A concept barely heard of even a couple of years ago, Marketplaces are now being hailed by many as key to B2B’s future.
The fact that B2B Marketplaces offer benefits like digital capabilities, scalability, financial inclusion, end-to-end transparency and accuracy in analytics, give a new dimension to these platforms, which have evolved to offer improved business experience, thanks to technological proliferation such as application of artificial intelligence (AI) and cloud technology.
It was just a matter of time before B2B Marketplaces emerged as the principal disruptors as they tried to revamp the ruptured conventional textile supply chains by taking almost all the laid-down processes onto digital platform, which they did.
“There is a huge potential that exists for online B2B businesses,” says Co-founder and CEO of India-based Marketplace ReshaMandi, Mayank Tiwari, adding, “The apparel manufacturers and suppliers can see a considerable increase in their income as it opens a wider market and makes the entire supply chain effective and efficient.”
ReshaMandi is India’s first and largest Marketplace, started by Mayank Tiwari, Founder & CEO and a NIFT gold medallist with 13 years of cross-domain experience in retail, supply-chain and handloom sector along with Saurabh Agarwal, Founder & CTO, with 15 years of experience in the areas of deep technology, software architecture, innovation and deployment.
The very presence of 40 B2B players (in India) is proof enough of the opportunities that exist and the significant value that can be created across the ecosystem, feels Mayank.
With more and more players joining the bandwagon (both from the demand side and the supply side) now, it will altogether add a new facet to this fast-catching disruptive trend.
“B2B Marketplaces allow a seller to increase its reach manifold. The mechanisms of finding new prospects online are way beyond what one can achieve with one-on-one meetings and pitches. A Marketplace is always an expo – open 24×7 and 365 days. Today, being part of the online world is a given for any business that wants to reach a wider audience, locally and globally,” Mayank avers even as he underlines with the passage of time and as the industry matures, there will come a stage when the majority of transactions will happen through online Marketplaces.
How B2B Marketplaces work?
Unlike the concept, which is still new for many and perhaps needs a little longer to comprehend, the working of these platforms is very simple and rather straightforward.
They 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 – subscription model-based, listing fees-based and commission-based, giving one a wide array of options to choose from based on what works best for one.
However, one needs to keep in mind that B2B Marketplaces serve many industries and are not one-size-fits-all. So how one selects and engages with Marketplaces is of prime significance as they look to streamline business-to-business procurement and sales by acting as a digital intermediary between the buyers and the sellers.
In short, B2B Marketplace platforms reduce the cost and complexity.
As per Griffin Schroeder, the Partner in American investment firm Tiger Global, the sourcing market is now poised for a major transformation as supply chains for fashion and lifestyle goods move to South Asia and Marketplaces, if industry insiders are to be believed, will have a major role to play in this.
“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,” comments Asif Hossain, Co-founder of eRMG.
The SaaS platform of Bangladesh aims at simplifying garment sourcing for retailers and manufacturers.
“eRMG provides a core fundamental need that every buyer looks for during their sourcing journey: to be able to trust and rely on their vendors. With our validation and audit team, every supplier that onboards eRMG must undergo unique and transparent verification process, which helps establish reliability and compliance between the parties involved,” informs Asif, adding, “eRMG also assists in opening up a path of negotiation for suppliers, so that they can receive better value for their manufactured goods.”
eRMG’s SaaS offers services such as providing a virtual presence for order and supply chain management; complete accountability of manufacturers for due diligence; streamlined processes with the help of an efficient data-driven routing algorithm; generating diverse order ranges from non-traditional buyers of the market; educating buyers on how to convey their requirements to suppliers professionally; project management utilisation across all processes in the apparel supply chain; communication suite within its SaaS to shorten the feedback loop and lead time; vendor-managed inventory for material sourcing and planning; design recommendation for hassle-free product development; and live updates of production activity and commercial documentation.
Although Bangladesh is eRMG’s initial market where it has been conducting extensive studies to learn its implementation, eRMG has plans to expand into other South Asia, ASEAN and European markets.
It may be mentioned here that 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 while to ensure business promotion, credibility, compliance of stakeholders and production monitoring, the Marketplaces use technology tools even as they organise buyers’ physical visits to the manufacturing units.
Choosing the right platform!
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.
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 transactions.
The list just goes on.
So choosing the right Marketplace for a company, especially a vendor/supplier remains a vital 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 thus highly recommended for a factory to give a thorough look into all the aspects before deciding to partner with a Marketplace even as ideally, the first and foremost thing that a manufacturer 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 B2B Marketplaces are also supporting the manufacturing industry as fintech, some of the companies, especially in India, are taking their services for this particular requirement only and in such a scenario, a comparison of the terms and conditions of these platforms is very much required.
For example, ReshaMandi’s recently launched ReshaMudra offers personalised credit solutions for the textile industry as it breaks new grounds in the realm of financial inclusion, aiming to have exclusive tie-ups with banks and Non-Banking Financial Companies (NBFCs) to facilitate business growth with a moratorium period of up to three months, attractive interest rates and a turnaround time of seven days for the partners concerned.
