Between 2017 and 2019, horizontal eCommerce players like Amazon and Flipkart were experiencing business growth within India while vertical players in the eCommerce space were struggling. Among the worst hit were online niche fashion startups that failed to make a mark. These startups were quickly riddled with cash crunches, failed to secure funding, could not sustain consumer interest, and failed at customer relationship management. Within a space of a few years, many of these vertical online fashion startups disappeared from the market as quickly as they had begun. Among the many names was Voonik, an online marketplace for women’s fashion.
Founded in 2013, as an online marketplace for women’s fashion, Voonik was initially launched as a personal mobile application. The company was started by Sujayath Ali and Navaneetha Krishnan and was headquartered in Bengaluru.
In 2015, Voonik acquired TrialKart and a year later Getsty, a personalized shopping portal for men. This allowed Voonik to take a step into the premium eCommerce segment with the launch of Vilara in 2016. Voonik also acquired three startups called Zohraa, Picksilk.com and Styl in a bid to build and expand their platform. Voonik announced the acquisition of Dekkoh, a personalization and styling app in 2016. This move was aimed at steering the Voonik platform towards personalization and connecting its users to personal stylists through a chat-based app.
Funding of Voonik
Voonik has raised a total of USD 34.5 million in funding to date from investors like Sequoia Capital, Times Internet, Seedfund, Beenos, BEENEXT, Parkwood Bespin, Tancom Investments, Kunal Shah, and more. Its latest round of funding, worth USD 6 million, was raised in February 2017 with RB Investments Pte. Ltd. as the lead investor.
The Beginning of the End
In November 2017, reports first emerged that the fashion retailer had requested 200 of its total 350 workforce to forgo their salaries for the next 3 months. This move was a part of the cost-cutting plans of the company as it faced stiff competition from Myntra, Jabong, and Amazon among other eCommerce marketplaces. However, the CEO and Co-Founder Sujayath Ali firmly denied such reports.
He said - “This is incorrect information and we deny it. In an all-hands meeting, I had asked team members to be ready for an uncertainty in the worst case event of the salary payments being delayed. We have full intent of paying the salaries on time. It was an exercise of preparing the team to be ready for self-sustenance from operational cash flow instead of continuing to spend from investor money.”
Just a year before, in 2016, Voonik had increased its spends on hiring, marketing and advertising resulting in the company struggling for cash burn within a year. Voonik also failed to secure any further funding.
In a struggle for survival over the years, Voonik had also resorted to multiple pivots, the final one being in May 2019, when it began moving to a fully private label business. This was the beginning of the end.
In February 2020, Voonik announced its merger with Bangladesh-based ShopUp. Both the founders of Voonik also joined as Co-founders. As per several media reports, this was a distress sale as Voonik failed to find buyers within India. ShopUp is a social commerce platform that helps micro-entrepreneurs in Bangladesh to set up a storefront on the social networking site Meta (erstwhile Facebook), access working capital and grow their business by automating many sales and operational processes.
Reasons for Voonik's Failure
Most online fashion brands succumbed to the general economic slowdown. However, behind the failure of Voonik were various business reasons that led to the eventual merger of the company.
No Clear Path
Although it began as an online niche fashion marketplace, the company operated without a clear business strategy or goal. In one of the interviews, Sujayath Ali, one of the Founders of Voonik said – “Unfortunately, I won’t be able to give a full-year guidance. But, overall, the idea is to start focusing on growth.” This statement was indicative of their lack of clarity and the direction that the business was focused on.
Incorrect Allocation of Funds
Although the company was able to raise funding, it focused the majority of its expenses on marketing and advertising rather than establishing and correcting operational issues. This caused a huge cash burn in 2017, causing Voonik to delay salaries in an effort to reduce costs.
This was a result of a lack of clarity. In the few years since its inception, Voonik pivoted five times which caused expenses to soar while business revenue suffered. With no clear idea, the company failed at raising any further funding as well.
In 2018, Voonik was also exploring the idea of offline channels through franchise stores in tier II and tier III cities. It was piloting its offline store in the small town of Thiruthuraipoondi in the Thiruvarur district of Tamil Nadu. However, Voonik was running in different directions without any real focus or clarity. This was a tailor-made recipe for disaster that struck hard and quickly. Voonik is a case study of a series of failed attempts that eventually ended in a distress sale.
What is Voonik?
Voonik is an online marketplace for women's fashion. It was initially launched as a personal mobile application before developing a website.
Who founded Voonik?
Voonik was founded by Sujayath Ali and Navaneetha Krishnan in the year 2013.
Has Voonik merged with another startup?
In February 2020, Voonik announced its merger with Bangladesh-based startup ShopUp. Both the founders of Voonik joined the company as co-founders.
Why did Voonik fail?
Reasons for Voonik's failure include:
- No Clear Path
- Incorrect Allocation of Funds
- Multiple Pivots