ASSIGNMENT ON STRATEGIC MANAGEMENT
COMPANY: MYNTRA.COM
Submitted By: AMIT KUMAR ROLL NO. : 12 (PGDIE-40) NITIE, Mumbai
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Contents Beginning of Myntra.com ....................................................................................................................... 3 Industry/Service ...................................................................................................................................... 3 Products .................................................................................................................................................. 3 Competitors ............................................................................................................................................ 4 Resources ................................................................................................................................................ 4 Capabilities .............................................................................................................................................. 5 VRIN Analysis .......................................................................................................................................... 5 Revenue Model ....................................................................................................................................... 6 Value Chain analysis................................................................................................................................ 7 Revenue .................................................................................................................................................. 8 Five Force Model..................................................................................................................................... 8 PESTLE Analysis ....................................................................................................................................... 9 Competitive Advantage ........................................................................................................................ 10 Initial Funding ....................................................................................................................................... 10 Technology ............................................................................................................................................ 10 Manpower............................................................................................................................................. 11 References ............................................................................................................................................ 11
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Beginning of Myntra.com Myntra was established by Mukesh Bansal, Ashutosh Lawania and Vineet Saxena in February 2007. All three are IIT alumni and have been associated with several start-ups. Myntra is headquartered in Bangalore with regional offices in New Delhi, Mumbai and Chennai. The company started off in the business of personalization of products, and soon expanded to set up regional offices in New Delhi, Mumbai and Chennai. It began its operations in the B2B (business to business) segment with the personalization of gifts, which included T-shirts, mugs and caps to name a few. However, in 2010, the company shifted its strategy to becoming a B2C (business to customer) oriented firm, expanding its catalogue to fashion and lifestyle products. Myntra.com is ranked among the top 10 e-commerce companies in India and is scaling rapidly. In the last 3 years, Myntra has become the most popular destination for personalized products in the country. Building on the success of personalization, Myntra is expanding into broader Lifestyle/Fashion retailing. Started: February 2007 Milestone 1: In October 2007 Myntra received a seed funding from Accel Partners (formerly Erasmic Venture Fund), Sasha Mirchandani from Mumbai Angels and another angel investor. Milestone 2: In 2008 they touched 1000 daily visitors mark. Milestone 3: In 2009 they touched 4000 daily visitors mark and were awarded “Pride of India 20092010” award for exceptional business growth by IDG Ventures. Milestone 4: In 2010 Myntra was the Red Herring Global 100 winner. Milestone 5: By 2012 February Myntra was shipping 10,000 products every day. Vision: To become India’s largest online lifestyle products retailer.
Industry/Service Myntra.com is into the e-commerce (online shopping) business. It is an online retailer of fashion and lifestyle products in India.
Products From 2007 to December 2010, Myntra.com was in the business of online demand personalization. The products ranged from T-shirts, mugs, greeting cards, calendars, key chains, diaries, wine glasses, coasters and many such products with photographs, one-liners and slogans. Myntra pioneered the personalisation of sports jerseys and offered sports jerseys of several cricket and football teams such as Team India, IPL, FIFA and EPL. These jerseys could be personalised with a name and number of the customer’s choice. Myntra has tied up with top fashion and lifestyle brands in India, such as Nike, Reebok, Puma, Adidas, Asics, Lee, Lotto, Decathlon, FIFA, John Miller, Indigo Nation etc. to offer a wide range of current season merchandise from these brands. Myntra currently offers products from more than 3
200 Indian and international brands. These include shoes for running, tennis, football, basketball and fitness, along with casual footwear from world-renowned industry leaders like Nike, Puma, Converse, Adidas, Decathlon, Reebok, Lee Cooper, Numero Uno, Skechers, Crocks, Asics, Fila, Lotto, ID and many more. There are also casual and dressy footwear for women from Catwalk, Carlton London and Red Tape to name a few.
