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A concept that was barely heard of even a couple of years ago is now being brought up on the table in almost every discussion within the fashion sourcing fraternity. B2B Marketplaces have charted their own growth path, especially in India as they try to revamp the ruptured conventional textile supply chains by taking almost all laid-down processes onto the digital platform.

The advantages, unlike before, are that the suppliers and buyers need not invest time and resources to search and find each other out nor worry about order status or financial transactions, as things go online.

So, are digitalising processes the prime force behind the mercurial rise of B2B Marketplaces? There are other factors too, adding to the growth momentum of B2B Marketplaces that are related to market disruptions. The fact of the matter is that a large part of the traditional supply chain in textile and apparel industry faced a significant setback during Covid-19 and stakeholders such as large manufacturers, SMEs, distributors as well as retailers underwent severe efficiency loss in the key procurement processes, especially where sourcing decisions were taken in an unorganised environment, which lacked both credibility and accountability, helping the cases of B2B Marketplaces  further!

Taking advantage of this erratic scenario, B2B Marketplaces emerged strongly to offer B2B buying and sourcing through online platforms at reasonable prices and shorter delivery times that in time would prove to be the game changers.

What’s more, the B2B Marketplaces are focused on the all-important aspect of standard credit terms, considered one of the most vital issues impacting the textile industry, reeling under severe cash flow shortage.

Normalcy returning to the business now, B2B Marketplaces are on a newfound growth momentum leveraging digitisation to integrate the largely fragmented mid-sized factories, where scope of improvement is massive.

The inclination towards these factories is obvious. With the rise and dominance of D2C fashion brands, the future of sourcing is going to be dominated by these factories, thanks to their agility to effectively cater to smaller orders.

Today, there are over 40 such platforms offering specific expertise and niche, right from providing end-to-end online ordering for buyers, tracking production on the factory floor, working for lower MOQs (minimum order quantity) as well as bulk orders, to improving factories’ efficiency and ensuring ethical production.

Dhruv Kapoor, Co-founder- Zilingo,  Bengaluru told, “Zilingo Sourcing gives brands a one-stop online dashboard for all their apparel procurement needs. Brands can upload designs, get quotations, review supplier certifications and source hassle-free from Zilingo. Our use of technology means that we can offer faster turnaround times and lower MOQs, as well as cut down on inefficient communication and process bottlenecks. We’ve been able to deliver value to larger and more established brands, to newer direct-to-consumer brands, and to institutional customers.”

Foursource, Fashinza, Groyyo, Reshamandi, Zilingo, Geniemode and The Yarn Bazar are just few names that have created a great niche for themselves in a very short span of time. They work more like business facilitators rather than just being aggregators. Take for example Groyyo, just a year-old B2B Marketplace, that claims to empower over 350 apparel and textile manufacturers across 150 product categories by maximising their manufacturing potential.

Ridam Upadhyay, Co-Founder & CTO, Groyyo, Gurugram said, “Our job is to make sure fashion brands which are directly working with manufacturers have an overall good experience and we have to reduce all their problems. Things are there in fragmentation and we connect all of them as we have data and technology.”

As per a McKinsey report, 70 per cent of B2B decision makers are open to making a remote purchase in excess of US $ 50,000 and around 30 per cent are ready to spend more than US $ 5,00,000. There are B2B Marketplaces which claim to grow over 20 times in the last one or two years. These Marketplaces have been able to design and deliver an offering that addresses multiple issues in the supply chain. 

These platforms have members from various segments of buying and vendor’s sides who can place orders and cater to these orders. To get associated with Marketplaces, there are diverse business modules like subscription model, listing fees and commission, enabling a company to choose what works best for it.

To ensure business promotion, credibility, compliance of stakeholders and production monitoring, the Marketplaces use technology tools while also organising buyers’ physical visits to the manufacturing units.

On the technology front, Artificial Intelligence (AI)-integrated tools are working in favour of these platforms to boost efficiency and give real-time status of the work in progress to the buyers. Some of them also work as automation companies, and have Manufacturing Execution System (MES) integrated to their respective platforms to improve an apparel factory’s overall output.

“We first give work to manufacturers and later whatever, wherever improvements are required, we do so to empower them,” says Ridam.

Financial transactions through online Marketplaces have always been considered vulnerable to frauds. More so, procurement of materials online is considered a risky proposition due to concerns over performance, availability and security (of the materials purchased) as sellers may not disclose data related to the product quality, legality of use and warranty, resulting in operational failure at times.

Therefore, safety in financial transactions is of utmost importance. Hence, to secure such transactions, B2B Marketplaces also follow a legal system like proper contract with minute details and, another important aspect is that many Marketplaces pay reasonable advances to their suppliers, more than what they received in the traditional systems.

B2B Marketplaces enable pathways for retailers and address many important issues that plague supply chains, from product development to merchandise allocation and planning.

They represent much greater potential value than merely reducing purchasing costs through aggregation.

