Voonik looks to build loyalty among customers, adopts Amazon's Prime model

The firm is looking to double the number of purchases its top customers make

Fashion e-retailer Voonik is following the footsteps of global rival Amazon. It will introduce a loyalty service called Primo next month. At a cost of Rs 99 per quarter, customers opting into the service will be eligible for free shipping on all products apart from getting access to exclusive deals and content.
 

Voonik is looking to double the number of purchases its top customers make, from 12 purchases a year today to 24 through Primo. While the core proposition of the service is to provide free shipping to incentivise buyers to make repeat purchases, the company believes like Amazon Prime a right balance of content is required.

"Voonik Primo will obviously give you free shipping on all our products, but more importantly it will give you access to a lot of selections which are not available to everybody," said Sujayath Ali, co-founder and CEO of Voonik. "We will also partner with some content providers to give content to users in a unified way through our app."

Today, 75 per cent of Voonik's business is driven from Tier II and Tier III towns, where customers have limited choice as compared to the country's metro cities. This has allowed the company to retain margins and also charge for shipping and overheads that come with cash-on-delivery which is the most prominent mode of payment.

The company is hopeful that a waiver of shipping costs will make customers shop more often on its platform. It's acquisition of fashion chat platform Dekho has been enhanced to include video calls with stylists, and will also be deployed for Primo customers.

"I think we're approaching the loyalty programme with the intent that the more loyal a customer is, the more benefits we pass on. Today we take a 20 per cent commission on every sale, but for these customers I might just take 10 per cent," added Ali. "This will allow them to get much better prices."

While the programme might put pressure on Voonik's margins, Ali believes that the extra volumes it will drive will offset the lower earnings and in fact help the company realise better returns per customer. With half of its sales being driven by customers who shop for six to twelve products a year on its platform, the company knows which base of customers to target for Primo.

Voonik plans to achieve operational breakeven in March 2018, with a revenue of Rs 180 crore on a GMV of $250 million. Ali says Primo will be a big contributor in helping the company get there, from its current revenue of around Rs 60 crore for FY17 at a GMV of $120 million. Revenue will accelerate much faster than GMV as the company realises better operational efficiencies.

Currently, Voonik competes with Amazon and Flipkart's fashion categories and not with vertical players such as Myntra, Jabong and Koovs that cater to the mass premium segment. The company says it has carved itself a niche here, as people don't yet fully look at the large horizontal players as online fashion destinations yet.

Online fashion is among the fastest growing categories in e-commerce today, with more than 50 per cent demand coming from Tier II and smaller towns, according to a report published by Facebook and BCG. Moreover, over half of these customers are women, a category which Voonik caters to exclusively.