How India’s largest fashion e-tailer is slowly going out of style

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End of Reason Sale (EORS). Time-Bomb Offer. Grab or Gone Deals. OMG! Deals. Prime Time Deals.

This is what the homepage of India’s leading fashion e-tailer Myntra looked like on 9 December—the first day of EORS. One could argue it’s the festive season, and discounts are par for course then. But that’s not the case.

Myntra has been creating back-to-back category-led sales events since July. The company has around 22 sale days every month, said a former senior executive from the business team. Around two years ago, that number was 11. Rival Ajio doesn’t have more than 14 such days in a month.

Many within Myntra believe that it has become an “events platform”, said a second former executive. This person and several others quoted in the story haven’t been named as they did not want to be seen commenting publicly on Myntra.

Myntra has 50 million monthly active users on average, the highest among fashion e-tailers. But, while consumers visit the platform in droves, it doesn’t translate into sales.

In fact, these big sales events, such as EORS and Big Fashion Festival (BFF), have failed to deliver on multiple fronts. A few years ago, these events led to 5–6X higher sales than the other days; now, it’s just 2X, per a former senior executive who, until recently, worked with Myntra’s global brands.

Even sales of its superstar private-label brands like Roadster and HRX have declined, said the second executive quoted above. So, the company has been missing its revenue goals, they added. “The target used to be Rs 1,800 crore (around US$ 216 million), and we fell short by at least Rs 150 crore (US$ 18 million) [during each of the sale events]. Around 25–30% of the [yearly] revenue is supposed to come from these 5–6 days.”

“The past 15 months have been bad,” said a former business-development executive. In the year ended March 2023, its revenue grew 12% versus 35% a year ago, when the gross merchandise value (GMV) hit Rs 25,000 crore (nearly US$ 3 billion). The revenue growth for the Mukesh Bansal-founded startup could currently even be in single digits, believe some former executives.

“The points you have shared with us are based on misinformation and do not reflect the current status of our business. We do not have anything further to add,” a Myntra spokesperson said in an emailed response to The Ken.

Myntra, as its users know it, is changing. The company has moved on from being a fashion destination for brand-conscious buyers to a mass-market player focused on tier 2 and 3 cities since April 2022, said a former executive who was part of the team for House of Brands—which includes Myntra’s private labels and licensed brands such as Killer and Nautica, which are exclusive to it.

And it’s a new leadership that has been tasked with navigating the company through choppy waters.

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A delicate fabric

Since Mukesh Bansal left the company in September 2015, Myntra’s chief executive officer (CEO) has changed about every 3–4 years.

Ananth Narayanan succeeded Bansal in October 2015; he built and strengthened private-label brands. That continued when Amar Nagaram took over took over Your Story IT'S CONFIRMED: ANANTH NARAYANAN STEPS DOWN AS MYNTRA CEO Read more took over Your Story
IT'S CONFIRMED: ANANTH NARAYANAN STEPS DOWN AS MYNTRA CEO in January 2019. Before Nagaram left in December 2021, its House of Brands used to have a larger marketing team and separate budgets.

But all this changed when Nandita Sinha, Flipkart’s vice president for customer growth, media, and engagement, became Myntra chief in January 2022.

“From Bansal to Narayanan to Nagaram, the transition worked. This time [with Sinha], that didn’t happen,” according to the second executive quoted earlier.

For starters, the company began experimenting less. Prior to February 2022, the experiment period experiment period The experiment period is the time provided to teams to test out a new vertical in terms of sales, growth, and overall performance. The vertical is killed if it doesn't scale up experiment period The experiment period is the time provided to teams to test out a new vertical in terms of sales, growth, and overall performance. The vertical is killed if it doesn't scale up for any new vertical was 1.5 years. Now, it’s six months.

Then came the exits. Barely a month after Sinha joined, chief financial officer (CFO) Ramesh Bafna and chief marketing head (CMO) Harish Narayanan exited.

The losses also grew in this period. Before Sinha joined the fashion e-tailer, its consolidated revenue had soared soared Inc42 Myntra Witnessed 45% Rise In Revenue To INR 2,466 Cr On Back Of Strong User Demand In FY21 Read more soared Inc42
Myntra Witnessed 45% Rise In Revenue To INR 2,466 Cr On Back Of Strong User Demand In FY21 45% to around Rs 2,500 crore (US$300 million) for the year ended March 2021, and losses had narrowed by 42%. Though revenue for the next year ended March 2022 crossed Rs 3,600 crore (US$432 million), losses surged 39%, and the Ebitda margin worsened worsened Entrackr Myntra ends FY22 with Rs 3,610 Cr revenue and Rs 597 Cr loss Read more worsened Entrackr
Myntra ends FY22 with Rs 3,610 Cr revenue and Rs 597 Cr loss .

“As category and team leaders left, we never met our event targets,” added the second executive.

Meanwhile, employee sentiment at the company took a turn for the worse.

Around 200 employees across various functions also have been either fired or were forced to resign this year, said two former senior executives. According to a report report Economic Times Myntra plans makeover of private label strategy, 50 jobs to be hit Read more report Economic Times
Myntra plans makeover of private label strategy, 50 jobs to be hit , 50 jobs were cut in the House of Brands team.

Town Halls have been described by several ex-employees as “empty, uninspiring, and lacking any encouragement or long-term strategy”. The CEO saying that “we can all pull up numbers if we push ourselves” in a company-wide meeting is far from being practical, said the House of Brands executive.

