Myntra Plans US Expansion, Sets Up Myntra Inc Subsidiary!
Myntra, Flipkart’s Fashion arm is now looking beyond Indian Shores. The apparel and Lifestyle etailer is planning to enter United States market shortly, for which they have now setup a subsidiary called Myntra Inc. according to a Mint report.
Myntra has had a tough 2015. While their revenues have grown steadily, their losses increased four fold compared to previous year. According to their ROC filings, Myntra Designs Pvt. Ltd, the company that owns and operates Myntra revenue growth of 78%, which stood at INR 773 crores in FY 14-15 vis-à-vis INR 433 crores in FY 13-14.
However, Myntra losses surged from INR 173 crores in FY 13-14 to INR 740 crores in FY 14-15.
In a bid to cut down their losses, Myntra is now looking at overseas expansion.
Myntra has recently said that they are looking at reaching profitability by end of 2017 and are slashing discounts on their platform.
Ananth Narayanan, CEO at Myntra said, “Since the last quarter, we stopped blindly offering discounts. Rather, we became intelligent about it and took the help of technology to figure out what discount can be given to which product seeing its price and demand. We don’t want to be a discount-led platform but a mass premium player”
Over 70 percent of Myntra’s expenses in FY2015 were related to stock-in trade (of which discounts are the major part) – By cutting down on discounts, Myntra hopes to cut down on their losses.
The company claims to have clocked $800 million in annualized GMV in January and are aiming to achieve $1 billion GMV in 2016.
Why US expansion?
First and foremost, unlike in India, US Apparel market is not entirely driven by discounts. The apparel market is huge and if Myntra is able to source apparels (atleast some percentage of it) from Indian merchants and sell it in the US, they will definitely be able to make profits.
However, Myntra will also face multiple problems. They will be entering into a market that is already saturated. Being a new player marketing and advertising expenses are going to be huge. In addition, setting up the entire fulfillment and logistics process is going to be a major challenge, especially in a country like US, which has large geography.
Also, their app-only model, which faced severe flak from Indian users, will not work in the US. They will need to have a full-fledged web presence, which means they will need to again build everything from scratch, though their experience in India may help them achieve it faster.
Overall, it is too early to comment as to whether or not Myntra will be successful in the US.
We will keep you posted as and when we get more details.