Myntra re-invents itself
Rahul Sachitanand May 3, 2011After struggling to find its groove with its first business plan, a group of graduates from the Indian Institute of Technology, or IIT, Kanpur seems to have hit the right note in round two. Myntra, an e-commerce start-up founded in a three-bedroom apartment in south Bangalore in 2007, has been hitting the high note since undergoing a strategic makeover two years ago, attracting 25.000 customers to its site daily, and $20 million in venture capital funding. The firm, which started with personalised merchandising solutions to companies, realised that its business was fragile, with wafer-thin margins and large volumes, and re-invented itself as an online apparel merchandiser.
The driving force behind Myntra is Mukesh Bansal, 35, who earlier worked in Silicon Valley, and was closely involved with a number of start-ups. "Fashion and lifestyle is a $30-billion market in India," he says. "We want to dominate in the online space first before considering any other category." Over the past two years, Bansal and the two other co-founders Ashutosh Lawania and Vineet Saxena (a fourth executive Raveen Sastry joined them a little after Myntra began) have attracted top brands including Nike, Puma and Lee Cooper. Today, Myntra has some 30 brands in its kitty and expects to have 100 over the next three months. "There are at least 250 brands we can target," says Bansal.
The three co-founders are close friends who all went to IIT Kanpur, and thereafter remained in touch through alumni networks and mailing lists. Returning from the United States, Bansal decided to enter the nascent Indian e-commerce industry.
He made Bangalore his base, having visited it frequently in the past. Two of his previous start-ups (Centrata and Newscale) had offices in the city. Bansal and his friends took a close look at American personalised gifting sites for inspiration before launching Myntra.
Flexible business model
In its first avatar, while selling personalised merchandise - think T-shirts or key chains with company logos or personalised statements - Myntra even invested in offline kiosks to sell its wares. "Myntra tried small retail formats and kiosks," says Ranjith Menon, a vice president at IDG Ventures, an investor in the firm. "But they were flexible with their business model to realise its limitations and reshaped their business."
The shift saw Myntra focus on end consumers, rather than businesses. This called for devising a simple and effective way to reach customers, as well as new payment models such as cash on delivery.
Naturally, the website, now all-important, was overhauled to make it more consumer-friendly. Myntra also expanded its warehousing capacity to deal with the surge in orders. Sure, there were competitors, such as Smile Interactive's fashionandyou, which offers to its members a vast range of clothes and accessories for purchase online. But Myntra's founders remained unfazed.
"We offer designs from the latest season and we don't sell deeply discounted products the way some of our competitors do," says Bansal. Soon after the makeover, however, two of the co-founders, Saxena and Sastry, quit, moving on to other jobs.
According to industry watchers, in the coming years lifestyle and fashion brands will see nearly a tenth of their overall volumes coming from online purchases. Thus, many brands were quick to grab the opportunity Myntra offered. For fashion and sportswear brand Puma, for instance, a robust online presence was a business necessity.
"Today, everyone is online," says Rajiv Mehta, Managing Director, Puma India. "Young people, a key target group, tend to save time by hunting for deals online and eventually lead virtual lives." Puma is now looking for newer ways to leverage the online platform. According to Mehta, one of the ways could be to sell footwear with specific colours and designs only through Myntra.
At Rs 2,000 crore, the sportswear market is still relatively small in India and divided among half a dozen players. An online presence acts as an evangelist for the brands, says Nike India's marketing head Sanjay Gangopadhyay. "Myntra gives our distribution an additional edge beyond conventional multibrand outlets and large retailers."
With Myntra's technology also improving, more and more Nike customers now prefer to shop online, Gangopadhyay says. Myntra expects revenues of Rs 75 crore in the just-concluded financial year, compared to barely Rs 3 crore two years ago. "There are early indications that significant brands want to work with Myntra for their online reach and commerce," says Subrata Mitra, a partner at Accel Partners, an early stage venture capital firm, which first invested in the firm in 2007. E-commerce enterprises need to focus on solving some of the fundamental problems that a customer faces, says Deep Kalra, CEO of makemytrip.com, India's leading travel portal. "Many entrepreneurs get so carried away by their own ideas that they lose sight of this most critical aspect."
Infusing the right talent
Myntra, however, has not fallen into this trap. Instead, it has focused on improving its back-end services by deploying a 24-hour call centre, setting up a dedicated warehouse in Bangalore and fine-tuning the processing and delivery of orders.
"In the initial phase, everyone does everything, but as we grew we started hiring specialists and made necessary changes in the organisational structure," says Kalra. "It is important to get senior people who fit into a start-up."
Bansal has done just that. He has taken on board the likes of Sanjay Ramakrishna, who earlier worked with Google and Intel, and Deepak Rishi, former supply chain head for apparel firm, VF Arvind.
"In the e-commerce market, the emotional connect with consumers is the key," says Ramakrishna. In an increasingly fragmented market, Myntra has chosen its niche carefully - it sells the latest and most popular fashion merchandise online. Its focus is on building rich catalogues which consumers can use to pick their products. This has worked like a charm. During the recently-concluded cricket World Cup, it sold over 20,000 Team India jerseys.
"We deliver within 48 hours at present, but that can be reduced to less than 24 hours with a strong warehouse and a smoother supply chain," says Rishi. Besides, Myntra is carrying out trial runs of door-todoor delivery in the city. "We will set the benchmarks for the industry to follow," says Rishi.
Critics claim there are still gaps in Myntra's set-up. They claim the website's design and experience offered to the user are still rudimentary. The absence of a plan to provide a mobile phone platform is also seen as a glaring gap in its portfolio. "The mobile is soon going to overtake the personal computer as the primary mode of Internet access for Myntra's key target group," says Menon of IDG Ventures. "We should soon have a plan on this front."
With the Indian e-commerce industry expected to cross Rs 46,000 crore this year, growing by over 46 per cent, according to the Internet and Mobile Association of India estimates, Myntra will quickly need to plug these gaps if it is to be counted among the heavyweights in this industry.