior and they will be the first guys who will be able to create a look and sell it to the consumer in entirety, much like how international shopping behavior works right now. In the end, it’s all about value creation. Today, we have created value with pricing. Tomorrow, we will create it with other factors, including luxury.
Online vs offline, what’s the future of retail?
Both will grow. Online will grow faster and according to me, at some point in time, both will converge into one happy family – Amazon buying Whole Foods, Walmart buying into Flipkart Group.
You’ve just turned EBIDTA positive. What’s next?
Turning double digit EBIDTA positive. We’re part of Myntra and we would like to contribute towards Myntra becoming profitable, not just the MFB division becoming profitable. That’s the direction in which we are moving.
What’s the revenue target this fiscal?
We are looking at about US$ 1.8 -1.9 billion revenue this fiscal.
How has GST affected your business?
Anytime there is a major financial restructuring or process change, that is bound to impact for some time, because everybody is learning, coping up and readjusting. Now, we have crossed all the hurdles posed by GST, and we are moving forward.
What are your expansion plans?
For us, expansion is about how we are going to scale differently in terms of products and experience and we are moving positively in the right direction.