Competitors Myntra undoubtedly enjoyed the first mover advantage in the online retailing business. But Myntra’s success has been replicated by other companies that have now become competitors for Myntra. Some of them are Scopial.com, Blue Bus Tees, dilsebol.com, Inkfruit.com.
Resources Capital: Till date Myntra has received capital from various venture capital firms. Some of them are: Accel Partners (formerly Erasmic Venture Fund), Sasha Mirchandani from Mumbai Angels, NEAIndoUS Ventures, IDG Ventures etc. Thus they have enough capital to try out new ideas and experiment. Myntra has a state of the art office in Bangalore. Myntra’s new age office with a capacity to seat over 400 employees, boasts of some of the best facilities for its employees. With respect to the online retailing industry, the importance of capital can be rated to be 3/5. Relative to competitors Myntra has received quite a lot of funds from venture capitalist. Therefore it can be rated 4/5
Human Resource: Myntra is a small organization with about 250 employees. Many of the employees have IIT/IIM background and have left illustrious careers in Silicon Valley to be a part of this company. They play best in class salary and thus are able to attract and retain talent. With respect to the online retailing industry, the importance of capital can be rated to be 2/5. This is because, though the human resource required if highly skilled, there is a lot of engineers available. Relative to competitors Myntra employees better qualified employees as can be inferred from the Job description that is available on their website. Hence rating can be 3/5. Partnership with various brands: Over the period of years Myntra has established partnerships with more than 250 national and international brands in order to sell their merchandise online. Myntra has tied up with top fashion and lifestyle brands in India, such as Nike, Reebok, Puma, Adidas, Asics, Lee, Lotto, Decathlon, FIFA, John Miller, Indigo Nation etc. to offer a wide range of current season merchandise from these brands. Myntra has also partnered with IPL and is currently the official supplier of customized jerseys. With reference to the respective industry in which Myntra operates, it is very important to provide the customer with as many options as possible. By establishing partnerships with many brands, Myntra has done a very good job. Therefore a rating of 5/5 seems apt. None of its competitors are able to provide a similar variety and choice of brands. Thus we can give a rating of 5/5.
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Capabilities Technological: Myntra maintains its website which provides the only means by which a customer can make a purchase. To maintain, upgrade and improve the website and the user experience, Myntra employees many computer science engineers and experienced professionals. In the e-commerce industry, it is very important to have a state of the art technological infrastructure. Rating : 4/5 As compared to its competitors their online experience their website provides to the customers is at par or better than that of its competitors, Hence we can give a rating of 4/5. Order Processing and Delivery: Myntra attempts to order and ship every order within 24 hrs. It offers free shipping within India on all products above Rs 99 and has delivered products over 10,000 zip codes across the country. It can ship internationally to all major countries. Same as technology, the order processing and delivery are also very important for an e-commerce venture, we can give a rating of 5/5. Myntra performs order processing and delivery very well. Infact the CEO of the company has stated that they have world class warehouses in various cities and an important focus on supply chain. We can rate this capability as 4/5. Marketing: Myntra is very responsive to market trends and always keeps the latest designs and merchandise in its online catalogue. Myntra has successfully used social networking websites Facebook and Twitter to expand its customer base. Myntra positions itself as a fashionable new age brand. It launches major marketing campaigns every year. In February 2012, Myntra rolled out an OOH (out of home) campaign across Tier 2 cities to build brand awareness and promote online shopping. Marketing is very important for a company engaged in online retailing. Myntra has used mostly viral marketing and internet for its popularity coupled with occasional discounts and referral discounts. It can be given a rating of 3/5. With respect to competitors Myntra stands out in its popularity, thus a rating of 4/5 can be given.
VRIN Analysis VRIN Analysis enables SME managers to recognize their core competencies and key sources of competitive advantage. VRIN tells SMEs what they should do, given the relative strengths and weaknesses of their resources and capabilities. Then SME managers’ job is to bundle resources and capabilities to achieve competitive advantage.
