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Jabong or Myntra: Which fashion e-tailer will race ahead to the top?

For Myntra, a big advantage in the battle to get ahead is the way it can piggyback on Flipkart's logistics. Jabong has also been extremely active in bringing international brands to the India and forging exclusive partnerships.

The shirt off your back

At fashion e-tailer Jabong, every small and big achievement is celebrated. At his Gurgaon office, Praveen Sinha, who, with Arun Chandra Mohan and others, started the company from a one-room office on Golf Course Road with less than a million dollars in the kitty, fondly remembers some of them. Jabong celebrated when it crossed its first 100 orders in January 2012; when it became the only site in India in top 10 Google search results in 2013; and when it got to one million fans on Facebook. It even celebrated the launch of its Enterprise Resource Planning software. "We used to celebrate tying up with brands that were difficult to get, especially when we were small," says Sinha, who is also the MD of the company.

Sinha might soon have another occasion to celebrate as Jabong will come under the umbrella of the Global Fashion Group, a move initiated by the e-tailer's two big global investors - German incubator Rocket Internet and Swedish investment firm Kinnevik. This alliance, Sinha hopes, will catapult Jabong ahead of its arch rival Myntra, as it can now tap into the expertise of four other leading online fashion companies around the world: Dafiti in Latin America, Lamoda in Russia, Namshi in the Middle East, and Zalora, a leading company in Southeast Asia and Australia. In addition, it can draw on the consortium's strengths in sourcing raw material from different countries; negotiating better deals with vendors as well as getting design talent for western wear from the UK and Europe. "India has enough ethnic wear designers but there aren't many who design western outfits. The merger will make it easier to introduce newer designs," says Sinha.

However, Mukesh Bansal, Myntra's founder and CEO, is unfazed. "I don't know whether that alliance will help them or not, but I know that we have become much stronger after we became part of Flipkart last year. Our distance from Jabong is increasing," says Bansal, who is also the head of e-commerce at Flipkart. "We are about double the size of the number two player now. This would most certainly reflect in the monthly numbers of the last three to four months, if not as much in the numbers for the entire year. We saw the distance increasing since last December," he says. However, at least last year's RoC figures do not show that Myntra's revenue is double that of Jabong's.

Jabong's Sinha is equally dismissive of the benefits of the Flipkart-Myntra combine. "Backend efficiency can be a strength but every merger has its own problems. It will take time to say whether it takes off."

Jabong launched its website in January 2012 while Myntra had been in business since 2007 selling personalised products before it pivoted to online fashion in 2010. By the time Jabong was on its feet, Myntra was already stocking 20,000 SKUs (stock keeping units). By 2013, Myntra had opened a second warehouse in Gurgaon, apart from the one in Bangalore and the total number of SKUs had tripled by 2013. By December 2013, both Jabong and Myntra were neck-and-neck in terms of Gross Merchandise Value touching nearly Rs 100 crore a month.

Now, both have pulled ahead of other players, and together they boast almost three-fourth market share. "There are two factors that made them stand out: execution and access to capital," says Bharti Jacob, Managing Partner at venture fund Seedfund Advisors, an investor in an early online fashion player Fetise that has since shut down.

Fashion - which covers apparel, footwear and accessories - is the fastest growing e-tail category. As global experience has shown, the largest horizontal companies have typically not dominated fashion e-tailing. Vancl is the largest online fashion store in China and ASOS rules in the UK. In India too, Flipkart, despite owning Myntra, prefers to maintain that as the primary brand for fashion.

But the fashion landscape is still fairly cluttered. Myntra and Jabong might be the big daddies but there are others - Zovi, Limeroad, Yepme, etc - trying to grab a slice of the pie. There are also niche players like Zivame, which is trying to dominate the women's innerwear segment.

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According to figures shared by both companies, both make close to a lakh shipments across India. The other numbers they share are also broadly similar. Jabong claims 1,500 brand tie-ups, 150,000 SKUs and pin code coverage of 12,500. Myntra claims 1,000 brand tie-ups, 160,000 SKUs and pin code coverage of 12,000. According to figures from the Registrar of Companies (RoC), Jabong has grown very fast to almost catch up with Myntra in terms of revenues. Jabong's revenue grew from Rs 4.69 crore in 2011/12 to Rs 527 crore in 2013/14. Myntra grew from Rs 64.9 crore in 2011/12 to Rs 552 crore in 2013/14.

Compared to them, all others are small potatoes. Zovi had revenues of Rs 51.33 crore and Yepme clocked Rs 61.26 crore in the financial year closing March 2014, according to RoC data.

Sinha likes to say that he does not let competition dictate Jabong except when it comes to matching discounts. "We have always been price-competitive. It has never been that someone has made a price-correction and we would sit and wait," says Sinha. Indeed, Jabong took the lead in doing several things its own way. It was the first to offer special delivery services for fashion shipments; the first to introduce features like 'Open box deliveries' that allowed customers to open the packet and see the product before making the payment; same-day deliveries in Delhi-NCR, and tracking the courier boy on Google Maps among others. In 2012, when e-commerce companies found it hard to convince traditional courier firms to offer such services, Jabong worked with start-ups like GoJavas, Delhivery and Chhotu (which closed down later).

