Fashion and fashion industry have been growing and developing on the back of technology since forever. This is all a result of innovation; today technology is helping brands create and maintain more innovative textiles and supports increasingly sustainable textile production.
Digital transformation or digitisation of the supply chain is important and this is also backed by the fact that 70 per cent of executives from some of the largest manufacturing and retail organisations across Europe and North America, say they have already started a formal digital supply chain transformation effort. That’s where Zilingo comes into the picture. Even as there has been great advancements in the process with use of technologies like big data analytics, simulation tools, the cloud and supply chain visibility platforms such as ERP and PLM systems, there is still room to grow.
Zilingo initiated its journey in the year 2015 as an e-commerce platform for merchants to sell products to end consumers and later realised that while merchants had numerous ways to sell online in the B2C space, digitised supply chain solutions, such as expanding sourcing and procurement options, financing and downstream distribution, still were lagging behind.
Dhruv Kapoor, Co-founder and Chief Technology & Product Officer, Zilingo, elucidates, “We soon shifted our focus entirely towards B2B, with the aim to make the supply chain more transparent, fair and connected. Our USP is that we provide our customers with technology-driven supply chain solutions and focus mainly on two areas. First, procurement of ready-made as well as made-to-order goods on Zilingo Trade, our online platform that makes sourcing seamless and efficient, and lets brands work with our sourcing experts and our large network of verified suppliers. Secondly, we work with factories in the garment industry to increase efficiency and reduce waste using Zilingo Factory, our cutting-edge MES software which digitises tracking of quality and other metrics. In the last couple of years, we have witnessed factories benefit immensely from Zilingo Factory as it enabled them to make garment factory operations more trackable thus increasing efficiency and reducing waste.”
Zilingo works with brands globally, connecting them to its network of verified suppliers and with its technology providing them with transparency and visibility. The transformation from B2C to B2B platform, although challenging, was a vital journey for the firm.
“We created a roadmap to transition our proprietary technology to support the B2B use-case. Through this transition, we learnt various lessons that we incorporated into building our current suite of cutting-edge services and offerings,” avers Dhruv Kapoor. The Singapore-based supply chain solution provider launched its B2B platform in 2017 in Southeast Asia in order to enable procurement of raw material, ready-to-ship products and to source factories and manufacturers.
Zilingo has raised Series D funding of US $ 225 million in a round led by Sequoia Capital, Temasek, Burda Principal Investments, Sofina, EDBI, Singapore Investment fund, and existing investors in 2019, US $ 54 million in Series C funding and US $ 17 million a year before that, taking the total funding raised since the inception to US $ 304 million.
Technological integration and digitisation have become of paramount importance right now and enormous number of brands are now meeting technology head-on. They are investing in technology to offer the best of products to their consumers. Aiming to digitise this vast offline market is an enormous undertaking and Dhruv Kapoor is headstrong on this. Apparel Resources gets candid with the Co-founder. Excerpts from the interview…
AR: Elucidate on your business model. How do you generate profit?
Dhruv Kapoor (DK): Our revenue model is centred around seeking the best way to add value to our customers. There are two ways we do this. Firstly, Zilingo Trade enables our customers to seamlessly and transparently procure ready-made as well as made-to-order goods through our platform. In this process, we work with our network of credible suppliers and our team of sourcing experts. We charge our suppliers a commission for each order originating on the Zilingo Trade platform, and provide them with our Seller Center software to sell on Zilingo Trade and enhance their online presence.
Secondly, Zilingo Factory is a cloud-based SaaS (software-as-a-service) product for garment factories to track metrics, improve efficiency and reduce waste. We charge our customers a monthly fee instead of a high fixed cost. With minimal requirements for set-up and usage, factories only have to procure a handful of off-the-shelf Android tablets, our software which reduces capex risk and sets factories up for success.
AR: What are the services offered by Zilingo? What is the average cost a brand has to incur to avail your services?
DK: Zilingo’s services are centred around the key themes of procurement, distribution and efficiency. The technology we provide our customers increases transparency, enables seamless communication, automates workflows and expands distribution and procurement opportunities. While Zilingo Trade lets brands source from our network of verified factories and suppliers. Starting from the RFQ, our digital platform provides transparency through the supplier selection, sampling, production and delivery processes, in concert with our team of sourcing experts, Zilingo Marketing Services is a key value-added service on Zilingo Trade. Our network of high quality studios and our internal team of producers and creatives help brands with premium quality photoshoots, online ads, visual design and more. Furthermore, Zilingo Factory lets garment factories revolutionise how they track quality, efficiency, downtime and wastage by digitising quality and production progress tracking. And lastly, Zilingo Connect which is an omnichannel software that links a brands inventory with multiple e-commerce platforms, is bridging the gap between product procurement and online sales.
AR: How can all brands/ companies customise what they are looking for through the platform? What is the average lead time – from order placement to delivery?
DK: Zilingo Trade makes procuring both ready-made and made-to-order goods transparent and seamless thanks to our technology, our team of sourcing experts and our network of verified factories and suppliers. Here’s how it works: First, brands start by subjecting an RFQ (request for quote) on Zilingo Trade. This would typically include a tech pack file. Our team of sourcing experts then share this request with relevant verified factories and suppliers. These suppliers get notified and can view details of this sourcing request on Zilingo Seller Center. They must submit the price and timeline quotation for this RFQ, or reject the request. The brand is then presented with price and timeline proposals from multiple suppliers and can choose the supplier they’ll go ahead with. This supplier will then share a sample with the brand. The brand, supplier, and our team can discuss feedback on the sample seamlessly on Zilingo Trade and the brand can upload photos to pinpoint issues.
