[Note: This article is part of The Junction Series. We will be covering the RetailTech sector in detail at The Junction 2017 in Jaipur. Learn more about The Junction here!]
Worried about what to wear at your friend’s wedding? Tired of surfing the Internet to find the latest fashion trends? If yes, then you are not alone – this is everyone’s story. In a never-ending competition to look smart by following the ongoing fashion trends, people usually end up following either outfits worn by celebrities or buying expensive fashion labels.
And this was the dilemma faced by Sujayath Ali, who used to hear a lot of criticism about his fashion sense from his father which led him on his entrepreneurial journey. “As a boy, I had grown up hearing a lot of criticism from my dad about my dressing sense or lack thereof. I thought luxury brands and paying more for clothes would be the key to my external transformation but that strategy didn’t seem to help,” begins Sujayath.
This was the moment when Sujayath asked himself – if he doesn’t need to be a geek to buy a laptop, then why should he know about fashion to buy clothes?
He then pitched his idea of creating a new way of shopping to his engineering classmate, Navaneetha Krishnan, who later quit his position at FreshDesk to join him. Sujayath who had put in time in companies such as Amazon, Visa also returned to India to get their hands dirty and start their own entrepreneurial journey with fashion discovery platform Voonik in 2013.
Now after almost three years of operations with a total of close to $27 Mn funding from investors like Sequoia Capital, Times Internet, Seedfund, Beenos, BEENEXT, Parkwood Bespin, Tancom Investments, and Kunal Shah, Voonik is growing strong in a market where established unicorns like Flipkart and Snapdeal are having valuation troubles.
Bengaluru-based Voonik is currently working to make fashion personal and accessible through its hyper-engaging app. The app allows its users to capture customers’ preferences such as style, body type, and skin tone and then show them the products that are suited for them. As Sujayath says,
“We began our journey with an MVP after three months of starting up. We were having stylists manually do the recommendations and the MVP was required to build an automated personalisation platform later.”
Business Model: A ‘Lean’ Marketplace
Voonik follows an interesting business model. It has a scalable ‘lean’ marketplace business model where it operates without inventory and fulfilment centres. The company charges 18-20% commission on every product it sells. The engine takes into account stylist recommendations in creating a personalised feed. On the supply side, it reaches out to the manufacturers and brings a massive collection of fashion forward products at everyday low prices.
As Sujayath explains,
“By eliminating the middlemen, we are able to deliver very competitive prices, thus eliminating any need for discounting etc. Also, we keep feeding market intelligence to our sellers, helping them in knowing the latest fashion trends and in creating styles accordingly. Thus, we are moving rapidly towards our dream of becoming the country’s largest online fashion company.”
Furthermore, Sujayath emphasises on the importance laid on ‘quality checks and assurance’ of the dispatched products. “We do monitor quality for new sellers through regular physical quality check. But for the rest of the products from established sellers, we allow our algorithms to take care. Product feed is highly receptive to product performance. If we receive quality complaint about any product or the return percentage increases for any SKU, the seller performance score reduces and hence the visibility of the product on the feed goes down,” says Sujayath.
As Sujayath believes, this is a self-fuelling model which encourages sellers to ensure good quality and rewards those products that get higher customer engagement.
Discovering The White Space Of Unorganised Fashion
For Sujayath, the launch of the mobile app in 2014 and adding unbranded categories in the app was one important tipping point in the growth story. This led the Voonik team to discover the white space of unorganised fashion.
Apart from Voonik, they have also launched two other platforms – MrVoonik and Vilara. Vilara is a premium offering of brands and boutiques which is currently in beta form, whereas Mr Voonik claims to have crossed 5,000 daily shipments within a month of launch.
“We are currently in the process of increasing our catalogue on Vilara and get new brands on board. Initial response for designers and boutiques is phenomenal. I am glad that we have created a vibrant platform for customers who are brand conscious,” says Sujayath.
Ecommerce in India today is considered the most challenging sector but Sujayath doesn’t believe this. For him, ecommerce is the easiest sector to enter if you have a strong business model which has a profitable path. According to him, rapid scaling with cash burn is the major reason for ecommerce not growing and players in this space need to understand this.
According to Sujayath, Voonik is generating revenue and that too without burning cash and this makes them different from other players.
Competing with companies like Zivame, Limeroad, Roposo, Voonik claims to have the highest engagement in shopping through apps in India and it has grown tremendously over the years. Its focus is on mobile but it equally allocates adequate resources for the web as well.
“We are an app-first company. In our new tech developments the app always gets a priority. 90% of our customers come through mobile. But the web is equally important for us as we get a higher percentage of prepaid orders and more engagement such as creating wish lists etc.,” opines Sujayath.
20 Mn Users, 17 Mn App Downloads, 22K Sellers
Voonik claims to be growing at an accelerated pace. According to Sujayath, it has an annual GMV rate of over $120 Mn. The platform (app and website) claims to have over 20 Mn registered users, with 17 Mn app downloads.
Within a time span of three years, the company has built a personalisation technology that seems to have made it the most engaging ecommerce app in India.
According to an official statement, on the supply side, it has over 15 Lakh products from more than 22,000 sellers. On asking Sujayath from where they get their major traction, he says, “Proof of our concept is a massive following in the Tier II and Tier III cities of India, where a customer’s best fashion shopping option is to sieve through crowded offline stores. And if we talk in numbers, more than 50% of our customers’ hail from non-metro cities.”
Not only this, Voonik has acqui-hired startups like TrialKart in 2015, Getsty in Feburary 2016, Picksilk in June 2016. It also took on Styl and Zohraa to strengthen its technology and build the ecommerce platform.
“I respect the entrepreneurial spirit in people. Through acqui-hires we have not only acquired a talented team with a particular skill set, but also people who have the courage to take risks and the passion to create consumer centric products,” says Sujayath.
On asking Sujayath, how these acqui-hires have benefited the company, he explains,
“Acqui-hires have given us a niche customer and supplier base and new tech platforms. Our key projects – MrVoonik and Vilara were built and launched within 90 days, all thanks to the acqui-hired teams. Capital allocation is a key activity for founders and acqui-hires are an effective tool there.”
The team has also increased the number of pin codes in terms of reach along with integrating online wallets to surge ease of payment and encourage pre-paid order placing. With their focus on operational efficiency, the startup is expecting 4.5 x growth in the near future.
Editor’s Note
The ecommerce market is growing as per expectations, however, finally all players are focussing on profitability rather than customer acquisition. Therefore, companies are finding ways to move the customers away from discount-led searches. Funding discounts over a prolonged period is quite detrimental in building a sound business. With the recent demonetisation, ecommerce companies have also seen a steady movement towards prepaid orders that enabled them in delivering better customer experience.
In short, ecommerce in India now has the required infrastructure and customer education, to pivot into the next phase of growth and value building – with companies such as Voonik, Roposo, Limeroad leading the way. But in the marathon race to be crowned the winner, will Voonik – with millions in funding, consumer-friendly tech, and a lean business model take the podium? That remains to be seen.
