Myntra's Big Leap Forward

At $100 million, Mukesh Bansal’s Myntra is already India’s largest online apparel seller. Now he’s got Shopper’s Stop in his sights. Even as Jabong and Flipkart have him in their’s

By Rohin Dharmakumar
Published: Mar 14, 2013
Mukesh Bansal wants Myntra to become India’s largest fashion and lifestyle retailer
Image: Mallikarjun Katakol for Forbes India
Mukesh Bansal wants Myntra to become India’s largest fashion and lifestyle retailer

After six years, two ‘pivots’ (changes in business model), $80 million in venture funding and a bitter parting of ways with two of his co-founders, Mukesh Bansal seems to have finally hit his stride.

Myntra, the internet business he started in 2007 as a seller of personalised gift items to businesses, is today India’s largest online seller of branded apparel. With an estimated annual revenue run rate (current revenue extrapolated over a year) of $100 million, it is second only to Flipkart, the ecommerce big daddy.

“Both Shopper’s Stop and Lifestyle are at around $500 million in revenue, while we should be touching a revenue run rate of $200 million by March 2014. There’s no reason we can’t beat them to become India’s largest fashion and lifestyle retailer,” says Bansal.

“For Myntra to become the largest retailer in India is very do-able considering it took Shopper’s Stop 22 years to reach 50 stores,” says Darshan Mehta, the CEO of Reliance Brands and an experienced hand in the fashion apparel sector.

There’s just one problem though. Two, actually: Jabong and Flipkart.

Jabong, Myntra’s biggest competitor, has superhumanly scaled itself to around three-fourths of its size in just 15 months. And Flipkart, since October 2012, has been methodically trying to add apparel to the list of categories it dominates online.

The pot of gold the three are chasing is a $60 billion market slated to grow to $100 billion by 2015, where gross profit margins range between 35 to 45 percent, according to Sudhir Sethi, managing director of VC firm IDG Ventures (an investor in Myntra).                      

“A very clear learning for all of us is that fashion apparel is not a winner-takes-all category. A recent analysis showed that 122 of the top 500 ecommerce companies in the world are from the apparel space,” says Kanwal Singh, managing director of Helion Venture Capital.

Yet, that doesn’t mean a large number of players will be able to co-exist profitably. The limiting constraint becomes venture capital, millions of dollars of which is required to build the infrastructure and service customers will trust.

Apart from the leading players, venture funding has almost dried up for most others. Many smaller players are either cutting back to conserve cash, or putting themselves up for sale. Bansal says he passed on 10 acquisition offers in just the last six months.

What keeps him up at night though is Jabong. “In our estimates, they have around 20 to 25 percent of the market compared to our 30 percent. They’re a very bad competitor because they’re unpredictable and don’t make rational choices. They copy almost every move of ours and sometimes do things that hurt them just to hurt us as well,” he says.

His ire is understandable. Since launching 15 months ago, Jabong has ploughed in anywhere between $50-100 million to bulk itself into a formidable competitor. It is incubated and owned by Rocket Internet, the German firm founded and run by three internet billionaires and brothers Marc, Oliver and Alexander Samwer, whose business model consists of ‘cloning’ ecommerce business models at breakneck speed.

The goal of each Rocket Internet company is to burn through millions of dollars in funding from the parent company in just a few years to become the category leader in an internet sector. Once—if—that goal is achieved, the company is sold off for a significant premium. There is no room for sustainability or even profits in this model. Only measurable execution matters.

Employing people in shifts, Jabong operates 24x7. Competitors talk about employees who have been poached for two to three times the salaries they were drawing earlier. In Chennai for instance, Jabong hired the vast majority of Flipkart’s hub logistics staff overnight by offering a significant premium. (Flipkart declined to participate in this story.)

“In spite of being 30 percent smaller than us, they are outspending us on digital marketing spends by a factor of three. They just want to scale very fast to become the category leader and get a big exit,” says Bansal.

To achieve these aggressive goals Rocket Internet hires people from top-notch consulting firms like McKinsey and BCG. A May 2012 feature on the brothers in the German magazine Der Spiegel explained the reasoning for this: “These are the types of people who are accustomed to putting a clearly delineated plan into practice, rarely complain about having to work overtime and don’t want too much freedom. They are the polar opposite of people who are normally attracted to the internet sector, the creative types, tinkerers and nerds.”

Alok Mittal, Managing Director, Canaan Partners
Image: Getty Images
Alok Mittal, Managing Director, Canaan Partners

Jabong has three managing directors and no CEO. Two of the three—Praveen Sinha and Manu Kumar Jain—are ex-McKinsey while the third, Mukul Bafana, is ex-Bain Capital. (Jabong did not respond to Forbes India’s detailed set of questions for this story.)

