Reliance Retail's Ajio is set to achieve this big milestone - Hindustan Times

Reliance Retail's Ajio is set to achieve this big milestone

By | Edited by Aryan Prakash
Dec 22, 2023 02:23 PM IST

In August last year, Isha Ambani was appointed as the head of the division by Mukesh Ambani for Reliance Retail.

Reliance Retail's online fashion arm, Ajio, is reportedly on the brink of profitability this month, marking a significant milestone as the country's largest retail conglomerate's initial profitable online venture.

Relaince Retail launched Ajio in 2017. (Representational Image)
Relaince Retail launched Ajio in 2017. (Representational Image)

According to The Economic Times report, Ajio is anticipated to register ‘ 6-8 crore in earnings before interest, tax, depreciation, and amortisation (Ebitda) in December, according to company’s executives quoted in the report.

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The company's journey toward profitability can be attributed to: a market trend favouring premium, aiding Reliance in leveraging its extensive array of international brands to enhance the average billing value. The ET report further said that cost reductions in logistics were achieved by fulfilling most orders through physical stores located closer to the delivery points, thereby reducing return rates.

One of the executives said that Reliance aimed for Ajio to turn profitable within this fiscal year, and it is accomplishing this milestone in December. Moving ahead, the primary emphasis will be on fostering profitable growth, as Reliance intends to avoid excessive expenditure now that the business has reached a significant scale, the executive further said.

In August last year, Isha Ambani was appointed as the head of the division by Mukesh Ambani for Reliance Retail which is valued at 8.2 lakh crore. Renowned global brands like Jimmy Choo, Georgio Armani, Hugo Boss, Versace, and many others collaborate with Reliance Retail as partner brands in India. At a grand Reliance Industries event, Isha Ambani reportedly disclosed that Reliance Retail expanded with the opening of 3,300 stores in the previous year.

Ajio, founded in 2017, strategically reduced marketing expenses by establishing five distinct storefronts targeting various consumer segments. With approximately 4,000 stock points for last-mile delivery, including Reliance Retail's nearby stores, Ajio effectively curtailed logistical costs, the ET report said. This operational efficiency led to a reduction in return rates from 35-36% to approximately 28% of orders.

In terms of gross merchandise value, Ajio recorded annual sales of $2 billion, with 51% sourced from the Reliance Retail portfolio and the remaining 49% attributed to its proprietary and exclusive brands. Engaging in competition with Myntra, Amazon, and Flipkart, Ajio caters to the online fashion segment.

Roughly 15 million individuals shop for fashion online, while an additional 30 million patrons prefer both online and offline stores for their purchases. Ajio has showcased annual sales of $2 billion in terms of gross merchandise value, largely facilitated by Reliance Retail's partnerships with several international brands, exclusively available in India through Ajio.

AJIO recently unveiled plans to invest in and boost the growth of 100 direct-to-customer fashion startups, aiming to showcase their products on a new Direct-to-Consumer (D2C)-focused digital platform called AJIOGRAM, hosted on the AJIO platform. Furthermore, the company intends to onboard 200 exclusive Indian fashion and lifestyle D2C brands onto AJIOGRAM by the following year, according to the company's announcement.

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