Professional Documents
Culture Documents
March 2021
PREPARED BY-
Kunal Saini (19209)
Karan Seth (19204)
Chaitanya Sharma (19126)
Kashish Sachdeva (19264)
Devansh Arora (19205)
New Delhi Institute of Management
50 (B&C), 60, Tughlakabad Institutional Area, New Delhi-110062
Website: www.ndimdelhi.org
Research Report
On
Business Set up of Myntra
(UAE)
Submitted to
Sangeeta Yadav
INTRODUCTION
Overview
Fashion e-commerce platform, Myntra after gaining success in India is
planning to scale up its international presence and for that purpose,
Myntra has partnered with regional e-commerce platforms, noon.com and
namshi.com, both of which are a part of the Emaar group.
We will target the fashion casual wear categories as exporters and will
gradually set up our own manufacturing hub in UAE.
Why UAE?
Our research identified high levels of potential channels across the globe
offering significant opportunities in the online fashion segment. Amongst
these, the Middle East stood out in terms of the audience’s demographic
profile, extremely high mobile penetration, the similarity in fashion
preferences and a large population of Indian origin.
Also, presence of large funds and comfortable lifestyle of people with high
incomes will open good opportunities for us. Moreover, revenue in the
ecommerce market in UAE is high with a CAGR of
10.30 % with fashion being the largest segment. We are looking forward to a
5X growth from the partnership over the next two years.
Services Offered
1. Designs as per taste and preferences, for example- Abaya for women,
hijabs, traditional dresses for kids and adults
2. More than 80-100 brands to choose from as people over there have
inclination towards high end brands as a one stop solution for all their needs
3. User friendly website- instead of using models for clothes showcasing, we can
use dummies
4. Gold jewellery are an important part of Dubai culture therefore we can sell
these jewelleries through our ecommerce platform
5. Makeup products will also be a part of Myntra as women in UAE are
very fond of using makeup products in their routine
6. Designs from the latest season, trends and style
7. Info centric buying- try and buy options available, EMI options, gift wrapping
8. Cash on Delivery as well as pickup from store options available
9. 24 Hour call centre
Overview of overseas market
1. Revenue in the ecommerce market is projected to reach US$7,456m in 2021
2. Revenue is expected to show an annual growth rate (CAGR 2021-2025) of
10.30%, resulting in a projected market volume of US$11,034m by 2025
3. The market's largest segment is Fashion with a projected market volume of
US$2,221m in 2021
4. User penetration will be 69.4% in 2021 and is expected to hit 66.1% by 2025
5. The average revenue per user (ARPU) is expected to amount to US$1,075.81
E-commerce market
Emirati e-commerce has one of the highest growths in recent years, and is the
most dynamic market across the MENA region, as well as the e-commerce
leader among GCC states. Between 2013 and 2017, online retail sales are
believed to have grown from US$ 490 million to US$ 1.6 billion.
2. Geographical strengths:
A. Strategically located in the Middle East, with easy access to not only key
Middle Eastern and European markets but also to China, South Asia,
Malaysia, Indonesia, Philippines and other Asian markets as well
B. Highly developed ports and access to major sea routes
C. Image as a regional leader and trendsetter with other countries in the
area looking to it as a model of development
3. Commercial strengths:
A. Zero personal and corporate taxation
B. No taxation information exchange agreements with other countries
C. Free Trade Zones, relative ease of business start up
D. Pro-business immigration policies
6. Infrastructural strengths:
Full range of ultramodern and sophisticated banking sector providing a
variety of services for its wealthy expatriate clientele
Banking system is so private that it is now often compared to that of
Switzerland
High-end telecommunication facilities and IT infrastructure
Efficient transport and distribution facilities
Well-planned amenities – roadwork and waterworks
100+ airlines connecting to 146+ destinations
Premiere Logistics Infrastructure
An abundant and inexpensive energy supply
B. WEAKNESSES
A. Many of the strong service sectors reserved for UAE nationals
B. Real Estate Services
C. Rental/Leasing Services relating to Cars
D. Services Incidental to Agriculture
E. Hunting and Forestry
F. Services Incidental to Fishing
G. Placement and Supply Services of Personnel Investigation and Security
Services
H. Passenger and Freight Road
I. Each Emirate has its own business setup rules and regulations
J. Not an English common law jurisdiction
K. One needs a network of people in order to expand opportunities
C. OPPORTUNITIES
A. High internet penetration
B. Ecommerce market growing at a rate of CAGR 10.30 percent with
fashion being the major segment
C. Gateway to 1.5 Billion Middle East and African markets
D. Huge export market
E.
