Despite rising competition from rivals like Reliance Ajio and Nykaa, online fashion retailer Myntra has gained market share over the past 12 to 18 months, according to chief executive Nandita Sinha.
Sinha, a Flipkart veteran and Myntra’s CEO for nearly two and a half years, stated that international and direct-to-consumer (D2C) brands have become a primary focus for the company, driving a substantial portion of its high-value retail. Additionally, Myntra is accelerating its diversification into fashion-adjacent sectors such as beauty and home decor, she added.
Consumer Trends and Market Penetration
Sinha noted that approximately 45% of Myntra’s total sales for international brands originate from tier-two towns and beyond, attributing this to the scarcity of physical stores and other channels meeting the rising demand in these markets. Additionally, demand for D2C brands such as Rare Rabbit, Snitch, and Bewakoof is also rapidly increasing.
Sinha reported that demand for D2C brands is growing by 80% year-on-year, while the luxury portfolio, featuring high-end brands such as Hugo Boss and Guess, has experienced a 150% expansion.
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“It hasn’t been about dominating a single category. We have gained market share broadly across all categories,” Sinha said. “It’s also been about capturing new customer cohorts, whether it’s the 10 million Gen Z consumers we have or expanding deeper into tier-two cities, which are expanding faster than metro and tier-one cities and currently represent a significant portion of our consumption,” she stated.
Financial Performance and Industry Insights
Market research firm Datum Intelligence estimates that Myntra achieved gross sales of approximately $3.9 billion in 2023, while Reliance’s Ajio ended the year with over $2 billion in gross sales. Industry executives have reported similar figures for these companies.
Neither Myntra nor Ajio commented on their specific sales figures.
While Myntra continues to lead in online fashion, Ajio has emerged as a challenger to the Bengaluru-based company. Amazon India, the primary rival of Myntra’s parent company, Flipkart, has not solidified its position as a challenger in the online fashion sector.
The platform presently features over 400 international brands, such as Mango from Spain, Trendyol from Turkey, and Kiabi from France. Sinha noted that the contribution of international and D2C brands to the business has increased from low single-digit percentages in the first half of 2022 to approximately 10-15% currently.
According to several industry executives and analysts, online fashion, mirroring broader retail trends, has experienced growth primarily fueled by premium products, while items with lower average selling prices have encountered reduced demand in recent quarters. Sinha mentioned that Myntra observes a majority of its new customers joining the platform at lower price points, while repeat customers contribute to premiumization on the platform.
In addition to its core fashion operations, the company plans to expand into new segments such as beauty and home decor in the future.
Sinha stated that approximately one-third of the company’s user base has explored its beauty segment. The company introduced its home decor segment earlier this year.
By the end of 2023, Myntra had amassed a monthly transacting user base of 40 million.
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Sinha remarked, “We’ve established a significant presence with renowned international brands in the beauty segment, including Huda Beauty, numerous Korean beauty brands, and Mac Cosmetics.”
Direct competitors in the space for Myntra include Nykaa, Ajio, and Sugar Cosmetics.
Sinha also emphasized the importance of achieving profitable growth.
The company has been incentivizing users to minimize product returns or exchanges by providing discounts and other perks. Returns constitute a significant cost for such firms, with return rates in the online fashion industry averaging between 30-40%.
“The cost related to processing returns has decreased for us,” she said. “Returns are a service, and if they become expensive, we must ensure that the costs of providing that service are reduced.” Furthermore, even if all barriers are removed, customers may still find the return process difficult.”
During an earnings call on May 16, senior executives at Walmart, Flipkart’s US parent company, announced that Myntra had achieved profitability on an earnings before interest, taxes, depreciation, and amortization (EBITDA) basis for the last two quarters.
Sinha clarified, saying, “Missed development prospects or cost-cutting initiatives don’t account for our profitability. Our technology, scalability, and leverage enable us to pursue profitability without compromising our ability to grow.”
“We aspire to be the preferred platform for the emerging India, which is embracing trends more than ever. We’re shifting our focus from customers seeking commodity fashion towards those embracing forward-thinking, premium fashion,” Sinha explained.
Meanwhile, there’s been an increased emphasis on private labels, particularly focusing on top-performing brands.
Last year, Myntra underwent a restructuring process, shifting its focus to a few select private labels instead of expanding a multitude of in-house brands. As a result, the company now boasts 20 in-house brands.
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