Fashion e-tailer Myntra has been a coveted trophy for a while now.
Five years ago, it became a prize e-commerce giant Flipkart could show off to its rival Amazon. While Amazon was just starting to ramp up its India operations in 2014, Flipkart was acquiring Myntra, followed by the acquisition of Myntra’s rival Jabong two years later.
Before Amazon could finish saying fashion, Flipkart had consolidated its lead in the fast-growing segment. In a neck-and-neck race of 31.2% market share for Amazon and 31.9% market share for Flipkart, according to research firm Forrester’s data for last year, Myntra-Jabong took Flipkart’s share of the pie up to 38.4%. A bona fide jump.
In fact, Myntra-Jabong contributes nearly 20% of the group’s overall monthly revenues, a value that the world’s largest retailer Walmart did not miss after it bought Flipkart for $16 billion in August last year. Since then, much has changed.
At the time, Flipkart had three units apart from its core group operations, payments provider PhonePe, logistics arm Ekart and fashion e-tailer Myntra, which Jabong is a part of.
While Walmart has been openly enthused about the prospects for PhonePe—an unexpected $10 billion easter egg—it has been relatively quieter on Myntra. Significantly, at the time of the acquisition, Myntra was valued at $6 billion internally, dwarfing PhonePe’s $2 billion valuation.
And Walmart saw an opportunity. After all, it had faced its share of struggles in trying to sell fashion in its home base of North America. When Walmart CEO Doug McMillion visited India earlier this year, a media report said he was “mesmerised” by the way fashion was performing at Myntra and Flipkart.
That Flipkart is a crucial buy for Walmart is well known. In just over a year, the retailer has already left a definitive mark on Flipkart’s operations. For one, fast-growing PhonePe is becoming a veritable leader (The Ken wrote about PhonePe’s position here); Walmart has brought the focus to food retail—it has given Flipkart an equity capital of nearly Rs 2,000 crore just for food and has pushed for cost control at Flipkart’s grocery arm Supermart. (The Ken wrote about Flipkart’s hyperlocal plans here.)
But, in all of this, Myntra’s growth has been slowing. It has missed its internal gross merchandise value (GMV) targets two years in a row, two former executives at the fashion portal said, requesting anonymity. This has seen its GMV growth fall from 56% to 45% in the last two financial years, one of the executives added. Under Walmart, Myntra has seen a shift in goal from profitability to increasing revenue, three former employees at the company said.