'We want to invest in AI, machine learning and robotics'

Online fashion retailer Myntra recently announced that Myntra Fashion Brands (MFB), its in-house brands’ collection has become profitable, registering a positive EBITDA of 5%. The company as a whole is looking at accomplishing this feat in the last quarter of financial year 2017-18.

As it looks to achieve a run rate of $2 billion in GMV, its tryst with technology will continue to remain centre-stage. Myntra and Jabong CEO Ananth Narayanan discusses the nuances of the company’s plans for the year with Mamta Bhardwaj of DH. Excerpts:

There was talk of reduction in supply chain costs and increase in delivery speed that helped achieve profitability for MFB. Could you please elaborate?

There are two parts to the supply chain, and the first is manufacturers. We decided to consolidate the number of people we work with, so that out supplier base is rationalised. Second, we used technology more effectively to make accurate predictions about what styles will sell. Then we looked at the entire value stream of the supply chain to reduce the gap between the product going up on the platform and a corresponding order being placed.It has a direct impact on working capital and the chances of the piece going out of style is reduced significantly.

Could you quantify the magnitude of the impact that these exercises have had?

One of the things we did is called design-to-value, where we rationalised - How do we standardise buttons, fabrics, clippers, all those? So even though the styles and SKUs are different, we benefit from economies of scale. All of these led to supply cost coming down. In absolute terms, there has been about 5% improvement in buying margins.

Please elaborate on ‘accuracy’ in predictions that Myntra has been able to achieve.

Myntra thinks of itself as fashion trendsetter. We use technology in prediction. One, we pick up data across social media platforms, including Instagram and Facebook.

Apart from this, we have consumer data of our own. We know what is selling. We study the behaviour funnel -- when they click on something, how long do they spend on it, do they go to the next stage, do they go to the cart, do they checkout -- that data gives us information about which styles are performing and why. Ultimately, we take global trends and our own data to decide.

In-house brands naturally have bigger margins, is that what has been able to deliver profitability or is it simply the volume of transactions driven by their popularity?

It is a combination of both these. Some part of it is because of the higher margins, because we are not paying royalties. Second, as scale goes up, our overall costs come down, and Myntra brands, including the likes of Roadster, HRX, Mast & Harbour and DressBerry, have been able to make their mark in consumers’ mind as national brand.   

You mentioned that some capital will be pumped into optimising supply chain and customer acquisition this year. Could you elaborate on these plans?

There are two different areas we want to invest in. First is technology. We want to invest in robotics in our warehouses, AI, machine learning and. This sets us up for long-term success. Second is supply chain infrastructure. Basically, warehousing and last-mile consolidation centres, to ultimately improve consumer experience.

Third is brands. There are some brands that we want to partner with, and some that we already work with. So we want to invest in them.

What are the plans on the omni-channel front?

Bengaluru will get 2-3 more stores. We will do another standalone store, and then will do a mall store and see if that works. It should happen in the next 12 months, and after Roadster, HRX is what we are looking at launching.

The Roadster store is already ahead of the technology curve. How do you plan to take it forward?

One of the things we want to try and do is put facial recognition with an AI machine-learning programme that can recognise who you are. While it already exists in many parts of the world, we are working out the economics of bringing it to India by next year. There are a couple of chains in Japan and the US that are trying to do this, and there is fair amount of data indicating that it has been beneficial.

What is Jabong’s role in Myntra’s path to profitability?

It plays a very important role considering that there are only about 30% overlapping customers.

Jabong helps us acquire customers, and there is also a bunch of synergies through supply chain. We need both platforms to get to profitability.

How confident is Myntra about achieving profitability?

The good thing is, every time someone asks me about this, I feel more confident. So maybe you should just ask me a few more times.