Following the DIPP 2016 diktat that an individual seller can’t contribute more than 25 per cent of overall volume processed by e-commerce marketplace, firms such as Amazon and Flipkart have cut down their dependency on in-house sellers.
Myntra is no exception and this can be gauged from the financial performance of Vector E-commerce, one of its largest vendors for the past several years. As compared to FY17, its revenue slipped from Rs 1,216 crore in FY17 to mere Rs 81 crore in FY18.
Besides 90 per cent reduction in revenue, the company’s revenue plumped to Rs 52 lakhs in the previous fiscal year from Rs 9 crore in FY18.
Flipkart’s WS Retail and Amazon’s Cloudtail, both slipped from profitability to losses in FY17 and FY18 respectively. The scaling down of in-house grown sellers has been executed to comply government’s regulation that came into effect to protect the interest of online sellers.
In fact, WS Retail has completely parted ways from Flipkart, and the reason behind the same is Walmart’s wishes for Flipkart to abide by all the Indian rules and regulations, which meant a huge step down for the e-tailer.
Looking at Vector E-commerce’s financials that go on to show a negative net worth of Rs 6.21 crore, a working capital deficit of Rs 16 crore in FY18, the road for Vector looks like hitting the dead end at Myntra.
Moreover, the fortune turning in the favour of Tech Connect on Myntra, resulting in massive revenue growth from Rs 1.3 crore in FY16 to Rs 2,485 crore in FY17, making it the next largest e-tailer on the fashion portal, could contribute to Vector E-commerce’s exit from Myntra (if it happens).
With several top-level management exiting Myntra, including last CEO Ananth Narayanan, after Binny Bansal’s exit from Flipkart; this becomes another sack for the fashion portal. It remains to be seen how the future of Vector E-commerce and Tech Connect turn out to be.
The development was reported by ET.