This reduces process costs associated with managing the transaction. Overall increased coordination amongst buyers and suppliers, eliminates or reduces delays in critical steps in the supply chain, decreasing the need for unplanned airfreight shipments and, ultimately, fewer markdowns. Shortening cycle times lower inventory carrying costs too. Improving information flows permits retailers and suppliers to better monitor the flow of goods through logistics systems. All this leads to increased revenue for retailers as well as suppliers.

Narinder Kaur, Head Marketing, Turtle Ltd, Kolkata shared, “The demand and the reach generated on these platforms is a revolution that cannot be ignored. For quite some time, Turtle has been exploring Marketplace opportunities. From a brand awareness point of view, this platform has really been a go-getter.” She further added that companies on the B2B platforms are driven by logic and financial incentives. This makes one’s marketing and selling strategy sharp. One’s product becomes the focal point as the value paid against the service offered has to be directly related. One therefore needs to invest in new product development strategies.

Research shows that over 75 per cent of B2B purchases are taking place online, so there is a strong need for a solid online presence. These platforms also enable to capitalise on existing buyer demand to expand the customer base nationally as well as globally.

Retailers, manufacturers and suppliers in apparel and textile industry look for convenient channels to reach a large audience for their buying/sourcing needs as well as to cut down marketing and operating costs. Therefore, leveraging the right Marketplace ensures reduced supply chain costs, product costs via enhanced efficiencies, and increase in revenues due to timely delivery as well as reduced process costs associated with managing the transaction and the list goes on.

The 40 B2B Marketplaces that have emerged in the last few years in India are seen as having similar strengths and services, so choosing the right Marketplace for a company, especially a manufacturing factory, still remains a critical issue.

The factories should first understand why they want to be on a B2B Marketplace. Is it just to find new buyers? Is it to develop expertise in product development? Is it to go for responsible raw material sourcing? Or, is it to increase visibility into their factory processes without getting into physical efforts? It is highly recommended for a factory to give a thorough look into these aspects before deciding to partner with a Marketplace.

Ideally, the first and foremost thing that they should look for is – how financially stable a B2B Marketplace is! And, do they have enough (and relevant) stakeholders from the factory’s target audience? As mentioned earlier in the feature, most of the Marketplaces give priority to working especially with SMEs and there are a few product-specific B2B Marketplaces too such as Farbikaa – a Pune-based B2B Marketplace dedicated to T-shirts specifically.

Similarly, many B2B Marketplaces are working with home furnishing companies, fabric mills and even yarns and fibres companies, covering the entire spectrum of the apparel and textile value chain.

As B2B Marketplaces are also supporting the industry as fintech, some of the companies are taking their services for this particular requirement only. In such a case, a comparison of the terms and condition of these platforms is very much required.

Ritesh Sapra, MD, GBKC Global, Dehradun told, “We have taken service of ReshaMandi but as a fintech only, not on the sourcing or sailing front and it was overall good experience. Fabric mills are not giving much credit period while with the help of B2B Marketplace, we got an extended credit period.”

As sustainability has moved from a mere concept to become a norm in the fashion industry, B2B Marketplaces are integrating tools in their platforms that help vendors and buyers in responsible sourcing, assist in end-to-end visibility and build a sustainable ecosystem for workers/artisans through better living wages.

These tools keep a track of labour practices. Some Marketplaces do have their code of conduct which has the condition that for signing up for a membership on this platform, buyers and suppliers have to agree to comply with and adhere to the code of conduct and with the applicable laws and regulations of the countries in which they conduct business. This includes all basic rules and regulations. And, this process is for all to see, which still is a challenge in traditional working realm.

For example, Fashinza claims that by 2030, it wants to build an environmentally net positive supply chain at a scale that doesn’t even cost extra. Similar is the thrust of a few other platforms such as Foursource that is a firm believer in ‘smart, transparent and sustainable business’.

B2B Marketplaces have approached many brands and retailers, but many of them so far have not started working with these Marketplaces. A leading sportswear brand, having good retail presence in India as well as having huge sourcing for its overseas stores, has been approached by many Marketplaces, but so far it has not sourced anything through any of them. A senior sourcing official of the company told on the condition of anonymity, “We are very particular about the traceability of raw material right from yarn or even fibre. So we prefer to work directly with any vendor.” He further added that as B2B Marketplaces claim to have the technology required to ensure traceability, they could be explored.

A strong reason that ensures the growth of these Marketplaces is their strong funding (Refer Box 1) so that they don’t have to struggle with resources and can aggressively work on their plans and executions.  The Marketplaces use this funding for strengthening teams across key manufacturing clusters in various manufacturing and buying countries, for technological and physical upgradation of manufacturing partners, and invest aggressively in product and technology development to create a more efficient and sustainable ecosystem.

Griffin Schroeder, Partner, Tiger Global (an American investment firm which has invested in Indian B2B Marketplaces) believes that as supply chains for fashion and lifestyle goods move to South Asia, the sourcing market is poised for transformation.

Apart from the strong funding, another strong aspect in the favour of these Marketplaces is their strategic partnership with credit platforms, acquiring start-ups in software as a service (SaaS) domain that are helpful to the textile and apparel industry. These steps are helping the Marketplaces to have a one-point solution for all kinds of needs in the textile and apparel business.

