2017

STRATEGIC PRODUCT
MANAGEMENT AT
MYNTRA

INDIVIDUAL RESEARCH PAPER FOR:

(MGS 611) GLOBAL DISTRIBUTION SYSTEMS
AMEYA SHASTRI POTHUKUCHI (FALL 2017)

UNIVERSITY AT BUFFALO
Please Note: Due permission has been taken from Prof Dr. Kishore to write the Term-Paper on an ‘IT
Product Management Failure’ instead of ‘IT Outsourcing Failure’. Dr. Kishore has been accommodative
enough to allow me to write on the said topic, since I will be targeting Product Management roles after
graduation.

A company should never be ashamed to admit that it has been in the wrong, which is but saying... that it
is wiser today than it was yesterday.

-Michael Porter

Ananth Narayanan, the CEO of Myntra was pacing around in his office at the Myntra Headquarters in
Bengaluru, India. It was a pleasant but cold morning in the January of 2016. Narayanan sighed as he
realized it was time to go to the Chairman and the Board, and tell them it was time to re-visit the strategic
mis-steps the company’s senior management had taken in the spring of 2015.

Narayanan had joined Myntra as the CEO in October 2015. He came into the role at a time when Myntra
and the Indian e-commerce industry was growing exponentially, but was struggling with profitability
issues.

March 23, 2015 was a landmark day for the Indian e-commerce industry. On that day Flipkart (Myntra’s
parent company) and Myntra, two of the largest e-commerce portals in India, decided to shut down their
mobile websites. On May 15, 2015 Myntra took a decision to move further in their ‘app-only’ direction,
shutting down its desktop website too. Users would now be forced to install the Myntra mobile apps if
they wished to purchase anything.

This was a bold and unprecedented decision taken by the Founder and then-CEO of Myntra, Mukesh
Bansal. In this sense it was a transformational application, or at least attempting to be one and there
was a lot at stake. It was at this critical juncture that Narayanan was appointed the CEO. Mukesh Bansal
had since moved into the role of Chairman and was heading Myntra’s Board of Directors, to whom
Narayanan was reporting.

Since the decision to shut down the desktop and mobile websites, Myntra’s sales had dropped by at least
10% for the same period year-on-year and had alarmed the Venture capital groups who were invested in
Myntra, other investors, and senior management alike.

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In an e-commerce industry where the margins were wafer-thin and the sector in general was hyper
competitive, ceding market share to competitors due to strategic adventurism was seen as hara-kiri by
industry experts.

Myntra History and Background

Mukesh Bansal founded Myntra in 2007 along with fellow IITians Ashutosh Lawania and Vineet Saxena.
The company is headquartered in Bengaluru (earlier Bangalore), arguably the biggest IT hub in the world
after Silicon Valley, USA. It was not always the fashion e-commerce portal that it is today and was
originally founded with a focus on personalization of gift items. The portal allowed customers to
personalize products such as jigsaw puzzles, T-shirts, mugs, teddy bears, pendants, calendars, watches,
wine glasses and mouse pads.

In May 2014, Myntra was acquired by Flipkart (India’s largest e-commerce portal at the time) for $330
million to compete against Amazon which entered the Indian market in June 2013, and other established
offline retailers such as Pantaloons, Aditya Birla led Madura Garments, Fab India and so on.

Myntra’s Vision Statement was – To become the Amazon of India

While their Mission Statement reads – Providing a delightful customer experience.

It is very clear from their Vision and Mission statements that Myntra had a huge focus on customer
experience right from inception and was clear that they wanted to be the market-leaders in the hyper-
competitive e-commerce sector in India.

However, like all the other companies in the Indian e-commerce industry Myntra was also suffering
heavy losses due to its policy of focusing on market share first and profitability later (Exhibit 5). A year
after the acquisition, Myntra’s revenue jumped 78%, but losses surge by 4. Myntra, which got acquired by
Flipkart in May, 2014 has reported revenue figures of INR 773 crores against a loss of INR 740 crores for
FY 14-15 (see Exhibit 5).

Pressure was starting to build up on Myntra’s senior management from investors, who were concerned
about the incessant burning of capital without any obvious solution or strategy to turn the business around
and become profitable.

However, Narayanan was optimistic about the future. He was confident that it was possible for Myntra to
become profitable in early 2016, due to the growing revenue from its high-margin private label business
and also helped by efficiencies of scale by its Flipkart merger.

