Starting April, India’s leading online fashion retailer Myntra will open up Marketplace for third party vendors to start selling their products on Myntra, according to a ET report.
A lot has been happening at Myntra since the start of the year. They recently got funding of $50 million from Premji Invest, but there were also talks of Flipkart making an acquisition offer to them.
They chose to go the funding and growth route rather than getting acquired by the bigger player. Only time will tell whether not merging with Flipkart was the right decision or not, especially with Amazon taking giant strides in India over past 6 months or so.
Currently Flipkart and Amazon both operate on marketplace model. While, Amazon sells all their products from third party vendors, Flipkart came up with marketplace model only in April of last year. Prior to that Flipkart sold it under their own name. Flipkart now has around 1000 retailers on board.
On the other hand, Amazon’s growth has been quite meteoric since they launched in June of last year. According to Industry experts, Amazon is growing much faster than all other e-commerce players in India, that too at much lower costs. This is forced existing players like Myntra and Flipkart to innovate and scale quickly.
For Myntra, getting into marketplace model seemed to be the only logical move, if they had to reach a much larger scale in short duration of time. Myntra expects about 500 vendors to be signed up in the first year. According to Myntra co-founder Ashutosh Lawania, about one-fifth of the total business is expected to come from the marketplace over the next 1 year.
While marketplace model is great for scaling, it does pose problems in other areas like customer service, logistics, merchandize quality etc as lot depends on third party vendors. For Flipkart, it was rather easier to implement the marketplace model as they had their own logistics arm in place. Myntra on the other hand will find it tough because, like Flipkart, they do not have their logistics arm.
Timely delivery of products is one of the key aspects that consumers look at while ordering. Myntra has been quite efficient with it, even without their own logistics. But when it comes to third party vendors, they will need to build strict delivery SLAs to ensure timely product deliveries.
It would be interesting to know your views on Myntra’s marketplace model. What do you think?
Myntra does not have their own logistics arm? Are you sure about that? Do you want to maybe research some more?