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Valuable
Rare
Inimitable
Non Substitutable
Remarks
Capital
YES
YES
NO
NO
Comparative Competitive advantage
Human Resource
YES
NO
NO
NO
Partnership with brands
YES
YES
NO
YES
Technology
YES
YES
NO
YES
Order Processing and Delivery
YES
YES
NO
YES
Marketing
YES
NO
NO
YES
Sustainable Competitive advantage
Comparative Competitive advantage
Revenue Model Myntra.com is an aggregator of many brands. Its business model is based on procuring current season merchandise from various brands and making them available on the portal at the same time as in respective retail brand outlets. All these products are offered to customers on MRP. It is a Business to Customer (B to C) revenue model.
Customer orders from website and makes payment
Customer
Shipping
Firm
Packaging
Order Processing
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Value Chain analysis The following diagram illustrates the value chain concept
Out of all the primary and support activities mentioned in the diagram, the firm performs the following activities:
Firm Infrastructure Human Resource Management Technology Procurement Outbound Logistics Marketing and Sales.
As far as the Firm Infrastructure is concerned Myntra has a state of the art head office. The basic requirement of Myntra was for the office to reflect youthfulness, freshness, and vibrancy while incorporating fashion as the overall theme. The design team left no stone unturned in making this dream a reality. The office infrastructure is better than that of most competitors. Human resource management is one such support activity that can make or break any organisation in the long run. By reading about the HR policies in Myntra we can say that it is a very employee friendly organisation. The firm focuses on work-life balance. In HRM also this company is better than many e-commerce companies. Technology is what differentiates e-commerce from other types of retail. Technology allows online retail to be possible by hosting the website in which the customer can browse through the online catalogue, choose what he wants to buy, make online payment and receive the goods at his/her doorstep. Almost all e-commerce companies maintain their own websites by themselves; this allows them to make frequent changes and corrections as and when needed. With respect to technology Myntra is as good as any other online retailing company.
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Procurement is important for Myntra as they deal in merchandising; they receive the finished goods from various brands, store them at their various warehouses and then ship them to the customer when ordered. Outbound logistics is one of the critical activities for Myntra. They use a third party courier for their outbound logistics. It is their responsibility to give the demanded product to the third party courier as soon as possible. They then keep track of the lead time and try to reduce it with collaboration from the courier company. Marketing and Sales is a core activity of Myntra. By looking at the popularity of Myntra vis a vis other online retailing companies we can conclude that Myntra is doing a much better job in Marketing.
Revenue
Revenue (In Crore Rs) 80
75
70 60 50 40
Revenue (In Crore Rs)
30
25
20 10
9 3
0 2009
2010
2011
2012
Five Force Model
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Porter's five forces analysis is a framework for industry analysis and business strategy development which draws upon industrial organization economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a business unit to re-assess the marketplace given the overall change in industry information. Threat of New Competition: In the Online Retailing industry Myntra has already established the largest market share. But since the barriers to entry/exit and setup capital and working capital are low in this industry, threat of a new entrant becomes high. Threat of substitute services: Online retailing can be considered to be a substitute to the usual shop retailing. Myntra cannot provide the customer with a real retailing experience but at the same time gives the convenience of shopping from home/office. Currently there does not appear any other substitute service. Thus this threat is low. Bargaining Power of Customers: The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Customers can very easily switch to some other online retailer; this puts pressure on the company to continuously improvise on their service so as to keep their users satisfied. Therefore bargaining power of customers is high. Bargaining Power of Suppliers: The suppliers in this case are the various brands whose products are being sold by the company. They can demand an increase in their profit margin and put pressure on the company. The supplier may choose a competitor of the firm to do business since the supplier switching costs are low. Therefore the bargaining power of suppliers is high and Myntra needs to have good supplier relations. Intensity of competitive rivalry: For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. In this particular case the current rivaly, rather competition is not very high, but in future it will be.
PESTLE Analysis PESTLE Factors Political
Key Points Government is planning to allow 100% FDI in retail, this will allow retailers like Walmart to enter the Indian market.
