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Voonik CEO hints at employee salary cuts to achieve profitability

Voonik CEO hints at employee salary cuts to achieve profitability

Fashion etailer Voonik to undergo restructuring in its quest to reach EBITDA profitability. Salaries of employees may be deferred.

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After Abof and Snapdeal, the trouble for those working in the fashion e-tailing industry continues with Voonik now asking employees to forgo the salary. Voonik funded by Sequoia Capital has two separate apps Mr Voonik and Voonik which said it was looking mainly at catering to the needs of  Tier 2 and Tier 3 cities. According to reports, 200 out of 350 employees of the fashion retailer have been asked to forgo salary and also been given an option to resign with a one month salary. 

"Voonik is currently making contribution profit post-marketing. The next step is EBITDA profitability. Towards this, we have been increasing revenue and cutting costs across all areas including G&A, tech, and salary. As part of this, we have restructured some of the teams and this has set us up for profitability in the next two months. The rumors about not paying salary is not correct as we have full intent of paying everyone's salary," says Sujayath Ali.

However, Ali has been quoted in various publications saying salaries may be deferred and the exercise has been undertaken before as well.After raising $20 million from Sequoia Capital, Times Internet, Seed Fund, Beenox, Beenext and Kunal Shah in June 2015, the company in 2016 said it had reduced its burn rate by half. According to a report by Boston Consulting Group (BCG) and Facebook released in March this year, currently, the fashion e-tailing business is estimated to reach USD 12 billion to USD 14 billion by 2020. Currently, the fashion e-commerce business is USD 4 billion.

Not just Voonik   

Earlier this year in September, the Aditya Birla Group announced it will shut its e-commerce business Abof. This was the group second attempt at the space after Trendin. Around 200 to 500 employees were given an option to relocate to other departments. There were also unconfirmed reports to the company holding talks with Amazon and Flipkart to absorb employees. Even Snapdeal announced it will reduce its staff by 80 percent after the talks with Flipkart for a merger failed. This could collectively mean a lot of layoffs in the e-commerce and specifically etailing industry with no company announcing any major hiring plans.

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