After Flipkart and Amazon, fashion etailer Myntra is also distancing itself from its own seller. According to reports, the Flipkart-owned firm has roped in a new seller entity Tech Connect to reduce Vector Ecommerce’s contribution to its sales.
Just like the online marketplaces, Myntra had to take this decision after FDI direction passed in March 2016 that a single seller can’t contribute more than 25% sales.
“(Myntra’s earlier) structure could have been easily challenged legally. The law clearly states that the two entities—one that had foreign direct investment and the one that sells to the consumers—need to keep an arm’s length distance,” said an unidentified source.
Ex-CEO of Bharti Airtel and ex-Chairman of Micromax, Sanjay Kapoor, own a majority stake in Tech Connect Retail. This firm has replaced Vector Ecommerce on Myntra’s app and website.
As of now, it’s not known whether Myntra directly or indirectly holds any stake in the seller firm. Nor it is known if more such vendors will soon make an appearance on the fashion portal.
The fashion etailer is in the enviable position of being able to dominate the online fashion industry with Flipkart as its parent company and Jabong as its new partner.
Industry watchers believe that the trend of deep discounting will stop, so will the high cash burn.
“Our goal is full price sales. This will be easier now than before and will benefit the brands,” said Myntra’s spokesperson.
But as nearly 60-70% of market is in the hands of this trio operating as a single unit, fashion brands are worried about being coerced to accept all the terms laid out by Flipkart-Myntra-Jabong.
“It’s a scenario where 80-90 per cent of sales of premier global brands is happening from one entity which is controlling all three portals and that is a worry for many of the brands. The worry is that the group will ask for more favourable terms, including higher margins and that may not be favourable for the brands,” shared a fashion consultant.
Many national and international brands feel that in a hurry to reach to profitability, Myntra-Jabong may increase seller margins and selling price of products.
Will the etailer trio take advantage of its market position? Will brands and buyers continue to use the platform even after being asked to shell out more money? Or will small fashion players like Voonik, Koovs, Abof, Limeroad, Ajio, and Cliq gain from this situation by poaching Myntra-Jabong’s customers and brands?
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