Fashion e-tailer Voonik asks staff to forgo 3 months' salary

Sequoia Capital-backed fashion focused e-tailer Voonik has told 200 employees that the Bengaluru-based company won’t be able to pay them their salaries for the next three months as it undertakes massive cost-cutting measures, people directly aware of the matter said. The company has a total workforce of about 350 people.
 
The affected workforce is largely in product development and customer support, while the operations team won’t be a part of this move, at least for now.
 
In an all-hands meeting on Monday, the company’s co-founder and CEO Sujayath Ali said that employees who would resign will be given one month’s salary, people who were present told TOI.
 
Voonik deferring salaries is reminiscent of what happened earlier this year at the online marketplace Snapdeal which asked hundreds of its staff to leave as it struggled to raise funds.
 
Voonik competes with bigger rivals like Myntra-Jabong and Amazon as well as vertical players like Limeroad, and has not been able to scale its business after having raised around $30 million in equity capital.
 
Sources said the fashion e-tailer, which had gone on a hiring spree especially for senior roles, is not in a position to sustain those highly paid executives.
 
The online marketplace spent lavishly on marketing and advertising till last year, incurred a mounting cash burn even as it had been unable to rack up new funds. Sources said many of these senior-level executives are now in the process of resigning as the company stares at an uncertain future.
 
Other vertical e-commerce sites like Craftsvilla and Zivame have also gone through major restructuring amid tough fund-raising conditions and businesses that have found it difficult to compete with the might of Myntra-Jabong and Amazon.
 
When contacted, Ali confirmed the development. “Voonik is currently one or two months away from EBITDA profitability. One of the measures is restructuring certain teams. As part of this exercise, we have requested these team members to self-select to being part of our last leg of journey towards profitability, which includes deference of salary if required. We have done this exercise in the past as well and we always have paid back the deferred salary.”
 
Besides Sequoia, Voonik counts as its investors RB Investments, Japanese e-commerce operator Beenos, Singapore-based venture capital fund Beenext, Tancom Investments and Times Internet, the digital product and investment arm of the Times Group, the publisher of this newspaper.
 
As of the fiscal year 2016, Voonik clocked losses of over Rs 84 crore with a revenue of Rs 16 crore, according to reports quoting filings from the Registrar of Companies (RoC).
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