The profitability deadline for mega online fashion etailer, Myntra, is set for March 2018. To achieve its targets, the ecommerce platform has invested in an automated fashion line, a physical store and decided to move away from the heavy discount model.
Flipkart, the etailer’s parent company has decided to hike Myntra’s annual budget by 25% to strengthening its position in the e-fashion market. At the start of the year, Flipkart decided to cut Myntra’s annual budget in an attempt to reallocate its funds to fight off Amazon better.
However, after a flood of funding, $1.4 billion to be exact, that came its way last month, Flipkart seems to have had a change of heart, a source mentioned.
Myntra’s Ananth Narayanan said, “This year we got 25% extra money from the Flipkart board.”
The chief executive, however, did not reveal the total annual budget set.
Myntra’s spending goals
The additional money poured in by Flipkart will be used to:
- Boost ethnic offerings by investing in 3-4 small/medium ethnic brands
Narayanan said, “We will just invest in those brands and that will eventually be run by the entrepreneurs. In addition to our operating budget, our board has asked us to thoughtfully invest more in areas such as technology and brands which will help us continue on our growth trajectory and achieve profitability by March 2018.”
Focus on Vector E-commerce
The hybrid model that Myntra follows involves the buying of products from sellers and offering them on the platform in addition to allowing vendors to sell directly on the marketplace. Recently, a couple of brands disclosed that Myntra has requested them to sell through Vector E-commerce for direct listing on the platform.
Vector E-commerce saw a 40% rise in revenue in 2016 but also sustained major losses. In the attempt to compete with Amazon Fashion, Myntra seems to be looking to its top sellers in addition to reducing its dependence on discounts. Will this sit well with other sellers on the platform? Also, will this strategy rake in the revenue needed for profits? We’ll just have to wait and see.