Ecommerce News

Ajio set to become Reliance Retail’s first profitable online venture, ET Retail


Reliance Retail’s online fashion business, Ajio, is set to turn profitable this month, becoming the first online venture of the country’s largest retail group to achieve the mark, two senior industry executives aware of the matter said.

Ajio is expected to post ‘6-8 crore in earnings before interest, tax, depreciation and amortisation (Ebitda) in December, the executives said.

The company achieved profitability for multiple reasons: a premiumisation trend in the market helped Reliance with a huge international brand portfolio improve the average billing value, while it brought down logistic cost by fulfilling most orders from the physical stores nearer to the delivery point and reducing return rates, they said.

“Reliance wanted profitability in Ajio by this fiscal year and it is achieving it in December itself. The focus going forward will be on profitable growth since Reliance doesn’t want to burn money when the business has achieved scale,” one of the executives said.

An email sent to Reliance Retail seeking comment remained unanswered at Thursday press time.

Reliance had started Ajio in 2017.

Ajio reduced marketing cost with five different storefronts for each consumer class. It lined up 4,000 stock points for last-mile fulfilment, including Reliance Retail’s nearest store for delivery, which brought down logistic cost at the operational level. Also, return rates reduced to around 28% of orders from 35-36% earlier.

Ajio is posting annual sales of $2 billion in terms of gross merchandise value, with 51% of the business coming from the Reliance Retail portfolio and the balance 49% from its own and exclusive brands. It competes with Myntra, Amazon and Flipkart in the online fashion space.

Around 15 million people buy fashion online, while another 30 million buy from both online and offline stores.

  • Published On Dec 22, 2023 at 08:24 AM IST

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