Voonik to replicate Amazon’s Prime model to boost sales for profitability

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Online fashion portal, Voonik, in February claimed it will turn profitable in 10 months time. It raised capital worth Rs.40 crores to fund it profitability plans. And, next month it will introduce a new customer loyalty program to keep its online shoppers from wandering off.

What’s special about Primo by Voonik?

Voonik’s customer loyalty program, Primo will mirror Amazon’s Prime model. Opting for this service from the ecommerce platform will entitle customers to free shipping for all products. In addition to this Primo customers will also have access to exclusive deals and content. Primo comes at the cost of Rs.99 per quarter which is convenient and affordable too.

With the help of this loyalty program, Voonik feels it can double purchase rates on its platform. Primo could increase the average 12 purchases a year to 24 purchases per customer.

The CEO and co-founder of Voonik, Sujayath Ali said, “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. We will also partner with some content providers to give content to users in a unified way through our app.”

How will Primo coax shoppers to stay loyal?

Demand from Tier II and II towns drives 75% of Voonik’s business. Customers from these towns have limited fashion choices unlike those in metros. This disadvantage has allowed Voonik to retain margins and charge for shipping and overheads which are a part of the popular cash-on-delivery mode of payment.

With Primo in the picture, Voonik will waive off shipping charges, in the hopes that customers will buy more. In addition to this, Primo customers will also have access to enhanced video calls with expert fashion stylists. This feature is being developed by Voonik’s latest acquisition, Dekho, a fashion chat platform.

“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. This will allow them to get much better prices,” said Ali.

Won’t Primo eat more revenue?

A programme like Primo costs money as it promises multiple facilities and cost waivers for a small fee. This is bound to cut margins but Voonik’s CEO Ali feels that the additional sales (24 purchases per customer) Primo brings should be enough to offset the costs.

By March 2018, Voonik plans to breakeven, for which it requires revenue of Rs.180 crore on a GMV of about $250 million. Primo could bring it closer to this goal from its present revenue of Rs.60 crore for FY17 on a GMV score of $120 million.

Online fashion is growing fast and is expected to dominate ecommerce soon according to a report by Facebook and BCG. In addition to this, women online shoppers are going to increase too. And, lucky for Voonik, it exclusively caters to female customers.

At the same time, it will need to compete with the fine fashion categories of other ecommerce giants. Voonik has carved itself a niche in ecommerce and doesn’t have to compete with vertical players in online fashion, like Myntra, Jabong and Koovs which target the premium segment of online shoppers. Its main competition is Flipkart and Amazon. Both of which are very concerned about their online fashion retail.

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