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Myntra had set an aggressive target of generating annualized gross sales of $1 billion by March 2017.
Gross sales exclude discounts and product returns. For instance, in the year ended 31 March 2015,
Myntra’s actual revenue was Rs.773 crore (about $120 million) while its annualized gross sales were
$350-400 million at that time. Losses for that year at the Bengaluru-based firm tripled to Rs. 1,126.60
crores, according to the documents filed with the Registrar of Companies.

For Narayanan, this phase was a baptism by fire. The strategic mis-step to close the desktop and mobile
websites came at a time when Amazon had made an aggressive entry into the Indian e-commerce
marketplace, with an eye on one of the world’s fastest growing and largest middle-class consumer base.

Myntra Management and Organization

Narayanan was previously with McKinsey, heading its product development in Asia and had worked with
the firm for 15 years across its offices in USA, the Far-east and India. He was credited with successfully
setting up McKinsey’s Chennai (India) office and was a proven strategy leader who was precocious for
his age.

Mukesh Bansal had co-founded Myntra in 2007 along with Ashutosh Lawania and Vineet Saxena. They
had an eye on the power of the internet, the fast-growing middle class in a country of 1.2 billion people,
and the young generation which had both strong internet connections and disposable incomes.

Before starting Myntra, Bansal worked for 4 differed startups as an engineer and product manager.
Bansal’s business acumen is discernible in his elucidation of arriving at a business model; “A few basic
things, one is you start with a very clear vision of how the business model will make money. Also, a lot of
times, people make assumptions that are not validated. It is very important to know how much the
business is going to cost you and how that cost is going to change over time. It all boils down to whether
you’re making money or not.” It is this single-minded focus on business and profitability that led to
Myntra shifting its focus to the online retailing of branded apparel in 2010.

Governance Structure

Myntra had a well-defined governance structure to ensure smooth end-to-end process co-ordination for all
of its upstream and downstream processes.

A major part of Myntra’s success depended on having close relations with its sourcing vendors, who
would supply the goods ordered by the customer within a particular time-limit defined by SLA (Service

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Level Agreement). Further, at the downstream end, Myntra had a accurately-defined process on how to
deal with customer escalations.

Overall, the governance structure of Myntra had a high level of codification (see Exhibit 9). Once the
customer logged in a service issue, the customer service would pass on the message to Technical Support.
This would be done either by raising an escalation request or support request to the Technical support
team. In the event that the Technical support team was unable to solve the issue, they could take the
assistance of support management. And finally, if support management was also unable to solve the issue,
it would take the assistance of either product management, engineering managers, account managers or
professional services. The contracts that Myntra has signed with all its vendors have explicitly stated
penalty clauses for Service Level Agreement (SLA) misses, as also well-defined exit clauses.

Myntra is a part of Flipkart, which collectively has around 45% market share in the Indian e-commerce
sector. Hence, no vendor could afford to miss out on being a part of such a dominant e-commerce portal.
Ergo, Myntra more than not, has the larger negotiating power and called the shots when it came to be
negotiating the contract clauses.

Financially, the vendors give Myntra leeway which is rarely afforded to other players. In Tier 1 cities, the
vendors would get their due credit 5 days after the order was dispatched to the customer. In Tier 2 towns,
the vendors would get their payments 10 days after the order was dispatched to the customer.

Indian Market for E-Commerce and Apparel

Morgan Stanley in its report of February 2016 estimated that the size of e-commerce Market would be
$120 billion in 2020. Currently, it was $50 billion in 2015. The e-commerce retail landscape in India was
dominated by a few big players. The top three online retail platforms had a combined market share of
83%. Flipkart, including Myntra, led the pack with its 45% market share, followed by Snapdeal at 26%
and Amazon India at 12% (see Exhibit 4). It was expected that more and more retail companies will
move from offline to online. It will move faster in India than other countries as there are more real estate
and sales & distribution problems in this country.

India is already the second-largest Internet market globally in terms of users with 50 million internet
users. It is estimated that in 2020, the total number of Internet users in India will be 320 million, which is
equivalent to the population of the USA.

Sector-wise, apparel is the second-biggest sector after electronics in the Indian e-commerce landscape,
accounting for nearly one of every three purchases online (31%). So, Myntra was operating in a good

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business space considering India had the world’s second largest online population, and also apparel was
the second biggest sector (revenue-wise) in the Indian e-commerce landscape.

