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Sequoia Capital backed fashion e-commerce portal Voonik says it is looking to turn profitable by 2017 end as it looks at cutting costs, improving efficiency and engaging customers to return to shop on the platform.
Voonik, which offers personalised selection of apparel for customers, lags behind market leader Myntra and Jabong combine, has focused on improving user experience and delivery to customers. At the same time, it also has expanded the number of sellers on its platform to offer more choices to young customers who look at every day fashion.
"Our burn has come down by half due to a combination of marketing efficiency, break even on each customer as well as reduction in fixed cost. We have reduced our tech cost by 50 per cent this helped us reduced the burn rate which at the peak in June-July was at Rs 10 crore to Rs 11 crore and now it has come down to Rs 4.5 crore, "said Sujayath Ali, co-founder of Voonik.
In June last year Voonik raised $20 million from Sequoia Capital, Times Internet , Seed Fund, Beenox, Beenext and Kunal Shah. Voonik, which works on a model of having separate apps to serve men and women also acquired six companies in the last one and half year to get better technology support for cataloging as well as to launch a new premium luxury Vilara. The company claims it grew 3 times in revenues in the last one year.
"We will be able to be profitable in the next 10 months. My commissions pay for my fixed cost already. Every month we need to decide whether to grow faster or improve efficiency. For example currently post demonetization we are focusing on growing faster and reach our earlier mark back," said Ali.
For the year ended March 2016 the combined losses of various fashion e-tailers in India was Rs 500 crore mainly accounting to high customer acquisition and marketing costs. However, in the last six month the focus of most portals has been to pave the way to profitability by reducing their burn rate and improving efficiency. Currently the Fashion e-tailer industry in India is at $3 billion and is expected to be $10 billion in the next 5 years. In the year, 2016, the fashion e-tailers received a total funding of $876 million.
"Earlier we were at 0.5x what that means is that for every Rs 1 spent on marketing we use to get only Rs 0.5 back in revenue but now every Rs 1 we spend we get back Rs 1 in revenue. This allows us to scale without increasing the burn. Whatever we spend we get back in commissions,"said Ali. Voonik charges a 20 per cent commision from the sellers for selling on their portal.
The company also reduced its customer acquisition cost by 50 per cent. The company spends Rs 200 on each new customer acquired, while it earlier took them 14 months to earn this money back from customers through commissions it has now reduced to seven months.
Ali says that the challenge now is not to acquire customers but making sure that they stick to the portal. The company currently has 65- 70 million shoppers on its platform and want to grow to 100 million in the next 12 months.
"What helped us is cutting down a lot of channels and focusing on the right channels for marketing efficiencies, deeper partnership with Facebook and Google. We automated a lot of stuff that was manual, we worked on DPS, Facebook audience networks, etc. Also we developed a better dash board, and with the help of analytics system we got a better visibility into which channel is working better and which channel is not and also improving the pulse variation to bring back better conversions which in turn reduces the cost," added Ali.
Ali also said that the average time to delivery has come down from seven days to five days.
This year Voonik will focus a lot on stylist help to customers, through our acquisition of Dekkoh, They are planning to introduce stylist chat functionality in Voonik app. "It will allow people to have calls with stylist followed by chat. Dekkoh already has a community of stylist available for this. By the end of the year we will have a artificial intelligence based chat box," said Ali.