F. Trade missions and agreements with major industrial countries
(Japan, Singapore, EU, Mercosur, India, Turkey, China and many
more upcoming
G. Serve existing markets in Europe and Asia while setting up for access
to growth markets in Middle East, Indian Subcontinent, & Africa
H. UAE is seeing increase in international trade with imports growing
steadily at eight per cent year-on-year over the forecast period
I. Improved bilateral trade with the US, Iran and South Africa, among others
J. Drive to boost the tourism industry through major expansion projects in
hotels and airports
D. THREATS
A. High competition from brands like Amazon and noon.com
B. Rising cost of living in key emirates
C. Perceived real estate-induced economic volatility as potential risk
D. Being a part of a volatile region, the country’s risk profile could be
affected by issues concerning regional and international relations
(regional militant groups and Iran’s nuclear programme)
E. Heavy government subsidies on utilities and agriculture and its
obsolete tax system (BMI report)
F. Sandstorms and dust storms occur frequently
Pestal Analysis
1. Political Factors
The political factors in the Myntra PESTLE Analysis can be explained as
follows:
Walmart-owned Myntra is a well-established e-commerce player and has
presence in 9000 locations in India. However, Indian regulations have only
turned more stringent for e-commerce players. For instance, the draft e-
commerce policy proposes to regulate deep discounting by e-commerce
companies. Such a move could heavily impact the brand which regularly sells
many products on discount. Myntra had to work with new exclusive seller like
Sane Retails. This was in response to government regulations for, which
mandated to have no more than 25% of overall sales for e-commerce platforms.
In another instance, the Indian government, in 2020, made certain amendments
in ‘Consumer Protection (E-Commerce) Rules, 2020. The law mandated that e-
commerce platforms would have to share more information related to the source
and seller of products. The government introduced such a measure to ensure
buyers are more aware of local brands and choose these over foreign ones. This
also came amidst tense relations with China on the border. However, such
measures could reduce the sales of foreign brands on Myntra.
2. Economic Factors
Like many fashion brands, economic factors define how business operations
unfold
Although the Covid-19 induced lockdown brought sales of fashion of Myntra to
a halt, it tapped newer opportunities to increase its sales. Thus, it started selling
masks and personal protective gears on its platform. In another instance, Myntra
found that with work from home rules in force, people would need lounge wear
and leisure wear. Thus, it sold these items to consumers. Yet, the Covid-19
lockdown has impacted the company negatively also. For example, sales fell by
20% in the month of March. This is because the consumers have deferred their
discretionary spending. Despite this, the company plans to add more shoppers.
Every year it comes up with End of Reason Sale that starts in December. It also
tried to serve more than 1.8 lakh shoppers during its flagship year-end sale on
its website and app. The company offered a diverse portfolio of more than 2500
brands ahead at End of Reason Sale.
3. Social Factors
There are lot of opportunities for e-commerce platforms like Myntra to take
advantage of. For example, the government wants such platforms to grow in
rural areas too. The government will help set up the logistics and even provide
some funding for the same. Furthermore, if e-commerce companies collaborate
to provide a common service, they can take advantage of economies of scale
and share costs. Post the Covid-19 lockdown, there is a surge in online shopping
as concerns of safety persist in the online mode. This surge in demand can be
attributed to Tier 2 and Tier 3 cities. According to the annual report by
Unicommerce, many sectors are set to gain. These include electronics, fashion
and accessories, pharmaceuticals, Fast-moving consumer goods, etc. There are
other factors also which are contributing to the growth. These include growth of
new online shoppers, digital focus of shopping brands, preference of businesses
towards D2C model. Thus, Myntra, too will gain on these factors and grow.
4. Technological Factors
Myntra is making use of new technologies like data mining and artificial
intelligence. This would help its designers understand newer patterns and styles
and make more sales. The brand is already tapping into consumer data to
leverage its platform. It is also using augmented reality to improve the connect
with its consumers. The brand is also adding more features on its app. Such
features allow shoppers to rate their apparel purchases. Another characteristic is
the use of augmented reality to produce unique t-shirts for its brands. So,
whenever, a shopper points at such t-shirts, the deign comes live. The brand has
also come up with an innovative project called as Rapid technology. The
objective is to deliver apparel products in a faster manner. The project involves
estimate demand and make quick response to new trends, reduce expenses and
deep discounting in a more cost-effective way.
5. Legal Factors
The legal environment of e-commerce companies in India is still evolving.
There are still lot of litigations involved against such companies. For example,
there are more than 322 cases against Myntra pending in the Panchkula District
Consumer Redressal Forum. Many of these cases involve the company charging
lower prices by deep discounts and adding taxes illegally. Also, there is lot of
legal uncertainty after Walmart-Flipkart deal. The deal involved Walmart
acquiring a 77% stake in Flipkart for a record $16 billion.