Market Competition

By 2015-16, Indian e-commerce industry had grown highly competitive. Flipkart (Myntra’s parent
company) had the dominant market-share of 45%, but Amazon had entered India less than two years ago
and had already captured a 12% market-share.

The e-commerce industry in India was a war of attrition, where all the major players were heavily loss-
making. Furthermore, these e-commerce companies didn’t mind this because the idea was to focus on
capturing market-share first, and then focus on profitability once the smaller companies with limited
capital were forced to shut down leaving only the bigger players in the fray. The expectation that smaller
e-commerce companies would shut down resulting in consolidation of the e-commerce industry was
based on the educated assumption that they couldn’t compete with the deep discounts offered by the big
players (like Flipkart, Myntra and Amazon). Amazon for one, had the deepest pockets backed by huge
profits from its USA parent, and was causing huge headaches to the Indian e-retailers like Myntra, and
Snapdeal.

Myntra’s E-commerce Operations

Business Model

Myntra.com is an aggregator of many brands. Its business model is based on sourcing 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 or frequently at heavy
discounts based on the MRP (Maximum Retail Price).

In October 2007, Myntra received a seed funding from Accel Partners (formerly Erasmic Venture Fund),
Sasha Mirchandani from Mumbai Angels and another angel investor. In November 2008, Myntra raised
its series A funding of $5 million from NEA-Indo US Ventures, IDG Ventures and Accel Partners. In the
second round of funding spearheaded by Tiger Global and participated by existing investors IDG
Ventures and Indo-US Venture Partners, Myntra raised $14 million.

Operational Activities

Out of all the primary and support activities mentioned in the diagram (see Exhibit 7), the firm performs
the following activities:

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 • Human Resource Management
• Technology
• Procurement
• Outbound Logistics
• Marketing and Sales

Human resource management is one value-enabling support activity that can make or break any
organization in the long run. Myntra gave a huge impetus to hiring the right kind of people, who would
deliver the required work expected from professionals working in a hyper-competitive and ever-changing
environment.

Procurement/Sourcing is vital for Myntra as merchandising is their bread and butter; they receive the
finished products from various brands, store them at the various warehouses and then deliver the products
to the customer when required. Myntra had the walk the tightrope of balancing high availability (of
goods) versus having a lean inventory model. According to CEO Narayanan, Myntra usually places its
orders based on the order forecasts for the next three months.

To streamline their procurement and sourcing activities, Myntra was moving from an inventory model to
a hybrid marketplace model. Hybrid marketplace is a type of model in which the platform checks the
quality of products from the seller and gives the seller the facility to choose their own delivery and
packaging facility, or go with the platform existing delivery and packaging facility. In this model, the
portals like Myntra can start their own labels by manufacturing and stocking inventories too.

Outbound logistics is arguably the most critical activity and backbone for any e-commerce retailer.
Predictably, Myntra uses third-party courier services for its outbound logistics. It is their responsibility to
give the demanded product to the third-party courier as quickly as possible. Outbound logistics has a very
direct impact on consumer experience and affects not just delivery of goods, but also the return of goods
to the company by the consumer (in case of damaged product or customer dissatisfaction due to any other
reason).

Marketing and Sales is a crucial activity of Myntra since it had to ensure consumers had top-of-the-mind
recall (about Myntra) when they were about to make an online purchase. Myntra had a multi-pronged
marketing and advertising activities, most of them ATL (Above-the-line) activities such as TV
Commercials, SEO (search engine optimization), YouTube marketing videos, seasonal discounts etc.

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Product Portfolio

Myntra has partnerships with top lifestyle brands in India, such as Nike, Inc., 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 350 Indian and international brands. Myntra offered
personalized jerseys of several cricket and football teams such as Team India, IPL teams, national football
teams, and Premier League football teams.

Technology and Development

“The biggest focus for us it to give a very mobile specific experience. More releases have come out (in the
mobile app) recently such as visual search to enable a more proper view of the products. We also have a
voice search feature to make it easy to search for products online. People can upload selfies of the
products and can ask for suggestions through our app.”
-Shamik Sharma, CTO of Myntra, July 2015 [9]

Make vs Buy Decision

• Myntra’s App had high

asset specificity (due to
proprietary knowledge)
Asset Specificity

• Myntra would have high

level of uncertainty if it
outsourced the app
development Uncertainty
Outsourcing Level

• Myntra had the best

business talent with
leaders from McKinsey
and the best business Business Skills
schools

• Myntra had the best

technical talent with
leaders who had built
technical products earlier Technical Skills
and engineers from IITs
and the best technical
schools

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Myntra’s senior management led by then-CEO Bansal analyzed the possibility of outsourcing the app
building and maintenance to an IT vendor. As illustrated in the diagram above, they too into consideration
various factors such as asset specificity (of the mobile app), the resulting uncertainty because of
outsourcing, the level of business skills and technical skills that Myntra had in-house.