In contrast, Myntra’s approach towards building its own senior leadership seems quaint. Of the original four co-founders, only two—Bansal and Ashutosh Lavania—are with the company. Key functions like supply chain, merchandising, technology, HR and finance are manned by hired professionals with operational experience.

“The two other co-founders left in 2010 because they weren’t thrilled about being told to report to a newer, though more experienced, employee. But after having seen a lot of office politics while working in four startups in the Bay Area, I wanted to make sure there was no politics in Myntra right from Day One,” says Bansal.

By combining hard-charging ‘Type-A’ employees with unforgiving targets and generous funding, Jabong has admittedly built an operation that is the envy of many of its competitors. They ship 6,000 to 7,000 orders a day, without dropping the ball on customer service.

“Jabong has made the entire industry realise that using capital to win the game won’t work, because someone else with even deeper pockets will come in. They’ve done a good job at that,” says Alok Mittal, managing director with VC fund Canaan Partners.

Yet, this model has its limitations. For one, the Samwer brothers are notoriously fickle when it comes to metrics and targets. One quarter’s focus on growing revenues can easily morph into the next quarter’s mass layoffs to bring down costs. In Jabong’s case the employee count has apparently fluctuated from 100 in January 2012 to 700 by April to 500 today after a recent round of layoffs.

“I heard last year too there was a goal set to reach 20,000 daily orders by June, though what they managed was only 2,000 orders. The Samwers are known for their hyperbole of big numbers and large targets,” says Bansal.

Meanwhile Jabong’s latest mandate is to grow revenues three-fold in the next three months. The organisation is almost like a schizophrenic, with no institutional memory of anything beyond a year.

A smaller (in apparel) but possibly more dangerous competitor is Flipkart, in many ways the elephant in almost every single ecommerce room.

“Flipkart is a very serious threat because of their muscle power on all fronts—customers, funding and employees. They may be only a fifth of our size currently when it comes to apparel, but I know they won’t go away. They’ll keep on trying, for existential reasons,” says Bansal.

In October last year Flipkart launched its apparel (menswear) collection (it launched women’s apparel on February 26). The choice of products were decidedly conservative. Even the manner in which the new category was presented to consumers was staid. With neither capital nor engineering resources a constraint, it was surprising to many why Flipkart wasn’t taking on Myntra and Jabong more aggressively. But the reason could very well be its existing customer base.

Unlike Myntra, which has a distinct focus on the youth segment, Flipkart has a large and widespread user base that ranges from students to home makers, office goers and retirees. Thus, its choice of apparel and manner of presentation had to be accessible across this wide audience.

“Apparel to me looks like a separate category altogether and not just another sub-category for horizontal players. Even Amazon has found it hard to crack this because the customer experience is so much harder. In fact, I’d say the broader your customer segment, the harder it is in this business,” says Mittal.

That prognosis seems to be borne out by Mehta, whose Reliance Brands exclusively distributes premium and luxury brands in India ranging from Timberland, Diesel and Steve Madden on one end to Ermenegildo Zegna on the other. “Though we work with both Myntra and Jabong, we don’t deal with Flipkart. Their DNA is to sell books and electronics,” says Mehta.

But Lavania is still wary of Flipkart’s potential. “In ecommerce a customer is dealing with a system and not a person, so trust is very important. Flipkart has built that trust very well. My biggest worry is that our consumers shouldn’t add apparel to their Flipkart purchases simply because they trust them more.”          

Darshan Mehta, CEO, Reliance Brands
Image: Getty Images
Darshan Mehta, CEO, Reliance Brands

 “We’ve committed to the board that we will break even by March 2014. By then our gross revenues should be touching $200 million on a run-rate basis,” says Bansal. He is also considering an IPO two or three years later.

According to off-the-record estimates provided by a few sources, Myntra accounts for over 10 percent of annual sales for brands like Nike and Puma. That has had an impact on its depth of engagement, with Myntra teams engaging with global Nike functions in the US to plan a joint sales strategy.

“Myntra has been the cleverest of the lot. As a brand they’ve gone from kitschy to fashionable by constantly upgrading their user interface or how they shoot their images. We’ve been very enthused by the sales of some of our brands like Diesel and Timberland through them. Because of that we’re working with their teams eight to nine months ahead to procure items, even helping them buy from our parent brands globally,” says Mehta.

Myntra’s private label collection, which was launched six months ago, was bulked up in November through the acquisition of private label retailer SherSingh. Bansal says his objective is to increase the revenue contribution of his high-margin private labels from 8 percent currently to 25 percent in the next 12 months.

But to maintain its market leadership and growth rates, Myntra will need to convince its customers to increase the frequency of their shopping and the number of items they buy with each order.

