Marketed as India’s first personal shopping app, Voonik, which is based out of Bangalore, is witnessing remarkable traction and acceptability. Sujayath Ali, CEO and co-founder, talks to Pankaj Joshi about what exactly are the pegs of their business plan and where do they see it going.
Q. Given the omni-channel proliferation and investments done in specific online fashion shopping businesses, how difficult is it for Voonik to stand out?
Since our inception we have defined our target market differently, as affordable fashion which is not dependent on brands. The total fashion lifestyle market is estimated at USD 60 billion, wherein 75 per cent is the unbranded segment. Most players, when we started, focussed on metro-centric clients and modelled themselves as a house of brands. The differentiation was that they were trying to sell the same brands through a better client experience, addressing a 25 per cent market size where 5-10 per cent of the market will never migrate online because they are high-end customers and too attached to the in-store routine.
We focussed on the USD 45 billion segment, wherein our tech background has aided us hugely in creating a million stock keeping units catalogue. When a seller uploads an image, at our end we read the image and create a cut-out. Our system is trained to talk about parameters – sleeve, colour, category and sub-category – so as to define the product for the buyer. This is the charm of machine learning and we have found out that our system, through machine learning, creates catalogues more accurate than those done through human efforts.
We further customise the catalogue offering based on skin tone, body type and other parameters. We also understand that location and customer profile makes a difference and adjust our offering accordingly. For instance, a housewife in Chennai has wardrobe needs different from a working woman in Mumbai which are again different from a college girl in the North. Our aim is to provide a buying experience for the unbranded category.
Q. How successful has been your differentiation and how do you measure your success level?
All this personalisation helps us convert sales. Our conversion rate of 14 per cent is among the best in the industry. The app usage rate of 50 per cent is also among the best. One more innovation is Voonik TV, part of the app, where videos of 30-60 seconds are focussed on fashion discovery. Videos help us access the all-India opportunity which we have seen. These are educational in nature – how to carry off an outfit – and the settings are movie-based, television-based or even centring around a celebrity. The same are uploaded on social media. We are seeing lots of interest in this see-and-buy app feature from small towns where the affordable product line is given an aspirational quotient.
Our return rate at 6-7 per cent is also half of the industry rate. Here it may be mentioned that ethnic wear makes for 60 per cent of the women’s wear line, wherein sarees and dress material account for 40 per cent. After building a good traction in our women’s catalogue, we launched a separate line for men 6-8 months ago, with the same concepts. The concept has taken off so well that today our revenue is split equally between the men’s and women’s catalogues. In men, the big category is footwear, followed by accessories
ranging from sunglasses, watches and jewellery items. We have built a hub-and-spoke sourcing model where we have 30,000 suppliers across more than 100 cities covered under 15-20 hubs. As a policy we are not averse to brands, but the affordability parameter is paramount. If a branded product comes in the range of Rs 600-800, Voonik would be happy to market it.
Q. Where do you see yourself going over the medium term? What numbers do you have in mind as yardsticks?
With regards to numbers, in the last financial year we touched USD 100 million of gross merchandise value, wherein our revenue stood at USD 20 million. We plan to double those figures in the current year. At contribution level, we are positive today – the only burn is rent, hosting charges and the people’s cost. Since apparel and fashion in general is not a price-sensitive market, we believe that the 20 per cent commission level that we get will sustain on higher levels of activity in future. By FY2020, we should be profitable at EBITDA levels. The target for FY2022 is to surpass USD 1 billion GMV, with the same commission structure. This effectively is a 10 times growth from our FY2017 base of USD 100 million. In the context of the target market that we have chosen this kind of growth is eminently achievable. Given how heavily dependent we are on technology, we think this growth will come with only minor increase in fixed costs.
We have a different approach from other online fashion businesses which have invested in millions and even billions. Most of our incremental revenue should flow down to EBITDA. As a business, we believe we have cracked the code to have variable and marketing costs covered from our revenue even today. Now we have to scale up and get fixed costs back, then the rest is positive cash generation territory. The team strength today is 270, we plan to have 70-100 more contract-based manpower. We believe that the USD 1 billion mark would be achieved with twice this team size.