Based on such analysis, Bansal and his core team concluded that since they were planning to go for an
app-only strategy, the mobile app would no longer be an ancillary activity, but would be the core
competency of Myntra. They realized that the mobile app had high asset specificity (due to proprietary
knowledge and new features/functionalities being introduced frequently on the basis of feedback from
customers/analytics team). Also, the decision to outsource would result in a high amount of uncertainty
and loss of control over the process. It would result in a substantial increase in both ex-ante and ex-
post transaction costs due to high search and information costs, contracting costs, very high
contract enforcement and adaptation costs.

Due to these reasons, Bansal and the top-management of Myntra took a decision to develop (and
maintain) the mobile app in-house (i.e. hierarchy) as opposed to outsourcing it (i.e. market).

Myntra had an in-house team which developed cutting-edge features in their mobile app. Since they had
taken the bold decision to go mobile app-only, it was paramount that this app would have a great usability
experience, while also being able to cope with the exponentially increasing users visiting the site every
day.

One such feature is image processing which has made the experience of a traditional Myntra buyer very
different from what it is today. Myntra’s basic aim is to make ecommerce a more lively place. Nowadays,
when one shops on ecommerce sites, it’s a very lonely experience according to Myntra’s CTO Shamik
Sharma. One cannot see what others are buying or the new trends going on in India. Myntra was trying to
make it more social by telling the buyers what others are doing.

Like most e-commerce organizations, Myntra built and serviced its own site independently; this allowed
them to build patches to their desktop/mobile app and make rapid changes following agile methodology
to either stay ahead of the competition, or make some important changes based on negative customer
feedback.

Technological innovation (along with highly skilled human resources) is one of the two arguably most
crucial things that separate internet business from other sorts of retail. Technological innovation permits
online retail to be conceivable by facilitating the site in which the client can peruse through the online

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catalogue, pick what he/she needs to purchase, make an online payment and get the products at his/her
doorstep.

This is the reason why Myntra developed the mobile app completely in-house. They did not want to
outsource something which was their core competency. To this end, they recently acquired a mobile app
development company Native5 in May 2015. Myntra wanted to build the best mobile app team in the
country. In CTO Shamik Sharma’s words:

“Yes, it’s expensive to build an app in-house. But we look at our mobile app as our store and we need to
make it look beautiful. From that perspective, the cost is not high. If that’s our core business, and
compared to our revenues and the amount of effort and cost it requires to build your store, it’s not a very
big percentage.”

-Shamik Sharma (CTO and CPO, Myntra), July 2015 [5]

The App-Only Project

“Mobile apps are the best platform for Myntra today as they allow you to integrate with contacts,
calendar, and camera, which can be used to improve the user's experience in a number of ways."

-Prasad Kompalli, Head of e-commerce platform, Myntra (June 2015) [6]

On May 15, 2015 Myntra decided to pull the plug on its desktop website, having shut down its mobile
website a couple of months earlier. This decision to have a mobile app-only offering to customers was not
a random one, and was backed by certain hard data and educated assumptions. Then CEO Mukesh
Bansal, CTO Shamik Sharma and Head of e-commerce platform Prasad Kompalli all collaborated and
took a calculated risk to do something which was unprecedented in the e-commerce sector.

Drivers of the ‘App-Only’ Project

Bansal and the Myntra top-brass believed the cons of such a decision to discard the mobile and desktop
websites would outweigh the pros. The reasons why the senior management of Myntra took the ‘app-
only’ strategy were as follows:

• Explosion of Mobile Internet: According to a report by Internet and Mobile Association of India
(IAMAI), mobile internet users in India are expected to reach 371 million by June 2016. Mobile
Internet user base in the country had also increased from 238 million in June 2015 to 306 million
at the end of December 2015.

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• Vast majority of E-commerce users logged in through their smartphones: The overwhelming
majority of online retail is expected to happen through smartphones, particularly apps, by 2020.
Myntra’s senior management had justified the move by saying that over 70% of their traffic is
driven by smartphones and hence mobile app-only model was considered the future.

