Ajio, Reliance Retail’s online fashion platform, is reportedly on track to become profitable this month, marking a significant milestone as the first online venture of India’s largest retail group to achieve this feat. Industry sources familiar with the matter mentioned that Ajio is expected to record earnings before interest, tax, depreciation, and amortization (Ebitda) ranging between 6 to 8 crore in December.
Competing with giants like Myntra, Flipkart, and Amazon in the online fashion space, Ajio has shown remarkable growth, boasting annual sales of $2 billion in gross merchandise value. Around 51% of this business originates from the Reliance Retail portfolio, while the remaining 49% comes from its unique and exclusive brands.
The journey towards profitability for Ajio has been fueled by various factors. One key element has been the market’s trend towards premiumization, allowing Reliance, with its extensive international brand portfolio, to increase the average billing value. Moreover, optimizing logistic costs by fulfilling most orders from physical stores closer to the delivery points has contributed to reducing expenses and minimizing return rates.
Reliance’s strategic approach to Ajio included diversifying marketing efforts by creating distinct storefronts catering to different consumer segments. With 4,000 stock points established for last-mile fulfillment, including reliance on nearby stores for deliveries, logistic costs have been effectively managed. Additionally, efforts to decrease return rates have proven successful, dropping from 35-36% to around 28% of orders.
Looking ahead, Ajio has ambitious plans to invest in 100 direct-to-customer (D2C) fashion startups through a new digital platform called AJIOGRAM. This initiative aims to onboard 200 exclusive Indian fashion and lifestyle D2C brands, signaling a continued push towards growth and expansion in the digital fashion space.
