Voonik to launch customer loyalty service Primo

Fashion e-retailer Voonik is following in the footsteps of larger global rival Amazon to introduce a loyalty service called Primo next month. At a cost of ~99 per quarter, customers opting into the service will be eligible for free shipping on all products apart from getting access to exclusive deals and content.

Voonik is looking to double the number of purchases its top customers make, from 12 purchases a year today to 24 through Primo. While the core proposition of the service is to provide free shipping to incentivise buyers to make repeat purchases, the company believes like Amazon Prime a right balance of content is required.

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

Today, 75 per cent of Voonik’s business is driven from Tier-II and Tier-III towns, where customers have limited choice as compared to the country’s metro cities. This has allowed the company to retain margins and also charge for shipping and overheads that come with cash-on-delivery which is the most prominent mode of payment.

The company is hopeful that a waiver of shipping costs will make customer shop more often on its platform, but is also exploring other methods of engagement. It’s acquisition of fashion chat platform Dekho has been enhanced to include video calls with stylists, and will also be deployed for Primo customers.

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

While the programme might put pressure on Voonik’s margins, Ali believes that the extra volumes it will drive will offset the lower earnings and in fact help the company realise better returns per customer. With half of its sales being driven by customers who shop for six to twelve products a year on its platform, the company knows which base of customers to target for Primo.

Voonik plans to achieve operational breakeven in March 2018, with a revenue of ~180 crore on a GMV of $250 million.

Ali says Primo will be a big contributor in helping the company get there, from its current revenue of ~60 crore for FY17 at a GMV of $120 million.