• Superior Analytics: In a desktop, most of the users are ‘logged out’ users (since typically
websites are closed and PCs are shut down after a particular browsing session is completed).
While in a desktop website, Myntra could deduce generic things about their customers—like a
particular user being from Bangalore and the likelihood that the user might be more interested in
a certain type of clothes or people in Delhi being interested in a certain clothing line— Myntra
couldn’t analyze on a granular, individual basis.
But on mobiles customers are always ‘logged in’. Even if a customer opens the app he/she is
already logged in. Myntra could get much more detailed data about that particular user such as
who they are and what they want. Myntra wanted to make the experience much more
personalized and better.

For example, if a customer shops for kurtas (Indian semi-formal attire worn on the upper body)
from his/her mobile, the next time you come Myntra can provide short-cuts to kurtas. If the
customer is logged out on a desktop, Myntra would not have that kind of information. You would
have to go through a series of processes—get on the site, click on women, click on kurtis—and so
on. You would be another random user. But if we know that you are the same user, we wouldn’t
have to take you through the entire process.

• Cost: Though not the main reason, the importance of budget dollars – especially in a rapidly
growing start-up struggling to conserve investors’ cash- cannot be understated and maintaining a
mobile app was expected to be cheaper than a full-fledged website.
• Targeted Marketing: One of the biggest advantages of moving to app-only model is to be able to
do targeted marketing without worrying about competition. The apps are great when it comes to
sending personalized notifications and keeping customers engaged.
• Captive Environment: Being inside a mobile app is more confined than being on a desktop or
even a mobile browser). Competition would be pushed out as customers would be more captive in
a specific environment and shopping around for discounts (on competitors’ websites like
Snapdeal or Amazon) would lessen substantially.

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Backfiring of the ‘App-Only’ Strategy

Though some amount of initial business turbulence was expected following the decision to go ‘app-only’
in May 2015, the subsequent months revealed that the gamble had not paid off. Not only did the company
not get the expected gains in terms of increased business or enhanced customer experience, but the entire
strategic experiment left a bad taste in customers’ palettes.

It was seen as paternalistic behavior on the part of Myntra, who were trying to forcefully nudge customers
towards a particular platform, even though it had no readily obvious benefits for the users themselves.
This was exacerbated by the fact that customers in the e-commerce sector in India could readily switch to
other e-commerce portals like Amazon or Snapdeal (which did not shut down their desktop or mobile
website), with very little to differentiate these e-commerce websites from one another.

Even in July 2015 (a couple of months after the mobile and desktop websites were shut down), CTO
Sharma was confident that like any industry-changing innovation, this storm would blow itself over and
eventually the pros of the ‘app-only’ decision would outweigh any cons.

It’s true that we have lost a portion of our customers due to this app-only approach, but I believe that has
been compensated by a huge number of people who have come on board on the app platform,”

-Shamik Sharma, CTO of Myntra [10]

But the VCs and other investors who had pumped in tens of millions of dollars over the years were not so
thrilled with the fact that fiscal performance had taken a definite turn for the worse. Myntra’s sales had
dropped by at least 10% for the same period year-on-year in the consequent months. Myntra’s customer
service representatives, call centres and frontline salespeople received a huge amount of feedback from
irate and bewildered customers who were wondering what was the point and need of shoving down a
basic user choice down consumers’ throats.

Many industry experts concurred that though mobile apps might be the best way for a customized
shopping experience, an app-only strategy in a buying behavior driven market would inevitably leave e-
commerce players with a narrower sales-funnel.

The prevalent view in industry circles was that an app strategy should not be an issue of “or” but “and”.
Rajiv Mangla, the CTO of (Myntra’s competitor) Snapdeal says that customers have heterogeneous online
shopping habits, ergo it makes sense to have a multitude of access points.