Further, as an industry-first initiative, ReshaMudra will also offer short-term financing in the form of the Buy Now, Pay Later (BNPL) scheme.
“We have taken service of ReshaMandi but as a fintech only, not on the sourcing or sailing front and it was overall good experience,” says MD of Dehradun-based GBKC Global, Ritesh Sapra.
Incorporated on 17th May 2021, GBKC Global Private Limited is a leading manufacturer of quality readymade apparel from the state of Uttarakhand in India.
What’s in Marketplaces for brands and retailers?
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.
They reduce process costs associated with managing transactions. 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 and 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 the suppliers.
“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,” claims Narinder Kaur, Head Marketing, Turtle Ltd., Kolkata, while adding companies on the B2B platforms are driven by logic and financial incentives.
This makes one’s marketing and selling strategy sharp even as one’s product becomes the focal point as the value paid against the service offered has to be directly related and one therefore needs to invest in new product development strategies.
For information, 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.
Factors working in favour of B2B Marketplaces
Normalcy returning now to the business after the widespread Covid-19 pandemic, B2B Marketplaces are on a newfound growth momentum leveraging digitisation to integrate the largely fragmented mid-sized factories, where the 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 and Marketplaces 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, are leveraging these avenues to charter new growth opportunities.
“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,” says Ridam Upadhyay, Co-founder & CTO of Groyyo, from Gurugram, which is one of the major satellite cities of Delhi and part of the National Capital Region (NCR) of India.
Co-founded by Subin Mitra, Pratik Tiwari and Ridam Upadhyay in July 2021, Groyyo is a cross-border B2B Supply Chain enablement company that offers services to SME manufacturers in the fashion and lifestyle categories across South Asia.
Dhruv Kapoor, Co-founder of Bengaluru-based Zilingo says, “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 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 institutional customers.”
Founded in 2015 by Ankiti Bose and Dhruv Kapoor, the Singapore-headquartered Zilingo is a technology and commerce platform in the fashion industry and has operations spanning Indonesia, Hong Kong, Thailand, Philippines, Australia and the United States.
Sustainability, responsible sourcing and transparency lending strong weightage
As sustainability 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 even if some Marketplaces do have their own code of conduct which lay down 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 along 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 big challenge in the traditional style of working.
But, if one thought, Marketplaces are all about positives, there still remain a few bottlenecks to address for sure.
Bottlenecks that seek attention
A large chunk of the industry is still not well aware about how the concept works and many of those who have already worked with Marketplaces also seem to have some reservations with their overall working.
For example, 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 while exporters doing value-added garments are of the opinion that the tight costing of these B2B Marketplaces was a major obstacle as they insist on prices that aren’t workable at all.
Only basic and high-volume apparel can be produced under the condition given by these platforms, claimed many in the industry even though few of the firms, working with such platforms claimed to be getting reasonable prices.
But they too have their apprehensions.
“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, as well as the majority of team members who deal with clients at mid-level, don’t have complete knowhow about the product,” observed Kapil Kamra, Director of India-based Common Sourcing Solution (CSS).
CSS is a marketing and sourcing partner for textile value chain, sourcing all kinds of woven/knitted fabrics, yarns and accessories.
Then there are those who already have reasonable business with existing buyers, and don’t wish to work indirectly as they are more comfortable working through buying houses directly, the traditional way that they are used to for long.
Suppliers are also concerned about sharing competitive pricing data and resist the substantial conversion costs and efforts associated with joining each new Marketplace.
Nevertheless, the kind of funding the Marketplaces are able to command — Marketplaces are using the funding to strengthen 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 — to ensure that they don’t have to struggle with resources and can aggressively work on their plans and executions, are proof enough of their rising popularity and not to tell the future prospects.
Also to be taken into consideration in this aspect is the scalability quotient of these B2B Marketplaces and, at the same time the increasing difficulties in traditional working of buying and supply, which turn things in favour of Marketplaces, especially with reference to those who want to touch new horizons using the new-age solutions.
After all 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.
Someone thus well said, “Great Marketplaces do not simply aggregate a market; they enhance it.”
What more can one ask for!
FACT SHEET:
- 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.
- As per a study, the global business-to-business e-commerce market size was valued at US $ 6,883.47 billion in 2021 and is projected to expand at a compound annual growth rate (CAGR) of 19.7 per cent from 2022 to 2030.
Some key features of B2B Marketplaces
- Building product design development capabilities for vendors
- Enabling buyers to source small order quantities with ease
- Financial help to vendors to assist them fulfil orders in shorter lead times
- Making easier textile and raw material (trims, accessories, and threads) sourcing
- Tracking status remotely becomes easier for buyers with digital tools integrated in tech-driven platforms
- Offering end-to-end supply chain visibility as transparency is at the forefront of the Marketplace model
- Freelance sourcing experts help buyers find right suppliers for their sourcing needs
- Giving boost to ‘Responsible Sourcing’
- Building a sustainable ecosystem for workers/artisans through better living wages
- Keeping buying cycle time minimal and eliminating complex procurement practices
