About 200 employees of Bengaluru-based online fashion retailer Voonik face an uncertain future, as the company has said that it is not in a position to pay them their salaries for the next three months as per a report by Digbijay Mishra in The Times of India.
People directly aware of the matter have said that this is part of the firm’s cost-cutting measures. There are around 350 people working in the company.
Workforce in the product development and customer support stand immediately affected, the report states.
The company's co-founder and CEO Sujayath Ali announced in a meeting on Monday that employees who wish to resign will be given one month's salary.
Facing bigger rivals like Myntra-Jabong and Amazon as well as vertical players like Limeroad, the company has not been able to scale its business after having raised around $30 million in equity capital, the report adds.
Sources have told ToI, the e-tailer is finding it hard to sustain the highly paid executives after they earlier hired people in senior roles.
Even as the company has been unable to acquire new funds, it has built up a massive cash burn, owing to lavish spend on marketing and advertising till last year.
Sources have told ToI that many of the senior level executives are in the process of tendering their resignations.
Other vertical e-commerce sites that struggled to compete with the likes of Amazon and Myntra-Jabong include Crafstvilla and Zivame. These sites have also gone through difficult fund-raising conditions and major restructuring.
Sujayath Ali confirmed the development to ToI saying, "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," he added.