Fashion-Tech Ecosystem
Second piece on the 3-article blog series on creating a B2B SaaS Product in Fashion
Hello Helloo! All you amazing people out there. I am Nikhil Kedia, working as a Product Manager at Adobe in the creative cloud team. This blog is about tech products and startups (from a PM perspective). This particular series is a result of my research on the immense scope of B2B SaaS business in fashion and my conversations with industry stalwarts. I have broken the series into 3 segments:
The first article laid the foundation for the B2B SaaS world. There we covered the opportunity sizing, customer journey, monetization and some other nitty-gritty of B2B SaaS. This one takes a dive into the fashion-tech ecosystem. In the final one, we will combine learnings from these two and introduce operation management.
The $500 Billion industry - Fashion Tech 💃🏻
The fashion-tech industry has several verticals. Startups like ‘ThredUp’ which is a Marketplace for buying and selling pre-owned clothes to ‘Rent the runway’ which is a fashion rental portal - both unicorns. Then come in B2B platforms, marketplaces and SaaS solutions. All in all, online retailers are there. Rental startups are coming up - slowed by covid. Brands are going online. Marketplaces for buying and selling coming up. But not really a B2B boom. And this is where the big gap lies.
Putting numbers to perspective
$500 billion → That is the size of the Global Fashion supply chain. The entire fashion industry is a trillion-dollar industry and the complete move to tech will take time.
$40+ Billion → That is the overall investment that has gone into fashion-tech with a boom recently. Partly accelerated by Covid. But even before that, during 2017-19, the funding in fashion-tech was $8 billion globally.
25K+ Companies → This is the number of companies/startups in this industry who have raised money. The major investors include Plug & Play, Nexus, Lightspeed, Accel, Sequoia.
The Desi Story - B2B Marketplace
India alone has produced 186 of 1250 companies in fash-tech over last few years. Ofcourse, Europe and US lead the way especially given big brands are concentrated in Europe. One of the startups, Fashinza, is about building a B2B marketplace for brands and manufacturers. They connect apparel manufacturers all across Asia with brands all across the world. Only recently they raised $100mn. Now why am I talking about them. They have cracked an important need; they have the first-mover advantage; and they are difficult to be copied because of the network that they have built by manually talking to the participants of the marketplace. But, this might not be enough to crack this industry. They might have to leverage this headstart and enter different stages of the PLM, provide SaaS solutions and allow the product to onboard more customers (brands and manufacturers) on its own - what we also call Product Led Growth.
Expand into SaaS or not?
Above is a good representation that I have crafted out for sectors relevant to Fashinza. If we see our talking point of the previous story - Lectra, it is doing everything. While connecting brands and manufacturers is great to build the platform, money lies in end-to-end supply chain creation.
But Abhishek Sharma, the co-founder, and COO of Fashinza has a different viewpoint about entering the SaaS business. Well, it did take me about a dozen messages but Abhishek was kind enough to get on a call despite his busy schedule. So let us hear it out directly from the man of the moment
Courtesy: YourStory
Fashinza - Excerpts from the COO
While Fashinza is not really a B2B SaaS which is the focus of this 3-article series, it forms a great story of an Indian startup in the fashion-tech industry. If the recent fundings are anything to go by, investors are clearly recognizing the potential of this industry and a connected marketplace. As Abhishek explains, Fashinza is primarily building tech for manufacturers and that is how it is creating a marketplace. Geography-wise, the prime target is South Asia (which includes countries like India, Bangladesh, Vietnam etc) as that is where most of the manufacturing lies. Over the past 12 months, Fashinza has seen a 10x growth, no kidding. And why not! Customers have reported over 25% decrease in costs and faster TATs, while suppliers have reported increased capacity utilization. Given that Fashinza has cracked an important need and is on its way of creating a place in the industry, questions around competition are bound to arise.
Competition and Opportunity
Like every cofounder, Abhishek wants to quash the idea of competition but he does acknowledge that more players like Growyo and Zetwerk have been coming up who provide ERP solutions for manufacturers. Something similar is also been done by unicommerce. In crude terms, Fashinza also provides an ERP system for the manufacturer, this one particularly in the fashion industry. The opportunity here is huge because it is across industries. For an example, Zetwerk is not really into fashion but into some form of manufacturing. Similarly, models once built can be expanded to different industries, akin to what Lectra had done in our previous story - from fashion to automotives and furniture. But even if we just focus on the fashion industry alone, this is a giant market. As per Abhishek:
What we have achieved is only 1% of the market size. Clearly, the scope is huge.
Catering to tech requirements for SMBs
On asking the challenge in building tech for people who might not be tech-savvy (given its customers include manufacturers based our of factories in Bangaldesh and Vietnam) - Abhishek does acknowledge the challenge. But he tells me that tech is something these manufacturers want. More than just a delight, it is a need. The prime challenge is ofcourse to build something that these people can use easily. So they have cracked this by giving a tablet as the platform. It sure does help with the marketing as well because users get a free tablet. They provide this at times to simplify stuff, while the tech interface is also enabled on phone and desktop. Clearly, an important learning here is creating the right infrastructure (in this case a tablet and easy to use application) for the right audience. It is not about building fancy stuff always.
Kal, Aaj aur Kal of Fashion
The fashion industry is clearly on its path to transformation and it is accelerated by Covid. Investors have realized the importance and potential boom and several founders across the world are lurking on the opportunity. But fashion does have quite a story. From the good old days of movies that showed how the garment industry made some people billionaires (aka Guru bhai’s Kerasilk), to the times when fashion-focused Nykaa launched a highly oversubscribed (and if I may say, overpriced) IPO - Fashion has come a long way. But the world of fashion is still not very technologically integrated and this is where the future roadmap of the fashion industry should be headed to. This was my drive to write the blog because I am pretty much certain that this industry is bound to change and we are in the early stages of it. Before winding it off, I just want to touch on the hype of the day - Metaverse. And see what is in it for Fashion
Fashion-tech in Metaverse
When it comes to the future, something that will lift up fash-tech and disrupt this industry is NFT. Creating a garment design, a fashion idea - is all artistic and everything art will be driven by NFT. The buck does not stop at NFTs as that is just to ensure fair transaction and right IP. In the world of metaverse, we will have avatars and the avatars will have a sense of fashion. And therefore you will have brands and content creators jumping on the opportunity. Infact, all of this has already started. Big brands like Nike, Gucci, Ralph Lauren, Burberry etc. already have a present in the metaverse. And you will get a glimpse of this if you look at Decentraland. It is a 3D virtual world browser based platform. A virtual world, a metaverse in its own right. Be it the cool hat that you want to buy for your avatar or that fancy jacket - someone had to create it in this world. Or may be someone just had to create an NFT out of an existing physical model. Whatever be it, the scope is clearly huge, primarily because there is a lot of potential flux of money involved.
Even in the times when the tech wasn’t as sophisticated, a game was launched by Linden Labs - Second Life. Content creators generated a lot of money, almost $60mn yearly from the sale of virtual assets. No wonder, fashion items form a major chunk of the assets and therefore there is a lot in it for creators. What is in it for B2B players like Fashinza or for B2B SaaS ERP systems like Lectra is still yet to be figured in detail. My hunch is every creator requires a platform ultimately and anything that makes it easier for creation and connection of multiple parties will thrive. This is a vast topic in itself, and I have not even peeled off the first layer. I think, if anyone wants to build something in fashion-tech, conversations on these lines should begin now. Startups like VRScout have already begun their work wrt this and I am excited.