In an attempt to reduce its dependency on Vector E-commerce, Flipkart-owned Myntra is working with a new seller Sane Retails for selling private brands of the company.
The move is to comply with Department of Industrial Policy and Promotion (DIPP) regulation which limits the sale made by a single merchant to not-more-than 25 per cent of overall sales on any ecommerce platform.
While Vector E-commerce contributes over 80 per cent of Myntra’s overall sales, Sane Retails is emerging as an alpha-seller which constitutes 22-23 per cent of the fashion platform’s sales.
Sane retails sells private labels and its own brands contribute a significant amount of business.
These sellers are the primary drivers of sales for any e-commerce company. They also work closely with the platform’s fulfilment centres and benefiting from their logistics expertise to ensure adequate inventory and faster delivery.
They also give more control to e-tailers on pricing, discounting, sourcing and commissions compared to rest of the third party sellers.
In fact, Myntra executives were also on the board of Vector E-commerce. The online fashion platform has also introduced other sellers like Tech Connect Retail to reduce the influence of Vector E-commerce on Myntra as a seller.
Besides, online platforms have been pushing for private labels. Private labels are considered an important ingredient for e-commerce companies to improve unit economics as they offer better margin in a business where margins are wafer thin. Myntra also has 14 in-house brands including its largest selling Rs 300 crore brand Roadster.
The e-commerce major Flipkart has also been experimenting with varied strategies to maintain its leadership position and improve unit economics. Hoping big from its private label bets, the e-commerce major is expecting to have 10 per cent of its overall revenue by the end of current fiscal.
Over the past one month, the company had launched two separate private label brands focusing on women (Divastri) and men (Metronaut).