Mukesh Bansal of Myntra talks about the website’s growth story, challenges unique to India & expectations from the next couple of years
The Indian e-commerce scenario has proved to be difficult to conquer. Challenges such as lack of FDI support, logistical and payment glitches and raising growth capital are giving entrepreneurs sleepless nights. Nonetheless, there are a few names that have managed to hit the right notes.
Myntra has become one of the first few names that come to mind when one thinks about online shopping. Established in 2007 by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena, Myntra initially focused on personalisation of gift products. Within the first six months itself the website received a seed funding from Mumbai Angels. The company soon received its second round of funding of INR 100 million (US$1.6M approximately). In 2010, it shifted to the B2C model and expanded its catalogue to segments such as apparels and accessories.
In an exclusive chat with e27, Mukesh Bansal, Co-founder and CEO, Myntra talks about the website’s growth story, challenges unique to India, how the last year shaped the industry, and expectations from 2014, among other things. Excerpts from the interview:
What motivated you to establish Myntra back in 2007?
Before starting Myntra, I worked at four different startups in the Bay Area for around 10 years. By 2006, I was ready to start my own venture back home in India and got excited by the idea of offering personalised products. I realised that there was no organised player in India doing mass-customisation and hence, in May 2007, we launched Myntra that focused on offering product personalisation.
Myntra changed its proposition in 2010; what was the catalyst behind the shift?
In mid 2010, we saw that fashion and lifestyle segment was growing faster than ever before, with a market potential to touch US$50 billion in a few years. We felt it was the right time to realign our strategy given the potential we saw in online retail, particularly in the fashion segment.
Hence, we decided to transform Myntra into an e-commerce player focused on fashion and lifestyle (retailing branded shoes, apparel and accessories). Today, based on the numbers and the growth we have experienced in the last three years, it seems like the company’s bet on fashion e-commerce is paying off.
Change in business models is a very common happening in India due to reasons such as lack of funds and high operational cost. What was the thought process behind the business model for Myntra?
We think customer experience is extremely important as the online e-commerce sector in India is still being established. When we have inventory with us, we are able to ship within a few hours of customer request. In a marketplace model, there is always an element of uncertainty about the availability of inventory, which may not be a great experience for customers.
We have seen that the speed of delivery helps in building trust. We want to move into the managed marketplace model when e-commerce is much more stabilised and trust factor is very high.
Logistics has been a major hurdle for e-commerce players since the very beginning. How have you tackled the same?
Last mile infrastructure continues to be one of the biggest impediments for the growth of e-commerce in India. To ensure the best customer experience while shopping on Myntra, we decided to invest in a dedicated logistic network to reach a large majority of our customers directly.
Today, we cater to over 60 per cent of our customers directly, with the balance being serviced by third party logistic services such as Blue Dart, DTDC, First Flight, etc.
There were conversations about Myntra going public. Do you have any such plans?
Not at the moment. But yes, we want to be the largest player, and eventually go public.
‘Real life mein aisa hota hai kya’ was Myntra’s first big television campaign. What was the brief given for it?
Our brief to the creative team was to create a clutter-breaking and memorable ad that will focus on building trust for Myntra.
Our focus was to build awareness on the advantages of shopping online and project Myntra as the most convenient alternative to real world shopping for fashion and lifestyle products by showcasing the core benefits of 24/7 shopping, 30 day exchange/returns and the unlimited range of products.
Did the change in proposition derive RoI and footfalls? Did you witness a significant surge?
This campaign (Real life mein aisa hota hai kya) worked really well. We noticed a significant jump in traffic, increase in repeat purchases and higher brand recall. The campaign aimed at demystifying the myth of online shopping, highlighting the advantages of online shopping over offline. The idea was to communicate the unique benefits that Myntra offers by transposing those advantages on real life shopping scenarios.
How was the year 2013 for the Indian e-commerce sector?
In 2013, e-commerce in general became mainstream. We saw the transformation where more people have started to shop online.
With increased communication through television and other platforms, there has been constant education on the advantages of online shopping. It has now become a big part of audience consideration.
We also saw the emergence of fashion, by far, as the largest e-commerce category. In the early phase, we saw books and electronics driving the growth in the sector as they were easier and safer products to purchase online. However, fashion has pulled women shoppers and new target groups to e-commerce, making it mainstream and contributing drastically to the next growth phase.
What are your expectations and plans for 2014?
In 2014, there is going to be a large focus on driving profitability. As for Myntra, we are on the path of constant growth and expect to break-even and achieve profitability in 2014.
Secondly, mobile will continue to be a massive trend going forward. With consumers upgrading to smartphones and telcos slashing internet connectivity costs to almost 90 per cent, we will see almost 30-40 per cent of business for e-commerce players coming from mobile phones in the next two years.
How is the Indian e-commerce sector expected to shape up in 2014?
As per a recent study, e-tailing, at approximately US$2 billion (over Rs 12,000 crore), contributes less than 0.5 per cent to the total retail industry in India. However, it is estimated to grow to US$75 billion (over Rs 4.5 lakh crore) by 2021. We see a huge market potential and would like to focus our efforts in growing this segment.