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Myntra Seeks To Explore Marketplace Model
E-commerce in India is maturing and has changed considerably from the heady days some years back when startups who were flush with funding, would go out and try every other thing to deliver the best service to their customers and thus get them to visit again. These days many existing giants are looking to use their money in a much more reasonable way. One particular step that they are looking for is to transform their operations from a inventory holding standpoint to a marketplace one.
Ebay has always been following this model. The launch of Amazon in India has gotten many existing companies to think about how they can compete and save money on the long term. While holding inventory allows companies to control the experience for its users, it also results in a lot of wasted cash and resources. The marketplace model makes much more sense as companies do not have to invest in buying and stocking inventory and have to just make sure that the orders are fulfilled. Marketplace models rely on third party vendors to stock and ship the orders. The companies keep the fees/commissions from the sales. Flipkart switched to a hybrid model a year back where it opened its platform to third party sellers in addition to retaining WS Retail, their very own seller operation.
Myntra is now looking to follow this hybrid model. The company is looking to switch to this model and plans to put this in place by April. This news comes shortly after the company raised funding to the tune of $50 million from a bunch of investors with Premji Invest leading the round. A majority of the funding will go towards setting up the marketplace platform and strengthening mobile commerce operations. The company expects a fifth of its revenue to come from this stream over the next year. The company will not really transition towards a complete marketplace. It will stock its premium and private labels while the local and boutique products are expected to be sold under the marketplace model.
Myntra is valued at $250 million after this latest round of funding. It is expecting to reach Rs.800 crore in revenue with the year ending this March. The company expects to reach profitability in 2015.
Source | ET
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Source: http://www.watblog.com/2014/02/17/myntra-seeks-to-explore-marketplace-model/