“Our model brings about a paradigm change in making the supply chain transparent. We strive for accountability, transparency and reporting. Users are not forced to be transparent but are incentivised to be transparent, by recording the whole journey on one central platform,” commented Asif Hossain, Co-founder, eRMG which is one of such SaaS platforms.

Despite all the above-mentioned benefits and ample opportunities, still, a large portion of the apparel industry including export as well as domestic are not associated with these platforms at all. Even a large chunk of the industry is not well aware about how the concept works. Many of those who have worked with such Marketplaces, are not content with their overall working.

Despite all the benefits, some of the brands still don’t have any requirements or need B2B Marketplaces at least for now as Thanveer Ahmed, Director, Raw Materials Sourcing, Ralph Lauren Sourcing, Bengaluru says, “We have direct sourcing, strong vendors based on our needs, changing requirements. There is no need as such therefore to take support of B2B Marketplaces.”

Procurement of materials online is considered risky due to concerns over performance, availability and security of materials purchased as sellers may not disclose data related to the product quality, legality of use and warranty resulting in operational failure sometimes.

Exporters doing value-added garments are of the opinion that the tight costing of these B2B Marketplaces is a major challenge as they insist on such prices which are not feasible at all. Only basic and high-volume apparel can be produced under the condition given by these platforms.

Vimal Shah, MD, Goodwill Impex, Jaipur commented that he was approached by a leading Marketplace and placed some orders also. But due to unrealistic costing of the Marketplace, the business was discontinued by this export house which is mainly into value-added womenswear.

DaMensch, India’s leading apparel retail start-up, has also worked with the Marketplaces but it did not prove to be quite beneficial. Vasanth Kumar, Head of Sourcing and Merchandising of the company strongly believes that the teams of these platforms involved in buying sourcing process don’t have a very deep understanding of products, and issues arise while dealing with critical products. They should have equal thrust on their technology part and visibility as well as product team which should be well aware about all aspects of the garments, nitty-gritties like the type of raw material used, quality, etc. However, it is being said that over the years, Marketplaces have improved with the hiring of product-specific professionals.

Vasant also adds that the platforms are better in terms of technology, aggressive approach and the global net. “Sourcing from overseas through these platforms can be comparatively good as they have a good network and for Indian brands, it is comparatively difficult to source from overseas initially,” he said. DaMensch has explored four Marketplaces so far.

Few of the firms, working with these platforms and getting reasonable business too, have their apprehension about these Marketplaces.

Kapil Kamra, Director, Common Sourcing Solution, Gurugram, a growing fabric trader working with some prestigious companies and brands, has worked with four leading B2B Marketplaces in last almost one year. He stated, “I still don’t have much confidence in these Marketplaces that they will be really long-lasting.  There is no strong leadership at the top level as well as the majority of team members who deal with clients at mid-level don’t have complete knowhow about the product.”

A big segment of the industry, especially apparel manufacturers, are not willing to work with these platforms and there are multiple reasons for it like they are having reasonable business with their existing buyers, and don’t wish to work indirectly as they feel more comfortable in direct working or working through buying houses because they are used to do their business from decades in a similar way and don’t see any major issues in this way of working. Suppliers are also concerned about sharing competitive pricing data and resist the substantial conversion costs and efforts associated with joining each new Marketplace.

Limited capacity is also a challenge hindering the growth of B2B Marketplaces as there are many such companies which have limited capacity or whatever capacity they have, often remains booked.

Few of the companies having very large scale of operations are not content so far with the orders they have got through these platforms as they are looking  for bulk orders. “We keep getting enquiries but there are no potential leads so far. There were few orders we did through Foursource,” said Alagesan Senniappan, Sr.VP Quality Assurance/ CSR/ Sustainable Textiles, Eastman Global Exports Tirupur

“In domestic, we are working with most of the leading players in our product category (shirts) and our capacity remains almost completely utilised. So till now, we don’t require the B2B Marketplace support to add buyers. But in future, when we will have more capacity for export, we can explore these platforms,” said Ritesh Sapra.

Indeed, industry insiders are also of the opinion that the companies having their own resources, enough client base and systems in place don’t see any reason to work with these platforms. Apparel Online also got to know from industry insiders that few of the Marketplaces don’t have enough team members and professionals and their employees are forced to do multitask beyond their limits.

Looking at the scalability of these B2B Marketplaces and, at the same time increasing difficulties in traditional working of buying and supply, things are totally in favour of those who want to touch new horizons using new-age solutions.

As Marketplaces add value not only through their services but also by being the strategic partners to the retailers and manufacturers, right from pre-production to delivery, more and more stakeholders of the industry are in process to associate with Marketplaces.

However, while it’s been established that the B2B Marketplace users prefer remote human interactions or digital self-service due to reduced travel expenses, ease of scheduling and safety, these Marketplaces need to evolve and continuously add value for their users by incorporating more tech-interventions to explore future trends in fashion retail and manufacturing business that offer wider opportunities to the associated companies. ​

The concepts like Metaverse and Digital Twin are being integrated in fashion retail and manufacturing industries, respectively, but, as of now, no Marketplace has been able to integrate these concepts into their platforms which therefore remain as untapped opportunity.

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