Voonik Technologies Pvt. Ltd, the Bengaluru-based start-up that owns fashion app Voonik, hopes to post operating profit by next financial year by reducing costs and posting higher sales on the back of higher sales from men's vertical launched last July.
The four-year-old start-up, co-founded by Sujayath Ali and Navaneetha Krishnan, had posted net loss of Rs 84 crore on total sales of Rs 16 crore in financial year 2015-16.
"We are getting very close to profitability. We are passing on shipping costs to sellers and customers and so our overall costs will come down significantly. We hope to break even by the end of FY2018," Raghu Lakkapragada, Voonik COO, told the International Business Times India.
It may be recalled that mounting losses have forced start-ups to return to a viable business model that generates profit than one where topline is the major focus (sales is vanity, profit is sanity).
For the current fiscal, he said Voonik's topline is poised to grow significantly. "When we look at last year, we had a much smaller footprint, in terms of customers. This year is very different...growth has been phenomenal. We see our revenues grow up by five to six times (from FY2016 sales)," he said.
The start-up, which started with a focus on women, launched Mr Vonnik —an app for men — and has been growing at a fast clip so as to rival business from women's vertical. "The current revenue split (men and women) is in favour of women, with about 70 percent coming from that segment. This will gradually change in the next three to four months to make the revenues from both the verticals almost 50: 50," the COO said.
The overall fashion market was pegged at about $60 billion in April 2015 and expected to double in five years.
Demonetisation hit Voonik in November since its women customers, predominantly from Tier 2 and 3 cities, were using cash on delivery (CoD) for buying. "It was almost 85 percent of total sales and did impact us," Rahgu said, adding it has come down significantly since then as people gradually adapted to digital payments.
The purchase per customer is more or less unchanged at around Rs 900 and the conversion rate on the app is about 14 percent, according to him.
On the profile of Voonik's women customers, he said, "They are not fashion-forward but want to look stylish. It also explains why our ethnic wear sales are high to these customers."
The investment in the start-up is $33 million and its investors include RB Investments, Sequoia Capital, Kunal Shah (founder and CEO of FreeCharge), Tancom Investments and Microsoft Accelerator. In its latest round of funding, Voonik had raised $6 million from RB Investments and Sequoia Capital.
