[Bootstrap Heroes] How these IITians are bridging the gap between manufacturers and retailers in $108B garment industry

16th Jul 2016
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Four IIT Roorkee alumni ‑ Iesh Dixit, Kushagra Goyal, Kaustubh Kulkarni and Aditya Jha ‑ joined different startups immediately after graduating in 2015. However, within a month, they decided to quit and start something on their own.

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During their stint in the startups, they realised that there was a lot of issue in logistics and they decided to fix it. During mid-last year, they launched Probzip, a Jaipur-based on-demand logistics service platform for hyperlocal markets.

However, solving the existent logistics issue in the ecosystem wasn’t as easy as they imagined. Initially, they served mom-and-pop retailers to get on-demand deliveries to their customers. But, the demand varied too much. The platform was trying to build a consistent demand for the constant supply. Thus, they started targeting distributors and manufacturers for logistics. While working for manufacturers, they realised that there is a huge access barrier for manufacturers when it comes to sell their products beyond their geographical limitations. That’s when they realised the pain point of manufacturers and moved to Delhi to explore the demand side.

By December, they made a pivot to work on the new idea. By selling through a simple B2C website and shipping through local transport, they understood what will work for b2b buyers.

In February 2016, they launched Wholdus, a manufacturer to business e-distribution platform that connects manufacturers to retailers.

“We aim to streamline the supply chain by giving one-stop solutions for wholesalers and retailers, enabling them to purchase products directly from manufacturers at factory price,” says 23-year-old Iesh, Co-founder of Wholdus.

He adds that for manufacturers, the platform makes distribution simpler by leading them to the validated pool of legit retailers.

The revenue model of the platform is a commission based. It raises flat 10 percent commission on every transaction between manufacturer and retailers/wholesalers. The platform, however, claims that it has a bandwidth to raise the commission cap between 10 and 25 percent, based on the transaction. “As the transaction size increases on the platform, so will our commission,” says Iesh.

Dreaming big

With an initial investment of Rs 5 lakh from their savings, the platform has so far invested Rs 10 lakh, mainly in building technology, office infrastructure, and human resources. The platform hasn’t invested much capital on marketing and relies on digital and other offline methods for customer acquisition.

“For us, retention is the key. We have built an in-house data analysis and algorithm platform for customer retention. We call it Sales Engine,” says Iesh.

Presently, the platform has a buyer network of around 650 buyers and has reached out to five states. It claims to have distributed Rs 5 lakh value products from 40 manufacturers in the last month alone.

The Indian textiles industry, currently estimated at around $108 billion, is expected to reach $223 billion by 2021, says IBEF.

The industry is the second largest employer after agriculture, offering employment to over 45 million people directly and 60 million people indirectly. The Indian Textile Industry contributes approximately five percent to India’s GDP, and 14 percent to overall Index of Industrial Production (IIP).

“We are eyeing apparels and garment industry and aim to grow 30 percent month-on-month. We believe that we can keep up the pace and enhance it by pumping in more capital as we move on. Moving in the future, we are shaping ourselves to become an artificially intelligent distribution agent bridging the information gap for manufacturers about the local market,” says Iesh.

He adds that he will be launching handpicked gallery for his buyers, which is a necessary feature for B2B buyers, when there are more personalised purchases. He would also be launching more products and feature required by the market.

B2B segment booming

According to Ecumen, an Ahmedabad-based e-commerce consultant firm, the B2B segment of the burgeoning e-commerce industry in India is set to touch Rs 45 lakh crore by 2020.

There are many horizontal B2B marketplaces focusing on the market. Amazon, Industrybuying, IndiaMart’s Tolexo, Power2SME and Bizongo, among others are some of the platforms in the horizontal space, targeting SMEs.

IndiaMART, which recently raised an undisclosed amount in its Series C funding, plans to infuse more funds into Tolexo. The company claims to have invested Rs 100 crore into Tolexo.com over the last one year.

Power2SME, which raised Series D funding in January this year, claims to break-even in 2017. According to the company, it clocked a GMV of Rs 136 crore last year and looks to target around Rs 350 crore this year.

Complexities in B2B category

According to the platform, government regulations pose the major challenge when it comes to B2B segment.

"B2B transaction is not as easy as B2C. There are lots of government regulations such as C2C Form, inbound road permit, outbound road permit, and other regulations, which need to be taken care of,” says Iesh.

However, he believes that GST would offer solution to this issue and strengthen B2B’s market position.

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