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As Ananth Narayanan, Mukesh Bansal, Shamik Gupta and other senior management anxiously tracked
the financial performance data coming in (in the aftermath of the app-only decision), and the various
reports from Myntra’s analytics divisions tracked the following metrics:

• Increase in number of mobile app downloads during said period

• Increase/decrease in year-on-year sales for same period
• Increase/decrease in number of active users on the app during said period
• Increase/decrease in average time spent by a user on the mobile app during said period
• Cost savings due to discontinuation of desktop and mobile website vis-à-vis the lost sales during
the said period
• Increase/decrease in customer satisfaction levels during said period
• Increase/decrease in market-share of Myntra and its two main competitors (viz. Snapdeal and
Amazon) during said period
• Increase/decrease in share of wallet of Myntra and its two main competitors (viz. Snapdeal and
Amazon) during said period

The data from the tracked metrics all categorically indicated decreasing customer satisfaction levels, loss
of sales to competitors, decreased time and money spent on the Myntra mobile app and vendors reporting
decrease in their goods sold on Myntra, it was very obvious that the strategic initiative had misfired and
was turning out to be counter-productive.

In a hyper-competitive market where ceding an inch of market-share to competitors was an unspeakable

blasphemy and an error worth millions of dollars, losing 10%-15% (according to conservative estimates)
of the annual sales after just a few months was ineffable. The margins in the Indian e-commerce sector
were extremely low (or non-existent in certain cases), and as such it was imperative to have huge
volumes.

As the senior management went through the analytics data and feedback, they realized they had made
incorrect behavioral assumptions about Indian e-commerce customers, and had taken their decision based
on certain questionable interpretations of factual data. During the post-mortem analysis, the broad
reasons why the ‘app-only’ strategy backfired were identified as follows:

• Female Customers: Myntra found out (the hard way), that women customers who form the
majority chunk of Myntra’s clientele, like to have the option of shopping across different
channels.

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• Office Going Customers: Office going customers in the age-group of 21 years - 40 years form
the biggest chunk of Myntra’s clientele (by age). Young office-goers like to quickly compare
products across the biggest e-commerce portals, and make a purchase in short ‘breaks’ during
work. It is convenient to do so using the same office-supplied large-screen monitors that they use
for their regular work. An app-only strategy cost Myntra these substantial customer volumes.
• Launch of Niche and Luxury Categories: In 2015, Myntra launched new categories such as home
furnishing and jewellery where customers typically like to see the products on a larger screen.
• Resistance to Paternalism: It was amply clear from consumers’ backlash that shoppers wanted to
buy products and services across a plethora of platforms (as per their preferences and
convenience), and did not appreciate being forced to only use apps.
• Incorrect Assumptions: The Internet and Mobile Association of India (IAMAI) Report of 2016
stated that that despite the fast-rising internet traffic, very little of it was translating into e-
commerce sales. The report further elaborated that only 13% of users in urban India are opting for
online shopping. In rural India, the ratio of internet users making online purchases drops to a
dismal 1%. And this is worrying because 70% of India’s population lives in rural areas, and most
of the explosive mobile internet growth was coming from the rural areas.
• Old Habits Die Hard: While mobile apps are at the crux of providing excellent customer
experience, significant traffic to leading e-commerce websites is still driven by desktop browsers
in India. In a market driven by consumers’ buying behavior, an app-only strategy is likely to
impact e-commerce organizations by having a narrower sales-funnel to start with. It is generally
not an ‘either or’ decision.
• Unexpected Resistance: Having to download an app for shopping was unacceptable to many first-
time users and transactional users. Transactional and/or first-time users constitute a large portion
of e-commerce market in India.
• Convenience of Price Comparison: A peculiarity of e-commerce users in India is that they are
extremely price sensitive, because of which they compare products across various e-commerce
portals and then arrive at a buying decision. In this endeavor, the small screen size of
smartphones is an impediment. The bigger screen size of laptops and desktops is viewed as a
better alternative to compare products across different e-commerce portals. Thus, keeping
multiple tabs open for comparison is a simple convenience that the mobile app environment
doesn’t allow.
• Customer Information: Contrary to popular opinions that desktop browsers are relatively poor in
collecting user information, desktop browsers collect a lot of information about customers.

