E-commerce companies back on growth track

After witnessing lull in demand, online portals are back on growth track and have started regaining market share over the past year on the back of an improved brand assortment and easier browsing experience. Interestingly, growth is led by Myntra. Companies such as Myntra, Voonik, Limeroad and Nykaa are seeing strong demand among online shoppers whereas sales growth in fashion at Amazon and Flipkart has slowed over the past year. Snapdeal, which is facing a cash crunch after struggling to raise fresh funds, has seen a sharp drop in fashion sales over the past year, according to fashion brands and e-commerce executives.

Myntra going strong

Myntra is on track to exceed its target of Rs 5,000 crores in gross merchandise value (GMV) for the year ending March 31; 80 per cent higher than its GMV in the previous financial year, chief executive Ananth Narayanan said in an interview last month. Myntra had earlier lost market share to its parent Flipkart as well as Amazon India after it became an app-only platform in May 2015. Starting January 2016, however, the company has been getting back market share and registering rapid sales growth by improving its product selection, including its private label offering, and designing a better browsing experience. The retailer also got a boost from re-opening its desktop and mobile websites last June. Myntra has now forecast sales growth of 40 per cent at Jabong in the next financial year.

Limeroad’s growth strategy

LimeRoad, which gets 70 per cent of its business from women customers, said its GMV jumped nearly four times in 2016 from the previous year. According to the CEO Suchi Mukherjee, LimeRoad core emphasis has always been on user engagement. This in large part is driven by exclusive content posted by our community together with our hyper-personalised algos. LimeRoad is the only platform in the fashion e-tailing industry, which offers the users services beyond just discounts – the curated looks and stories which assist the user in discovering delightful products at amazing prices.

Analysing the current demand dynamics, Sreedhar Prasad, partner, e-commerce and start-ups at KPMG India, says there might be heartburn for larger market places in the short-term because Myntra is emerging as a brand with a clear identity and is winning customers who are fashion seekers. They are emerging as a fashion destination or an aggregator of fashion brands (rather) than a marketplace. The rise of specialty retailers also throw up questions over whether Flipkart, which owns Myntra and another fashion retailer Jabong, will end up hurting sales at its two units. Flipkart has identified fashion as one of its key growth drivers this year.

Flipkart and Myntra both consider Puma and United Colors of Benetton among their five-largest selling brands. Recently Flipkart’s fashion head Rishi Vasudev said that Flipkart and Myntra catered to different audiences with ‘negligible’ customer overlap. Flipkart’s focus is to offer the widest range of products and sell to the masses whereas Myntra generates a majority of its sales selling pricier goods to so-called fashion seekers. Myntra’s private label business is another differentiator, contributing up to 30 per cent of its sales. One of Myntra’s private brands, Roadster, is the biggest-selling product on the platform.

Meanwhile Amazon India is focussing on both mass products as well as luxury brands. Amazon has added premium brands such as Aeropostale, M&S, Michael Kors and Emporio Armani to attract fashionistas, apart from offering lower-priced brands. According to Amazon India spokesperson, in just three years of launch, the company has successfully built the largest online fashion store with over 2 million fashion products from over 15,000 brands. The store is among the top three stores on Amazon.in and is one of the fastest growing stores on the platform. It continues to grow aggressively in terms of business and has been growing at over 150 per cent (year-on-year). Amazon Fashion is also a magnet category that contributes about 30 per cent of new Amazon.in customers and has consistently been doing this quarter-on-quarter.

Snapdeal’s strategy

Amid all the growth trends of arch arrivals, Snapdeal’s focus for 2017 is to build fashion as an important vertical. Vishal Chadha, senior vice-president, business at Snapdeal, highlighted that with the recent addition of close to 100 new brands including some prominent national and international names to itd fashion portfolio, the company is confident that this expansion will help them achieve the goal of making Snapdeal a one-stop shop for all fashion trends and style needs.