Currently, enjoying a Numero Uno position in the fashion e-space, Myntra is seeking out more margins from its e-retailers. Myntra is known to have demanded margins of up to 36 – 40% from the previous margins of 28– 32% from e-retailers and thus making them feel uncomfortable.
Several e-retailers selling fashion accessories, apparel, footwear and lifestyle products to Myntra have been approached by them with similar demands. Most of these e-retailers are solely dependent on online volume sales for their existence. On the other hand, brick and mortar franchises operate at margins in the range of 30-35%.
Also, since these ecommerce giants need to earn decent profits for sustenance whilst offering attractive discounts to their shoppers, it is these vendors who have to cough up decent margins for continuing their business. Most vendors are in a tight spot and wary of the usual sales pressure tactics undertaken by these ecommerce giants.
With fashion e-retail going big ways, it is time ecommerce giants work on ways to generate profits by setting in place a cost effective supply chain and reducing marketing and staff expenses rather than hiking margins from their vendors. Ecommerce giants and vendors need to work towards evolving a mutually beneficial work relationship for each other’s sustenance in the future.
Source – http://goo.gl/zZophq