Myntra and Jabong to cut down on discounts and losses

Discounts on products at leading lifestyle online sites Myntra and Jabong will be cut down drastically. The companies have realised discounts are eating into their profits and resulting in losses. Myntra reduced its discount offerings by six per cent in the quarter ended December. Plans are to reduce them further by three-four per cent. It hopes to be profitable in the next financial year.

Even Jabong, owned by Xerion Retail, is planning on the same lines. Even though it crossed Rs 1,000 crores sales for the year ended March 2015, its net loss grew to Rs 43.6 crores from Rs 16.6 crores a year earlier. It is exploring a new pricing mechanism to cut losses. Sanjeev Mohanty, CEO and MD, Jabong opines the company will bring down discounts further by selecting better products and assortment of products. He informed that they are creating efficiencies at various levels such as ‘warehouse, supply chain and other aspects’.

The billions of dollars that the e-commerce companies got from investors led them to lure customers with 30-80 per cent discounts. Most online retailers have posted huge losses because of high initial investments, huge advertising and promotional costs as well as deep discounting. Now they are under pressure from investors to achieve profitability. Bengaluru-based Myntra is set to miss its target of achieving USD1 billion annual gross merchandise value (GMV) this fiscal. It will now try to achieve the milestone by March 2017.