Jabong consolidates logistics with Myntra, targets 50% growth in FY18

Fashion e-tailer Jabong which was acquired by rival Myntra last year will be shutting down one of the combined five warehouses both the companies currently own as the two try to consolidate supply chain and reduce costs.

The development comes at a time when Jabong is targeting profitability by 2018.

The company targets to grow its revenue by 30 percent during the end of the financial year as compared to the previous fiscal.

"We are looking to grow by about 30 percent in this financial year which technically will become like a 50 percent growth because Jabong de-grew in the years before. The way we want to grow is actually on the back of nurturing our loyal consumer base but at the same time also attracting new consumers to resonate with the same fashion shopping experience," Gunjan Soni, head of Jabong told Moneycontrol in an interaction.

"We have already seen last quarter versus this quarter there has been a 30 percent increase in revenue," she added.

On the issue of consolidation in logistics, Soni said warehouse space across India will be used by both Myntra and Jabong together, which was not the case earlier. Both Myntra and Jabong are fashion portals under Flipkart.

“Instead of five warehouses, we will have only four, we will shut down one and that capacity will get allocated among the various other warehouses...these are fixed costs so the more load that we can share between each other, it helps in sweating of that fixed cost better," Soni told Moneycontrol.

Moreover, Jabong will soon start depending upon Myntra's logistics unit for its deliveries besides Flipkart's eKart and other third party logistics firms.

"We expect between Myntra logistics and eKart, it (logistics dependency) will be as high as 60-65 percent in the next three months," Soni said adding that the company will continue working with third party logistic firms.

Soni also claims that Myntra Logistics will be cheaper for Jabong, as compared to the third party logistics provider. She did not share specifics of the costs.

Will launch a 'try and buy' service

Jabong will launch its much sought after 'try and buy' offering with the help of Myntra Logistics. It will allow consumers to order products in multiple sizes and keep only the one which fits best.

"Myntra Logistics always had a fashion first delivery experience in mind...A try and buy for example is something that can be offered only on Myntra Logistics which none of the other third-party providers can offer," Soni said.

Try and buy was started on Myntra, some years ago. Jabong is currently running a pilot and is charging customers around Rs 50 for the same. The final price may be between Rs 50-100.

The company claims that during the pilot Jabong’s net promoter score (NPS) increased by 7 to 8 percentage points. "We are figuring out how to do it at scale and expand it across multiple cities," Soni said.

NPS is a measure that indicates the loyalty of a firm's customers and its overall quality of services.

Jabong also plans to launch 30-40 new international brands on its platform. It has so far launched brands such as Esprit, Forever 21, Aeropostale, Scotch & Soda among others.

Launches an online 'mood' store

Speaking about the private label brands, Soni said that while Myntra's private label brands have already been launched on Jabong, Jabong's brand Sangria will be made available on Myntra soon.

"The synergy between the two brands will be the largest driver to turn profitable," she said.

Jabong recently also launched an online mood store that allows the entire look to be shopped together, rather than buying different clothes and accessories separately.

The campaign will include digital shoppable videos on YouTube and Facebook, where the customer can pause a video and click on its product card to directly buy.

Jabong currently gets 55 percent of its orders from women. The company claims that during the last year, its NPS had gone to as low as 20 and now targets to grow it to 60.

"It shows that there was a lot of inefficiencies. We ended the March with a quarterly growth of 30 percent on the back of a lot of brand launches and a very targeted outdoor campaign...on NPS that a number of 20 became 52 in March and we are targeting 60 by the time we end this financial year," Soni said.

priyanka.sahay@nw18.com