“An average order from a Benetton store consists of around 2.75 to 3 items, while an equivalent online order will probably just have around 1.2 items. To overcome that, players like Myntra will need to sell ‘looks’ to customers instead of just garments. That way a customer will not only buy an ensemble consisting of, say, a shirt, trousers and a shoe, but will also keep coming back for more,” says Sanjeev Mohanty, managing director for Benetton India.

“We want to go from being a catalogue player to a fashion adviser for select youth segments. And we certainly don’t want to be anything and everything to anybody,” says Ganesh Subramanian, the head of Myntra’s merchandising function.

Myntra’s transition to ‘fashion adviser’ is visible: A ‘lookbook’ that allows customers to buy ensembles; a ‘style studio’ that allows clothes to be modelled virtually on different male and female models; a Bollywood-driven style guide; multiple trend guides; a blog curated by professional fashion stylists and starting March, a new campaign called Everyday New that will feature a new and curated fashion trend each day for the next 100 days.
Selling curated ensembles also makes Myntra less dependent on fickle, deal-hunting customers who are only interested in buying a product at the cheapest price.

“We want our consumers to say, ‘Myntra helps me look good’, because that’s the only way they will not be able to resist buying the 11th shirt they don’t really ‘need’ along with their 10 existing ones,” says Lavania.

This combination of retailing and editorial content, says Bansal, “will provide customers with lots of democratic and bottom-up choices to pick from, unlike the top-down fashion advice of a magazine like Vogue or GQ.”

Myntra’s dedicated focus on the youth market can also help stave off competition from the much more diffused Flipkart.

“Flipkart’s core audience could be older males, which is why they could be playing to their strengths by offering ‘core’ apparel like white shirts or blue shirts. But there’s a reason why most fashion brands in the world use models in their late-teens and early-twenties: People buy fashion because they want to look younger.”

As for Jabong, says Bansal, “They will only stay if they’re winning by destroying us, so we just have to wait it out. I don’t see us competing with them in three years.”


(This article is excerpted from the latest Forbes India 22 March, 2013 issue which is now available at news stands and book stores. You can buy our tablet version from

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  • Sahil

    Jabong has mostly delivered defective products to me and it is a hassle then to prove that its their fault instead of mine. First they send faulty products such as worn our clothes and apparels and when I return the same they fail the quality test based on the same fault. Then I had to contact them and each time the problem resolves after talking to several representatives over many days. Myntra has not shipped a single defective product and IMO they check the quality of the product to be delivered very stringently. But Jabong has more variety of everything, be it perfumes or be it boots and the same product (if available on both sites) and after same discount will be costlier on myntra s they collect vat on discount.(however they give points on each purchase but still that doesn't make that much sense as the points provided still hold less value than the vat collected by them) Also the search engine of myntra is less accurate and fails to identify the product many times if we input a slightly aberrated search request.

    on Jan 13, 2014
  • Maktub

    you should have named the article as Jabong\'s big leap forward. I wonder what research you have done on Myntra to write this piece. Not expected from so called big name Forbes. Gossip laden articles hardly give any insight in to the sustenance of a particular business. As \"sd\" commented above, what about the financial health of the company? Or is it a paid article

    on Mar 27, 2013
  • Sd

    It seems Jabong\'s all over Bansal\'s mind as it appears from this article. Almost half the article talks about Jabong - disparagingly. The article no where mentions how much in red, Myntra currently is. It seems all hunky dory till you have VCs pouring in money but what once it dries up?! They are still some distance away to breakeven let alone make profit.

    on Mar 19, 2013
  • Ashu Ashwani

    That\'s a great hike by Myntra in short span of time, we should appraise the development in IT and E-Commerce industry in India. Just imagine yourself in 2005 times and see the difference in 2013. The online market industry is still available for new market players just like Myntra, Jabong and others... so be calm and plan for next...

    on Mar 15, 2013
  • Hoveraround

    One should praise the aggression of Jabong! Also when the only so few Indians buying online players should think of growing the market and not be after each other\'s share.

    on Mar 15, 2013
  • Mistral

    Every business model has its origin somewhere.....however the data about Jabong generates this era of reverse innovation....why talk about copying..............

    on Mar 14, 2013
  • Maverick

    Myntra or Flipkart for that matter don\'t have any original business models, myntra copied zappos and flipkart copied amazon..... why complain about some-one copying you..... :)... Every one is looking for an exit whether they are investors of flipkart or that of myntra or of Jabong.... which VC or PE invests without thinking about exits ? isnt that how the startup ecosystem works... am not sure what all the fuss about jabong\'s investors looking for an exit is....

    on Mar 14, 2013
  • K A Prasanna

    There is no uniqueness in business model. It can be copied. Scaling up difficult.

    on Mar 14, 2013
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