Myntra, despite its early start, has been slow to introduce new features though it claims to be the first to offer the 'Exchange' feature for consumers who had problems with fitting. A few months ago, it also introduced direct payback into the consumer's account in case of refunds, instead of the earlier policy of having the money first credited to the consumer's Myntra account.

Jabong has also been extremely active in bringing international brands to the Indian market and forging exclusive partnerships. Founder and CEO, Arun Chandra Mohan, the former venture partner at Rocket Internet, has played a part in netting 20 exclusive partnerships with international brands, including British fashion brand Dorothy Perkins in 2012. Myntra brought the first international brand, US footwear player New Balance, in 2012. It now has brands like Adidas Neo, Supra, Replay, FOX, Sela, Soludos, Parfois, Cole Haan, Antony Morato, Gian Marco Venturi, KAS New York, selling exclusively on its website. Now with the Global Fashion Group deal, Jabong will gain a lot in terms of getting global brands on its platform faster. Global brands that are in the affordable price range of Rs 1,800 to Rs 3,000 have a huge market in India. "They introduce styles faster, almost every two weeks. In contrast, most Indian brands launch their season's collections once in six months," says Mohan.

In the fight to get ahead, the platforms have been vying with each other to get brands to retail exclusively on their sites. "Some brands sign yearly contracts and later move on to other sites," says an executive at Myntra. For instance, Spanish fashion brand Desigual signed an exclusive deal with Jabong in January 2013. About a year later, Desigual was lured away by Myntra for an exclusive tie-up.

For Myntra, a big advantage in the battle to get ahead is the way it can piggyback on Flipkart's logistics. "Flipkart has much higher order volumes for almost all products, and customer experience of Ekart (Flipkart's logistics arm) is also much superior to third-party logistics companies," says Ashutosh Lawania, co-founder of Myntra, who heads operations and customer experience. Myntra's in-house logistics arm used to cover 75 cities. In a year's time, Myntra, through Ekart, is now able to reach 170 additional cities. Myntra is aggressively expanding its warehousing capacity. It already has three warehouses in Bangalore and Gurgaon, with capacity of 450,000 square feet. Now it plans to ramp it up by another 300,000 square feet by the end of 2015. Jabong operates only one warehouse with packaging centres across the country.

Myntra has also taken cues from Flipkart's Big Billion Day sale, by coming up with an 'End of Reason' Sale. Lawania says this helped push up traffic on the site by 15 times.

Quote

We are about double the size of the No. 2 player... We saw the distance increasing since December

MUKESH BANSAL

Founder, Myntra

Myntra has also stolen a march when it comes to private labels (own brands created by retailers). Private labels have fatter margins of 50 to 60 per cent, compared to third-party brand margins of 30 to 40 per cent. Myntra, which has 10 private brands, each catering to a different segment, is much stronger as compared to Jabong, which has four private brands so far. Jabong's Sinha, however, refuses to accept that they lag behind Myntra in private labels. "We were the first to start with private labels, though we were not screaming about it. We were focused more on developing the right product, right quality," he says. As opposed to Myntra's home-grown design team, Jabong has a team in London with people from ASOS and the Arcadia Group to create designs for its private labels. But Myntra has also partnered international design studios like Italy based Parabellum Studio to design a range for Roadster as well as a French design studio.

Myntra's aggressive approach to private labels has kept its losses under control though. As per RoC figures, Jabong's losses grew from Rs 0.68 crore in 2011/12 to Rs 16.68 crore 2013/14 while Myntra's fell from Rs 3.51 crore to Rs 0.04 crore during the same period.

The latest weapons both have unleashed involves celebrity apparel lines. "We were the first to do co-creation," says Abhishek Verma, Head, Myntra Fashion Brands, who claims HRX is the first private brand co-created by a celebrity, Hrithik Roshan. HRX, which is among the top three menswear brands on Myntra, was launched in November 2013. Jabong reacted by introducing an "Alia Bhatt for Jabong" collection in September 2014. Now Verma is working on a Deepika Padukone collection. "Co-creations should be inspired by latest trends but should make sure they reflect the celebrities' personality well. In the case of Hrithik it is the ease of movement and fitness," says Verma. The Deepika Padukone collection, he says, will reflect her "outspokenness on women's issues and her elegance".

Both competitors believe that from now on fashion content will be the biggest factor driving transactions, but there are differences in the way they are attempting this. While Myntra had been engaging a team of fashion photographers and fashion writers and doing things like 'look books' and celebrity interviews and how-to videos to engage users, Jabong actually went ahead last year with a print fashion magazine The Juice.

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