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 Having a presence only on mobile apps restricts browsers from collecting and sharing such data
points.
• Lost Sales due to Google and SEO (Search Engine Optimization): Google is another factor that
the senior management of Myntra didn’t take into account while formulating the app-only
strategy. A substantial fraction of shopping decisions are made through Google. People are so
habituated to looking up products on the Google search engine that the success of any e-
commerce firm depends to a huge extent on how prominently they are reflected on Google search
results for the relevant keyword.
Thus, a big disadvantage of having just an app is that you lose out on the huge traffic from
Google. For instance, if a customer searches for ‘Scarf’ or ‘Kurti’, he/she will see the websites of
Myntra’s competitors (viz. Amazon and Snpadeal) in the results page. Meanwhile, even if Myntra
has relatively lower prices or superior quality/designs of these apparel products, the results simply
wouldn’t show up on the results page due to the sheer non-existence of the website.
• Prone to Being Uninstalled: Unlike food ordering apps or cab-hailing apps, e-commerce is not a
service that people use daily or even weekly. As a result, e-commerce mobile apps are more
prone to uninstalls. Hence, it would be especially prudent for an e-commerce firm such as Myntra
to keep all channels open for a customer to interact and make a purchasing decision.
• Prevalence of Low-End Mobile Devices: The most popular phones among Indians are feature
phones, which are incapable of supporting mobile apps and lack the advanced functionality of
smartphones. The percentage of users having smartphone in the country is just 29.8% of the total
mobile phone users. Even within the group of users having smartphones, the majority own low-
end smartphones which cannot support more than three or four working apps. Additionally, this
often leads to a high uninstall rate, which makes customer retention difficult.
• High-Value Transactions: It was observed that in cases where people purchased high ticket items,
especially over INR 10,000 (around $150), customers generally prefer a larger screen to view
product details and requisite content.
• Lack of High-Speed Mobile Internet: A non-negligible factor in India for any internet-based
business, was that mobile internet connectivity is slow for most users. Customers might want to
access the concerned e-commerce portal on a faster broadband-based connection, and a robust
desktop platform ensures this is available.
• Heterogeneity of Mobile Eco-system: Furthermore, there was a dizzying variety of mobile device
options in the market, with different OS, different hardware features, screen-sizes and so on. An
app-only model may have issues reaching consumers across the entire spectrum of platforms like
Android, iOS or Windows, even if they do own a high-end smartphone.

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 • Lack of Differentiation or Emotional Connect: As discussed earlier, none of the major players in
the Indian e-commerce sector are in a position to differentiate themselves from the competitors in
any way, or score high on consumer loyalty. The only way the major e-commerce companies try
to stand out from each other is by offering marginally higher discounts than the rest of the field.

Due to this lack of indispensability or emotional connect with the customer, customers had near-
zero switching costs (to switch to Myntra’s competitors) when using Myntra (via the app) became
a hassle. Myntra’s senior management realized that an exclusive app only strategy is successful
only for those companies which can create platform stickiness through product differentiation and
unique offerings.

Thus, Narayanan and his team were realizing that while it is relatively easy to build a functional
mobile app, it requires a well-crafted and comprehensive strategy and a nuanced execution model
to build and sustain a mobile app-only ecosystem.

It is part of the Myntra culture to try bold things. We tried to do this last year because we thought
we can offer consumers a much better experience on the mobile. While that is still true that the
mobile experience is far superior to the web, we have recognized that some consumers still want
the option to shop on the web; we are humble enough to listen to our customers,” Narayanan
said. [4]

Challenges in Reversing the App-Only Decision

i) Communicating to the Board: To say it would be acutely embarrassing for Narayanan to own
up to the Board that they had made a strategic mistake (and would have to go back to having
the Desktop and Mobile websites), would be an understatement.
It didn’t matter that Narayanan was not a part of Myntra when the decision (to go app-only)
was taken in early 2015. He was appointed the CEO in October 2015, and was expected to
take the company to the next level of growth, whereas the sales had actually decreased under
his tenure due to the strategic misadventure. The Board consisted of senior leaders of
renowned VC firms like Tiger Capital and Kalaari Capital, and the credibility of Narayanan
and Bansal (who was the CEO under whose leadership the decision was taken) would take a
hit.

ii) IT Issues: Myntra had shut down its desktop and mobile websites for more than a year. They
had a plethora of issues to deal with. They would have to get the web and database servers up
and running again in a short time. They would also have to ensure that all the functionalities

