Voonik shifts to a private label business
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E-commerce marketplace Voonik is moving to a fully private label business, according to an email accessed by ET, after struggling to survive independently and scaling down and downsizing staff significantly.
Voonik, in an email sent to sellers, said it was moving to a single-brand retail model in the coming weeks, and all products that sellers manufacture would be sold under the Voonik brand.
“For apparel, Voonik will provide the tags and the same have to be used on every apparel product,” according to the note sent to sellers. Voonik will do the same for footwear products, it said. The company, however, clarified that other processes including order, payments and shipping would remain the same.
The e-commerce firm is backed by the likes of Sequoia Capital, Times Internet and Beenext. Times Internet is a part of Times Group which also publishes this paper.
“We always had the plan to increase our private labels, we are now expediting it,” said Sujayath Ali, co-founder of Voonik. He said the company would move to a completely private label-led business in the next 3-6 months.
The process is at an initial stage, and it has started talking to few sellers to manufacture for Voonik.
“Initially, the idea was to clock 50% our sales from private labels by the end of this year and up to 90% by 2020. But, we have already achieved 40% and its growing rapidly,” he said. Voonik gets a majority of its traffic from smaller towns and cities.
Investors say that, while the value proposition is lucrative for this customer base, the category itself suffers from very high returns and low average order value — making it unsustainable for the company to run on a marketplace model.
Earlier this year, Voonik raised a Rs 1.4 crore bridge round at a valuation of Rs 55.2 crore, led by Sequoia Capital. However, Ali said that it is part of an ongoing bridge round and declined to disclose further details. In November 2017, Voonik asked more than 200 employees to resign, according to media reports.
The e-commerce company clocked a revenue of Rs 117 crore for 2016-17, on a loss of Rs 130 crore, regulatory filings show.
Source: ET Tech