Flipkart’s Myntra Not Affected By FDI Rule, Says Doesn’t Own Stake In Sellers

Flipkart-owned fashion ecommerce company, Myntra, has reportedly clarified that it does not own any equity stake in sellers on its platform, as it continues to sell brands through third-party merchants. The fashion etailer has said that it is already in compliance with the latest FDI rules for ecommerce companies that came into effect on February 1.

The regulations prohibit online marketplaces from owning equity stakes in sellers along with making exclusive deals with sellers.

According to an ET report, Myntra has been bringing several new sellers on board. It is learnt that brand such as Chemistry is now sold on Myntra by Wiztech Corp, AKS and Anouk through FashionTech, Mango is sold by WandWagon. Myntra holds stakes in these brands through its accelerator programme launched in 2017.

Similarly, other private labels of Myntra are now being sold by sellers such as Unistand, and Mayazen.

“We did not have any equity ownership issues to contend with in our seller base. We are committed to full compliance with the new regulations,” ET reported, citing an emailed response from Flipkart.

Myntra had earlier reported that it spent 2018 developing its private labels, which are now responsible for generating 25% of its revenue. The company is believed to have more than 14 private label brands and about 30-40 exclusive brand partnerships.

However the company will see an immediate impact on its margins as now an intermediary will be introduced, who will invoice consumers, for a percentage of the transaction, the ET report said, citing consulting firm Third Eyesight’s chief executive Devangshu Dutta.

Myntra’s former CEO Ananth Narayan had earlier said that private labels drive 25% of the company’s revenues.

For the year ended March 2018, Myntra generated a revenue of $60.6 Mn (INR 427 Cr). While the losses for the year stood at $21.4 Mn (INR 151 Cr), and its total expenses were recorded at $131.5 Mn (INR 926 Cr).