Why labels matter

The new leadership, including Sinha, Abhishek Gupta (CFO), and Sharon Pais (chief business officer), who joined Myntra in November 2021, were all from Flipkart. And soon, the Flipkart-effect became evident.

Several former employees said the leaders who joined Myntra from Flipkart are turning the company into a mass marketplace, onboarding as many brands as possible.

In a month, Myntra adds about 300–400 sellers, with each handling about 2–3 brands. So, the number of brands has gone up. But this emphasis on bringing on more sellers collides with its de-emphasis on private labels.

Private labels are where online marketplaces make money. That’s where they’ve control, can launch products faster, and get better margins.

And Myntra traversed the private label-led journey exceptionally well.

The share of private labels in Myntra’s revenue used to be 25% two years ago, but now it has fallen to 16%. This, while the company’s “aim [for the category] was to contribute 30%,” according to two former senior executives. “It has now moved to a pure-play marketplace model pure-play marketplace model It is a fee-based model where Myntra invites suppliers and manufacturers to supply their own brands; in other words, it doesn't make merchandise but procures it pure-play marketplace model It is a fee-based model where Myntra invites suppliers and manufacturers to supply their own brands; in other words, it doesn't make merchandise but procures it ,” said a Nykaa Fashion executive.

Myntra has been reducing its private-label brands to focus on a select few, said the two former senior executives mentioned above. So, if it had 54 such brands across categories like home-furnishing, apparel, and accessories in 2022, now, it is around 25.

But in the process, Myntra killed brands that were performing well, added the second executive quoted in the story. “Smaller brands actually have far better unit economics than HRX and Roadster. But the organisation was cash-crunched, and House of Brands was sidelined.”

House of Brands has also been struggling with direction since Manohar Kamath, the ex-head and Neetu Jotwani, the ex-SVP for this business, left, per the former global brands executive. The company appointed appointed Business Standard Myntra strengthens leadership team; elevates Suman Saha to head of HoB Read more appointed Business Standard
Myntra strengthens leadership team; elevates Suman Saha to head of HoB Suman Saha to lead the category in August.

“The House of Brands business is heavily dependent on just 2–3 private-label brands, and it has reached its saturation,” said the former House of Brands executive.

Roadster contributes 10% of Myntra’s gross sales, followed by HRX (8%) and Mast & Harbour (4–5%). Out of the 15 licensed brands, 10 have been showing negative contributions. Sinha now wants the House of Brands leadership to improve numbers through licensed brands, said the former executive who worked for the vertical.

To drive growth, Myntra had also forayed into beauty and personal care around two-and-a-half years ago. For the first six months, it grew at around 15% month-on-month, and by the end of year one, it sold Rs 190 crore worth of products, said a former executive who worked in this segment.

However, the vertical isn’t profitable yet, and gross margins are in the 1–5% range. “The burn is higher [than categories other than apparel], and margins are very slim,” said a former beauty vertical manager. By March 2023, beauty accounted for just 4% of the company’s revenue as compared to the target of 16%.

Moreover, Nykaa has already cemented itself as the go-to beauty platform for Indians.

These struggles haven’t stopped the company from designing new growth strategies even as the overall market for fashion has deteriorated deteriorated Epiprodux Fashion Industry Outlook 2023 Read more deteriorated Epiprodux
Fashion Industry Outlook 2023 , with sales affected by rising costs and prices.

Running out of fashion

Myntra’s latest efforts are targeted at younger consumers. It is trying to lure them with its Gen Z-focused segment Myntra FWD and ‘Rising Stars’, a set of direct-to-consumer fashion and lifestyle brands such as Neeman’s, Suta, and Rare Rabbit, among others.

Launched in May, Myntra FWD aims aims Moneycontrol Myntra launches Gen Z-focused platform FWD, aims to acquire 10 million new customers in 2 years Read more aims Moneycontrol
Myntra launches Gen Z-focused platform FWD, aims to acquire 10 million new customers in 2 years to acquire 10 million Gen Z customers in the next two years so that they can become big growth drivers.

Here, it will have to contend with deeper-pocketed Reliance-backed Ajio, which has around 20 million monthly active users.

“Ajio has really got Myntra by the throat in terms of younger customers and better delivery,” the former House of Brands executive said.

For instance, Myntra wanted to onboard American clothing retailer GAP but lost out to Ajio. Normally, Myntra doesn’t go beyond 4% royalty, they added. But Ajio provided offline store space for GAP and better royalty; Myntra couldn’t match that.

Even though Myntra and Flipkart together have a 60% market share market share Tech Crunch Ambani’s Reliance targets Indian fashion e-commerce with low-cost model Read more market share Tech Crunch
Ambani’s Reliance targets Indian fashion e-commerce with low-cost model in fashion e-commerce (Amazon Fashion and Ajio have 20% and 15% of the share, respectively, with Nykaa Fashion, Meesho and a few smaller players making up the rest) the pressure is not going to ease.

“They [Myntra] have to show results as Walmart is questioning them,” added the ex-senior executive from the beauty vertical. US-based retail giant Walmart had acquired Flipkart in a US$16 billion deal in 2018.

Now, the next few months are crucial for Myntra’s Sinha, remarked the second person quoted in the story. “It will either have to show in terms of profitability or growth and get the estimated Ebitda. Then, the last two years and all the upheaval with layoffs will amount to something.”

With inputs from Aayush Agarwal

Lede image/Unsplash