Myntra, Jabong Aim at Bigger Profit Margins with Private Labels

BANGALORE: Leading e-tailors, Myntra and Jabong, are aiming at substantial margins and have remolded their fashion mantra where the e-commerce companies are preferring private labels over the other brands. As a consequence, the fashion and lifestyle brands are witnessing a loss of market with slowing sales.

These companies have already invested thousands of crores to draw customers’ through discounts and endorsements and now it’s time for these e-commerce shopping platforms to convert the investments in profits as the pressure surges. Following this they have mowed down the discounts and are emphasizing on the sale of their private brands to accelerate the process, reports Economic Times.

Executives of the industry revealed that the profit margin on the private brands is around 55-65 percent while they make only 30-40 percent on the other brands.

"For example, if they had ordered 100 pieces, they are now only taking delivery of 70, that too in a delayed manner," said the chief executive of a brand associated with both Myntra and Jabong.

The managing director of an Indian apparel and lifestyle brand stated, "Now they are buying much less than they had forecasted. I think, gravity is finally entering and they are having the feel of the gravity as they are under pressure to make profit." he added.

Another source revealed the Jabong is preparing to trim the orders by 30 percent at peak growth phase. Instead it is aiming on the private label that would come along with special offers.

"Brands are our partners. We work very closely in partnership with them to improve sales, stock management and brand visibility," said a Jabong representative evading the issue of cancelled orders. On the other hand Myntra has refused to talk to the matter presently.

Experts from the industry approximate that e-tailors have invested 3,720 crore to avail discount on product during the peak Diwali season last year. These funds had been generated by foreign investors.

Fashion brands on the other side have to witness inventory pile-up owing to the previously placed orders to Myntra and Jabong.

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