Digital tools connect India’s MSME garment retailers and manufacturers

Why we invested in Showroom B2B, a digital platform streamlining and strengthening micro, small, and medium size (MSME) manufacturing and retail apparel businesses in India

AUTHOR

Ishan Mishra

As India’s garment industry flourishes, thanks in part to the country’s expanding middle class, robust manufacturing sector, and rise in tech savviness, it continues to be a major source of employment. The apparel retail sector now employs 45 million people in India, the majority of which are women, and an additional 100 million people work in adjacent industries.

While this growing sector offers vast economic opportunities, it’s also contending with numerous challenges, especially for India’s small, independent garment retailers and manufacturers. Small local retailers are essential to building the industry, making up more than 92 percent of total sales. However, many lack access to digital tools and formal financing options, which prevents them from optimizing their operations and results in stunted business growth. They face challenges in procuring a wide variety of products, managing interactions with multiple wholesalers, and arranging their own last-mile logistics for transporting the products to their stores.

This is where Showroom B2B, Accion Venture Lab’s newest investment, is stepping in. Showroom B2B uses digital solutions combined with physical innovation hubs to empower micro, small, and medium manufacturers and retailers in India’s tier 2+ cities. Through its digital B2B platform, the company brings small retailers and manufacturers together and provides them with tools to digitize and streamline their business operations, intending to save them time and effort and increase profits. Showroom B2B also offers timely and appropriately designed credit products to facilitate the growth of their businesses.

We’re thrilled to invest in Showroom B2B and support the company’s work to digitize the apparel supply chain while providing embedded financial products and services, putting small apparel retailers and manufacturers in a better position to thrive in this dynamic and competitive industry.

Linking disjointed parts of the apparel industry

Launched in 2020, Showroom B2B aims to be a one-stop shop for India’s apparel industry, supporting small manufacturers and retail stores. By embracing technology, the company reduces overhead costs and markups, allowing manufacturers to offer competitive prices and small and medium size retailers to increase profit margins.

One way it’s doing this is by building a more efficient supply chain. Traditional supply chains in the fashion industry are multi-layered and inefficient, often relying on multiple intermediaries between manufacturers and retailers, which can add complexities and costs. This is especially true for small retailers in India’s tier 2+ cities as they must liaise with multiple wholesalers and distributors to get their inventory and manage deliveries. Meanwhile, on the supply side, small and medium manufacturers struggle to build their distribution networks and pay sizeable commissions to their channel partners, which can significantly reduce their incomes.

The interior of a Showroom B2B "Experience Store" — *MSME retailers have the option to visit Showroom B2B’s “Experience Stores” to view products before they place an order.*

Showroom B2B works to overcome these issues by linking disjointed parts of the supply chain, eliminating unnecessary intermediaries, and enabling manufacturers to showcase their products directly to small retailers. Through its app, small retailers can discover and procure a wide range of high-quality, ready-made garments, review real-time availability, and easily place orders and reorders. To allow retailers to check out product samples in person before placing bulk orders, Showroom B2B also has “Experience Stores” that display samples from the manufacturers on the platform. This in-person sales approach keeps Showroom B2B’s return rates at a fraction of what other marketplaces experience. Through its app-based ordering system, Showroom B2B manages the end-to-end logistics process using third-party providers.

For manufacturers, Showroom B2B’s digital platform connects them to a wider range of retailers. The company also provides inventory management technology to help manufacturers stay on top of their stock levels and guidance on optimal restocking quantities based on historical sales data. By using their app to digitize inventory management for the manufacturers, Showroom B2B can hold minimal inventory and operate an asset-light just-in-time inventory model.

Solving the capital needs of small retailers and manufacturers

Showroom B2B also provides access to credit products, helping retailers and manufacturers build a credit history. Due to their remote locations and lack of digital data footprint, small retailers often struggle to access formal financing. Instead, most retailers rely on informal capital sources or receive payment terms (30 to 60 days) from their distributors. But access to delayed payment terms is unpredictable and depends on the retailer’s scale, relationship with the distributor, seasonal demand for products, and liquidity position of the distributor.

Small garment manufacturers also deal with capital constraints, including a lack of access to working capital to buy raw materials. They typically wait up to 60 days to receive payments from their distributors.

Showroom B2B works to solve these capital needs. Leveraging its unique tech-touch model, nuanced insights on the ready-made garments sector, and platform transaction data, the company provides timely and contextual access to credit products. Small retailers can take advantage of services like flexible payment options, working capital loans, and credit lines without leaving the platform. Showroom B2B has partnered with buy now, pay later (BNPL) providers to offer purchase financing so retailers can invest in inventory without having to make an immediate payment.

We are excited to join Showroom B2B and support them in bringing much-needed supply chain and credit solutions to small businesses in the apparel industry. We know the company is in solid hands, led by Abhishek Dua and Shubham Gupta, both second-time founders with more than ten years of experience in fast-moving consumer goods (FMCG) sales and B2B commerce.

So far, Showroom B2B has onboarded more than 500 small and medium manufacturers and 5,000 retailers on its platform and delivered more than 350,000 items to these stores. We have no doubt these numbers will continue to rise rapidly and that Showroom B2B’s commitment to using digital tools to enhance the experience of small fashion retailers and manufacturers will prove integral to helping them grow.