Ajio: Ajio is set to reach a milestone for Reliance Retail

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Reliance Retail‘s online fashion business, Ajio, is reportedly set to turn profitable this month. According to a report in Economic Times, with this Ajio will become the first online venture of the country’s largest retail group to achieve the mark. The report quotes two senior industry executives aware of the matter.
The report added that Ajio is likely to post ‘6-8 crore in earnings before interest, tax, depreciation and amortisation (Ebitda) in December.Ajio competes with Myntra, Flipkart and Amazon in the online fashion space. 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.
What’s behind Ajio’s profitability
As for the reasons behind the company achieving profitability, the report mentioned multiple reasons. These include the premiumisation trend in the market that helped Reliance with a huge international brand portfolio to 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 told the publication.
Reliance started Ajio in the year 2017. Ajio reduced marketing cost with five different storefronts for each consumer class. It lined up 4,000 stock points for last-mile fulfillment, 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 has announced plans to invest in 100 direct-to-customer (D2C) fashion startups through a new digital platform called AJIOGRAM. The company aims to onboard 200 exclusive Indian fashion and lifestyle D2C.



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