More rounds of sampling may happen before and after the selection of the supplier is finalised. Once production begins, brands can see the entire production process on Zilingo Trade from fabric procurement to cutting, sewing, finishing, packing, etc. laid out along with expected timelines for the completion of each milestone. Finally, once the order is shipped, we keep the brand updated on shipping status and timelines.
Since many of the suppliers on Zilingo Trade are factories which also use Zilingo Factory software to track factory-floor operations, we’re soon rolling out the capability for participating factories to share relevant production updates automatically via Zilingo Factory. This will increase transparency for brands and also help factories establish trust with brands and save time on sharing regular production updates. The overall lead time from order placement to delivery for made-to-order goods is 6-8 weeks for apparel and 2-4 weeks for fabric.
AR: Elucidate on the technological integration in the firm. How do you use the power of data for your offering?
DK: To begin with, it’s helpful to understand that the challenge of digitisation in the context of B2B and supply chain is very different and more challenging than that in the traditional B2C context. In the B2C context, consumers buy standardised products in small quantities, making shipping more straightforward, and payment is made upfront. Challenges around stock availability, payments, shipping volume and customisation are mostly absent.
However, with B2B there is a higher degree of variability — shipments can be the size of a carton or a container, payment could happen in multiple tranches and very often in concert with bill discounting or other forms of financing and brands may buy either ready-made or made-to-order goods. Our technology makes product discovery, search and the sourcing of made-to-order goods straightforward. Also, our technology integrates dozens of logistics providers, payment gateways, and fintech partners into our seamless checkout and order flow, making the whole process of sourcing from a factory or supplier easy and seamless. Making this seamless involves the coming together of software development, UX design, big data and data science and of course industry expertise.
Our approach is not to force-fit technology into the problem we are solving, but instead to listen to our customers and evolve our products using data and feedback. We also rely on data to improve our product experience. This is in the form of qualitative data, such as feedback from the brands, factories and suppliers we work with, as well as quantitative data, which means analysing usage patterns on our products. Finally, we invest a lot in user experience to make our products very easy to use for the entire gamut of customers we work with.
AR: How is digitisation taking over the overall apparel segment, among other industries? How is the industry accepting a platform like Zilingo right now?
DK: COVID-19 disproportionately affected SMEs and retail businesses, especially in the fashion and lifestyle space. Our team worked with brands suppliers to ameliorate the economic impact of the COVID-19 pandemic by helping them distribute and procure online on Zilingo Trade and access digitised sourcing, invoicing, logistics, payments, etc. speedily. While COVID initially resulted in a direct hit to our sales, this rapid move towards digital channels has led to a quick recovery and a huge improvement in profitability since then for us.
Brands are increasingly leveraging technology to overcome sourcing gaps, and have started to see decreased lead times and increased efficiency. We believe these changes, while accelerated by COVID, are long-term shifts in how brands tend to source.
Also, geopolitical issues and the pandemic have made companies re-assess their exposure to China’s textile and clothing exports. Brands are looking towards South East Asia and South Asia to diversify the suppliers they work with, and need sourcing expertise and technology to make the sourcing process transparent and efficient. Our objective is to provide value to businesses through our technology and expertise by making procurement, distribution and manufacturing more efficient and seamless. Although customers can sometimes be skeptical about incorporating new technology into their business, once we demonstrate how it works and how it simplifies their sourcing, distribution and manufacturing processes, we find that customers are quite willing to use newer technology.
AR: Tell us about your international presence. Which market brings in the maximum revenue to the firm?
DK: Zilingo has teams based in South East Asia, India, Bangladesh and Sri Lanka. We work with brands, distributors and factories in these regions, as well as brands in South America, Middle East, Europe and North America.
With regard to revenue, a bulk of our customers who buy ready-made goods are from Indonesia, Thailand and the Philippines. Customers who source made-to-order goods are generally in India as well as internationally, such as in North and South America, the Middle East and Europe. Customers who use Zilingo Factory software are based primarily in India, Bangladesh and Sri Lanka.
AR: How were operations at Zilingo affected due to the pandemic and the subsequent lockdown? How did you cope with the same?
DK: The pandemic has been a challenging and difficult time for businesses and communities around the world. At Zilingo, the pandemic presented two challenges. Firstly, we had to quickly restructure our internal operations due to the need to work-from-home. Being a technology company, this transition was more seamless than expected.
Secondly, we had to understand the challenges the pandemic would pose for our customers. With retail closures and financial uncertainty, demand for fashion fell, affecting brands and suppliers. Many garment factories also had to close operations due to lockdowns. At this time there was a surge in demand for masks and PPE kits, and we adjusted our category focus numerous times in 2020 to respond to evolving market conditions.
Most crucially, however, we doubled down on our focus of digitising the supply chain with our suite of products. Digitisation will help brands and suppliers respond to the need to be more agile, respond to changing consumer trends faster and avoid excess inventory.
AR: What’s your vision for 2021?
DK: 2020 was a challenging year for everyone, but it was also packed with immense learning. We made tremendous strides in terms of growing our customer base, digitising procurement of made-to-order goods on Zilingo Trade, improving the Zilingo Factory software offering and refining our value added services.
The fashion industry and all supply chain stakeholders will continue to face new challenges in 2021 as well and we feel that greater digitisation will be a powerful part of the toolkit to take these challenges on. In 2021, we want to listen to our customers better to understand their evolving challenges and continue our focus on creating powerful supply chain products for brands, factories and distributors.
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