Two ex-OYO Rooms executives start Voko, target millennials who don't want to buy furniture
Launched in 2016, Gurgaon-based Voko is operationally profitable now, and will become net cash positive by 2019 March.
While working at OYO Rooms, IIT graduates Bhuvnesh Sharma (27) who was in Business Development, and Harsh Vardhan (25) who was in Rooms Expansion and Operations, had to relocate every two to three months. Whenever they shifted, they bought new furniture and sold it when shifting to the new city. This was time, and money, consuming.
Once they rented furniture, they felt it was far cheaper and easier than buying it. But the rental service provider was an utter pain. They felt a serious necessity for improvement in rental service. That was the beginning of Voko, which provides rental services for home and office needs. They launched operations in March 2016, in Gurgaon.
Harsh says cracking the supply part is the biggest challenge in this industry. Voko follows a hybrid model to ensure availability and good quality of products:
1. Asset investment backed by HNIs - Individuals who have got idle cash invest their money in a new asset class i.e. Furniture and Appliances. The startup deploys these assets through its online rental platform and gives them returns for the mutually decided period.
2. Assets backed by vendors – Offline vendors provide their unsold inventory to earn recurring rental income.
Voko has a warehouse to maintain the inventory, and has partnered with startups in the logistics space like Let’s Transport for vehicles on a monthly rental basis. They partner with payment gateways and banks too. They have outsourced quality check to AMC partners. Voko also offers free delivery, installation and maintenance of its products.
Targeting the millennial
The name ‘Voko’ was decided as it is easy to pronounce and strikes a chord with the startup’s target consumers: the 400 million millennial urban working population in the 20-35 age group and earning Rs 30,000 to Rs 1 lakh per month. In the B2B space, it targets the likes of OYO Rooms and CoHo, as well as office spaces.
Harsh adds that they did not want to put “rent” in the name, as they didn’t want to limit themselves to just rentals. “Voko is the brand name, and Voko Rentals solves one way of solving millennials' problem of hassles with owning lifestyle products,” he says.
But what are they doing which Furlenco or Instamojo is not? Harsh replies, “We don’t compete with Furlenco as they are fulfilling specific type of products for niche customer segment, and their pricing is very high. We have much more affordable and flexible rental plans.” Voko provides furniture, appliances, air conditioners (the most popular category), and party packages. Their double beds are available at around Rs 600 and wardrobes below Rs 500.
Voko started with Rs 5 lakh from the founders’ savings, utilising it for building the online platform (technology) and customer acquisition over five to six months. Thereafter, Harsh says, they have been sustaining with recurring rental revenue.
Voko generates revenue by renting out the same product for the average life of four to five years.
“Our pricing is such that we recover the cost in 15 months-18 months and then make profit (rental income) for next 3.5 or 4.5 years,” says Harsh. He claims that they are operationally profitable now, and will become net cash positive by 2019 March.
In 18 months, they have got more than 5,000 registered customers across Delhi and Gurgaon and a monthly revenue growth of 15-20 percent. They are targeting 10,000 active subscribers in Gurgaon, Noida, and Delhi by FY2019.
Voko recently raised an early stage funding of $150,000 from India Accelerator (a mentorship-driven incubator and accelerator for starups in India).
Tech is the king
Technology plays pivotal role in managing a huge base of subscribers as it is a long-term relationship. Harsh elaborates, “We provide personalised dashboard to our subscribers where they can customise their subscription plans, raise service requests, check their payment dashboard and refer to their friends and family.”
Technology integration at Voko manages business operations in strong and automated verification process, recurring payment solutions, and on-ground fleet management.
Although there exists a definite customer base for rentals, Voko will have competition from not just online furniture marketplace Pepperfry, which has a rental service now, but also companies like Zefo—which sell refurbished goods including furniture and large appliances and have buyback guarantee as well.
Also, its growth depends on the number of empty houses (which are not fully furnished). Most families prefer buying furniture to renting, which narrows down Voko’s target customer base to bachelors. However, India’s furniture and electronic appliances’ rental market is worth $1.2 billion, which gives Voko huge potential for growth.