Myntra reports lower y-o-y sales growth in FY16; app-only move the major culprit

Myntra, one of the largest ecommerce fashion portal currently owned by Flipkart, has reported net revenue of Rs1,069 crore in FY16, a 38% y-o-y increase from Rs773 crore in FY15. However, the yearly increase is significantly less than the 75%+ sales growth the firm has experienced in the last 2 years. Myntra Designs Pvt. Ltd., the holding company for Myntra’s marketplace platform, also widened its losses to Rs816 crore in last financial year, compared to Rs741 crore in FY15.

The relatively weak sales growth is primarily attributed to the app-only strategy adopted by the firm in May’15 in an attempt to dominate mobile app commerce. However, the firm received a pushback from the customers after going mobile only, and also lost considerable market to competitors such as Amazon and Snapdeal after the guffaw.

Myntra has also set a sales target for Rs5,000 crore, net of discounts, in FY17, however, the target seems unachievable now post the demonetization drive which has hit the online fashion retailers hard. Earlier in December, Myntra also acquired its smaller rival Jabong, and aimed to turn profitable by the end of the FY18, driven mainly by a rapidly growing user base. Ananth Narayanan, CEO Myntra, had said that Myntra’s acquisition of Jabong had also boosted the company’s numbers, adding that it wanted to turn Ebitda-positive in FY18.

The firm is also on wrong footing in terms of the recent e-commerce guidelines released by the government of India wherein a single seller can’t account for more than 75% of overall portal sales. Myntra used to generate majority of its sales from Vector E-Commerce, and now is in talks with a new seller Tech Connect Retail Pvt. Ltd. to diversify its seller base.