Myntra denies owning stakes in sellers in compliance with FDI norms

by Apparel Resources News-Desk

06-February-2019  |  2 mins read

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E-commerce firm Myntra which drives major part of its business from exclusive brand tie-ups and private labels, has made it clear that it does not own any equity stake in sellers on its platform and is duly complying with the new FDI norms.

The move signals a significant restructuring at Myntra since it continues to sell brands through third-party merchants instead of brand stores directly.

In order to not flout the regulations which prohibit online marketplaces from owning equity stakes in sellers, the e-commerce firms have been bringing on board new seller entities. The regulations also disallow an e-commerce marketplace from making exclusive deals with sellers.

Chemistry (clothing brand) is now sold on Myntra by Wiztech, while AKS and Anouk sell through FashionTech and Mango is sold by WandWagon. Other private labels are being sold by sellers including Unistand and Mayazen. Myntra holds stakes in brand like Chemistry and AKS through its accelerator programme launched in 2017. The programme offered brands with technical, design and financial support and the firm had said that it will partner with about 10-15 local fashion brands.

Myntra also has strategic partnership with Mango along with holding stakes in celebrity fashion brands owned by Saif Ali Khan, Hrithik Roshan, Deepika Padukone and Alia Bhatt, which exclusively sell through their portal.

“There will be an immediate impact on Myntra’s margins, since now an intermediary will be introduced, who will invoice consumers for a percentage of the transaction. However, as long as Myntra doesn’t hold equity in the seller and the seller doesn’t get more than 25% of its business from Myntra, they should be in the clear.” – Devangshu Dutta, CEO, Third Eyesight ( Specialist retail consulting firm)

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