Relevance to Myntra Can be considered as threat from substitute
High government investment in National IT Faster, better and more infrastructures reliable internet access for national users Economic
Despite the economy slowdown in the previous years, the company had been growing by providing discounts to customers Many more people getting internet connections More online buyers with a growing economy 9
Social
Increase in social networking e-marketer online
Marketing has take advantage of channel
Product category risk and financial risk decrease online shopping Technological
Environmental
Legal
Need to consider overcoming risks to increase user There is an increase in broadcasting, information Increase frequency of use and telecommunications technologies for and sources internet access Rapid development of ‘high-speed’ network Media-rich contents are services(e.g. broadband) increases usability of easily made available to media-rich online buyers Global Warming/ Pollution Awareness Less car journeys, more shopping online. Have to become more “green” to attract Changing business methods consumers and environment to become more “green” ,i.e. with postage and packaging, work environment No uniform regulations governing e-commerce Be aware of both the covering all the countries domestic and international laws
Competitive Advantage Competitive advantage can be due to a cost leadership or product differentiation or both. In the case of Myntra the competitive advantage is mostly due to cost leadership. This is because it is able to provide the latest designs of various products of various brands at the MRP. Sometimes it gives discounts also and on top of it the shipping is done free of charge. In special cases it also enjoys competitive advantage due to product differentiation. In case of IPL tshirts the buyer can get his/her name imprinted on it. Also Myntra’s business model up till 2009 was of customized t-shirts and mugs etc which allowed it to have product differentiation.
Initial Funding In October 2007, Myntra received a seed funding from Accel Partners. The amount of the seed fund is not known.
Technology Since the company is engaged in online retailing the technology required is advanced. Maintaining a website were shopping is possible requires a high investment in technology. With an exponential increase in the number of customers visiting the website everyday this task becomes even more important. 10
Manpower The kind of manpower required is highy skilled manpower. Since the company is engaged in online retailing. To excel in online retailing, company needs to maintain the website and safe online transactions. Company needs to engage in good marketing to attract and retain customers.
References 1. http://en.wikipedia.org/wiki/Myntra.com (accessed on 07-04-2012) 2. http://www.afaqs.com/news/company_briefs/index.html?id=44701_Myntra.com+clicks+int o+T20+as+Official+merchandise+partner (accessed on 07-04-2012) 3. http://www.business-standard.com/india/news/dressed-totee/413537/ (accessed on 07-042012) 4. http://businesstoday.intoday.in/story/e-commerce-myntra-aims-to-dominate-fashionmerchandising/1/15058.html (accessed on 07-04-2012) 5. http://businesstoday.intoday.in/story/e-commerce-myntra-aims-to-dominate-fashionmerchandising/1/15058.html# (accessed on 07-04-2012) 6. http://www.medianama.com/2011/03/223-myntra-gets-14m-in-second-round-funding/ (accessed on 07-04-2012) 7. http://www.thehindu.com/business/companies/article2433066.ece (accessed on 07-042012) 8. http://articles.economictimes.indiatimes.com/2011-07-11/news/29761379_1_internationalbrands-category-brand-campaign (accessed on 07-04-2012) 9. http://www.moneylife.in/business-wire-news/myntracom-targets-rs-500-crores-revenuefor-the-next-fiscal/30099.html (accessed on 07-04-2012) 10. http://www.magnamags.com/index.php?option=com_content&task=view&id=9151&Itemid =217 (accessed on 07-04-2012) 11. http://www.indiaprwire.com/pressrelease/electronic-commerce/2009042223914.pdf (accessed on 07-04-2012) 12. Kavita, Pandey, U.S., 2012. E-Commerce Implementation, Problems, Solutions and Popularity in Managing Supply Chain: A Comparative Analysis of Different Top 10 Indian e-commerce Companies. International Journal of Computer Science and technology. Vol. 3 Issue 1.
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