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 and features on the desktop/mobile websites would work smoothly because it could not afford
any more negative customer experiences. They had been out of the game for what was a long
time in a hyper-dynamic sector such as the e-commerce sector, and would have to catch-up to
make sure they were on par with the rest of the race, if not ahead of it.
iii) HR Issues: Not only did Myntra lay off some of the its best IT engineers who were working
on the mobile and desktop website, but also it had acquired Bangalore-based mobile software
development company Native5 in May 2015. This acquisition was done in the anticipation
that the mobile-app only strategy would mean the app would be the sole point of interaction
with the customer, and hence Myntra was ready to over-invest in it.
An additional headache was to re-hire highly skilled IT engineers who would work on re-
building and maintaining the desktop/mobile websites. The engineers who were let go in
2015 were unlikely to return in a hurry.
iv) Handling Negative PR Fallout: Myntra had suffered considerable negative media publicity
due to its app-only misadventure. Announcing that it was re-starting its desktop and mobile
websites would paradoxically result in a further loss of reputation, especially in the initial few
months. It would give ammo to the sceptics of the app-only strategy, industry experts, and
dooms-day predictors who were waiting for a chance to say ‘I-told-you so.’
v) Recovering Lost Market-share: Myntra had lost more than a year and about 10%-15% of its
customer-base (according to conservative estimates) in the app only bargain. It would now
need to allocate more resources to send the message to its end users about its renewed
multiplatform availability, and convince them to switch back from its competitors.

Next Steps
As Narayanan prepared to have a meeting with the Board soon, he was wondering what would be the next
steps that Myntra should take. After recording the dismal performance of the app-only strategy, the Board
would be apprehensive to sanction any more funds to continue with the said strategy, especially so in the
light of losses mounting up for the company overall. Should they immediately re-launch both the mobile
and desktop websites? If yes, how would they get the websites up and running, as well as hire the right
high-skilled employees in a short amount of time, without compromising on the quality of Myntra’s
websites or the employees? Would it be more prudent to execute the websites’ development in a
staggered phase, with the desktop one being implemented first? Or was it worth a try to salvage the
mobile app-only strategy by developing a lean-version of the mobile app, which would consume very less
resources and work even on the low-end phones prevalent in the Indian market? An additional option

16
would be to have both website and app running simultaneously, but try and gently nudge users towards
the mobile app by offering them additional discounts and reward programs, which would be unavailable
to users who logged in using the desktop/mobile websites.

Time was running out, and so was the Boards’ patience with the Myntra leadership. These were not trivial
issues to find solutions to. But Narayanan had to ensure his next bet would hit the nail on its head.

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Exhibits

Exhibit 1

Source: Flurry Analytics, 2015

Exhibit 2

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Source: Flurry Analytics, June 2015 Report

Exhibit 3

Exhibit 4

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Exhibit 5

Source: Company Inoformation

Exhibit 6

Source: Economic Times (Feb 18, 2016)

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Exhibit 7

Exhibit 8

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 References:

1) Myntra’s U-Turn: e-commerce back to the basics

http://indianexpress.com/article/technology/tech-news-technology/myntra-relaunch-desktop-website-e-
commerce-2797784/

2) Myntra blinks, will relaunch desktop site on 1 June

http://www.livemint.com/Companies/gGCm6sa8fCHRUGwVQC67SL/Myntra-blinks-to-relaunch-
desktop-site-on-1-June.html

3) 5 reasons why Myntra is ditching app-only strategy, going back to website

http://www.business-standard.com/article/companies/5-reasons-why-myntra-is-ditching-app-only-
strategy-going-back-to-website-116050400373_1.html

4) Myntra Abandons App-Only Strategy, Humbly Returns To Desktop

http://trak.in/tags/business/2016/05/04/myntra-desktop-returns-ecommerce/

5) Forbes Magazine: Desktop Vs. App: Which Strategy Is Best For India's Businesses?

https://www.forbes.com/sites/suparnagoswami/2016/11/15/desktop-vs-app-which-strategy-is-best-for-
indias-businesses/#4e0ba165bc72

6) Myntra's desktop version to return next month

http://www.ibtimes.co.in/myntras-desktop-version-return-next-month-report-677358

7) Ananth Narayanan is Myntra's new CEO; Mukesh Bansal to be Board chairman

https://tech.economictimes.indiatimes.com/news/people/ananth-narayanan-myntra/48161518

8) Indian ecommerce market to grow fastest globally over 3 years: Morgan Stanley

https://economictimes.indiatimes.com/articleshow/51031652.cms?utm_source=contentofinterest&utm_
medium=text&utm_campaign=cppst

9) The app-only move is working well for Myntra, says CTO Shamik Sharma

http://techcircle.vccircle.com/2015/07/24/the-app-only-move-is-working-well-for-myntra-says-cto -
shamik-sharma/

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10) Myntra to Shutter Desktop Website, Go App-Only

https://gadgets.ndtv.com/internet/news/myntra-to-shutter-desktop-website-go-app-only-678281

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