Several online portals and apps have made the online shopping experience easier for people. But what happens to the unbranded neighbourhood retail fashion stores? In most cases, these stores source finished goods or cloths from traditional wholesalers and traders. To make life easier for these retailers, 33-year-old Rohit Dangyach, an IIT Roorkee and IIM Bangalore alumnus, started WholesaleBox.
WholesaleBox is an e-commerce portal for traditional wholesalers and traders in the unbranded fashion and lifestyle category. It helps retailers get vast variety of clothing and fashion goods right at their doorstep.
Catering primarily to the unbranded and regional brand goods market, Jaipur-based WholesaleBox claims to sell goods at less than 25 percent to what the stores would normally get.
Bridging the gap
“There is an immediate need for an efficient procurement and distribution model in the unbranded goods market. The market size accounts for approximately 70 to 95 percent across majority of the industry,” says Rohit, a former Cardekho employee.
The thought behind WholesaleBox was born when Rohit noticed that the stocks were offered at a wholesale price of Rs 350 to some of the retail outlets. The same stock was later sold for Rs 295 to a trader in Mumbai and was bought at Rs 250 from a factory in Jaipur.
Looking at this price gap, Rohit thought it would be best for retailers to buy goods online directly from the factories, thereby saving close to 30 percent of the channel margin. When Rohit received a positive response from a few traders and retail owners he spoke to, he decided to start WholesaleBox late last year.
After freezing on the idea, Rohit decided to build the core team. He roped in his friend Chandan Agarwal, an MBA graduate and an investment banker, who had a backpacker’s hostel chain, to join in as a co-founder. He also met Rakesh Shekhawat, who ran a Software Services Company at startup oasis incubator, and Madhur Bhaiya, an IIT Delhi graduate.
They found it difficult to get good quality manufacturers on board to sell on the platform. Rohit adds that their initial quantities were also low.
“These manufacturers hated the word online as some of them had tried selling on B2C portals and they had bad experiences because of single shipments, returns, lack of transparency and accounting hassles,” says Rohit.
Some of them were not very educated to handle the complex reports and payments of online B2C players and made losses because of high charges. However, they managed to rope in few factories.
WholesaleBox connects manufacturing and retailing businesses for transacting goods on their platform, and it removes close to seven intermediary layers and brings the costs down by at least 20-30 percent.
This enables shops to sell their products at a much lower rates than online / offline competitors.
Breaking the middlemen loop
Currently, a retail shopkeeper either procures through intermediaries or by travelling to manufacturing hub. In case of purchase through intermediaries, the prices of the product increases. The middlemen were making these margins only by knowing who the seller and buyer was.
In case the retailer travels to the manufacturing hub, he has to leave the shop, incur travelling expense, and has to buy at least two to three months of inventory in the limited travel time and the design available in the market at that point of time.
“By buying through WholesaleBox, a shop can easily breakdown his orders in several orders of smaller quantities based on the demand and fashion trends,” says Rohit.
This reduces the working capital requirement from few lakhs to few thousands and the retailer always has the latest design at his shop.
From manufacturers’ perspective, they get a pan-India reach to shops. In traditional model, manufacturers suffer from lengthy working capital cycle of two to three months and SOR (sale or return policy).
Manufacturers selling online incurred astonishingly high online selling costs of approximately 30 to 35 percent and then accommodate additional costs of photoshoots, inventory, warehousing rental and salary costs, cost of returns.
The manufactures sell complete sets through WholesaleBox resulting in zero dead stock. The working capital cycle is reduced to approximately 15 days and they get to sell across India. They also get analytics to help them modify their manufacturing plans. WholesaleBox also has a tie up with lendingkart to provide 30 days credit to shops buying through their platform.
A booming B2B market
The B2B e-commerce market is fast growing. A report by the Frost & Sullivan suggests that by 2020 the B2B e-commerce market will be worth $12 trillion. This trend makes B2B e-commerce almost two times bigger than the B2C market.
A research report by Frost & Sullivan suggests that Alibaba is a pioneer in the B2B e-commerce space with a GMV of a whopping $27.28 billion. In India, the B2B e-commerce market is expected to touch $674 billion. Currently, China, USA, and Japan are the biggest market drivers of the B2B e-commerce market.
WholesaleBox claims to have over 7,000 registered shopkeepers with over 20,000 shopkeepers browsing through their catalogues and interacting on the platform. Rohit claims that their monthly GMV has been growing at average rate of 20 to 25 percent.
The other players in the space include Wydr, founded by ex-Shopclues founding member; IndustryBuying, a B2B platform for industrial products. Currently bootstrapped, the team claims to be in talks for their first round of funding.
The platform plans to grade and rate buyers as well as sellers along with providing them a seamless transaction experience on the platform.
The team aims to tie up with wholesalers across the country. The team now has more than 200 Jaipur-based manufacturers and are also getting in requests from Surat, Mumbai, Ahmedabad, Delhi and other manufacturing hubs.