Ahead of its Big 10 anniversary sale, Flipkart announced its plan to reduce dependence on smartphone sales by focusing on private brands. The ecommerce biggie is in the middle of developing exclusive products across various product categories, which would go live before the 2017 edition of annual Big Billion sale.
Now we hear that Flipkart-owned Myntra is going to follow the same strategy. The only difference is that Myntra wants to get rid of discounts by placing more emphasis on private labels.
Like parent, like subsidiary
Myntra’s CEO Ananth Narayanan believes that utilizing precious funds to enhance own-brands and technology makes more sense than pouring it down on discounts and promotional activities.
Reiterating the fact, Narayanan said,
“Instead of increasing spending only on marketing and discounts, we have decided to invest more in technology and brands. These will help us build moats and improve the bottom line.”
The allure of private brands has captured many ecommerce companies’ attention. Be it ecommerce giant Amazon or niche fashion etailer Koovs, all are investing heavily in developing their own line of products. And rightly so, because it allows etailers to earn fat margins, operate on their own terms, modify product offerings and maintain control over quality, quantity & delivery.
Offline retailers like Shoppers Stop too has started concentrating on their own brands as it helps to drive the online customer base to their shopping site.
Won’t turn into private labels etailer, says Myntra
In spite of the many benefits of own-labels, fashion etailer Myntra wants to strike the right balance between private and national brands. The company understands that established brands have a higher customer pull and diverse product portfolio is essential in today’s competitive business environment.
“We want to cap the contribution of private labels to a third of our overall business. We want to keep our identity as a multi-brand retailer and not turn into a private label business”, said Narayanan
As of now, the company’s private brands such as HRX, Roadster, Anouk, and Dressberry account for 23-24% of revenue. By the end of this year, Myntra plans to increase contribution of these brands to 30%.
More full-price sale events on the horizon
In order to reduce dependence on discounts, Myntra experimented with full-price sale. As customers equate sale with discounts, the etailer failed to touch its revenue target of Rs. 100 crore. But this hasn’t dissuaded Myntra from hosting similar events in the future, albeit with few changes.
“One of the things we learnt from the full-price sale was that you need to have a lot more high fashion and exclusive merchandise. That’s what customers are looking for when you ask them to pay full-price. Another thing is, the sale should be longer. Because a full-price purchase won’t be an impulse purchase, customers like to browse and delay the decision. They want to come back later and see if they feel like buying it.”
Would no-discount sale events affect Myntra’s customer satisfaction meter negatively? Or would the wide range of private and established brands keep the buyers happy?