In today's post, Max Grosse Lutermann, the founder of maru.co has shared how the traditional apparel supply chain is changing. How digital apparel sourcing platforms can help fashion manufacturers through the new business model.
These new winners in fashion are faster than incumbent retailers and respond to the ever-changing demands of a new generation of consumers by churning out new styles on a continuous basis as opposed to a seasonal basis. Those brands value transparency and sustainability and appeal to the conscious consumer by opening up about their supply chains and by using organic and recycled materials.
With multiple hundreds of thousands of clothing manufacturing companies in Asia alone, the global apparel manufacturing industry has the right partner for every brand somewhere. However, finding and connecting to those factories that fit a brand’s requirements and demands is a tedious, time-intensive and expensive task: buyers typically have to travel to potential factories around the world and go through multiple iterations of sourcing rounds before a reliable, trustworthy partner can be found.
Manufacturers, who are often not very tech-savvy, have zero to little online presence and therefore limited possibilities to connect and market to customers abroad directly.
They have to rely on external partners like buying houses and agents to bring in orders, who in exchange take a significant cut on every transaction going forward and own the customer experience.
However, similar to the manufacturers they represent, these middlemen also rely on analogue processes themselves and often only repeat, pass on and most of the time dilute the information they get from the brand or supplier while providing little tangible value that would justify them taking a cut.
The administrative and manual effort involved in managing the process and following up on each order with the available tools is rather high and unscalable. Agents tend to either add big margins on top of the initial buying price, receive hidden kick-backs from suppliers that drive up the price or simply do not take orders from brands with smaller order quantities at all, because the economics do not add up.
The platform is built to cater directly to the changing needs of fast-scaling Digitally Native Vertical Brands (DNVB) and direct-to-consumer brands.
maru.co digitises the entire procurement process from quote to delivery with their turn-key supply chain technology.
Brands and retailers can connect to vetted factories in the platform’s global manufacturer network, compare quotes and possible suppliers for the item they want to produce, place orders and steer product development and production processes using intuitive project management tools.
Buyers on maru.co can bring products to life faster, take the confusion out of fashion sourcing & manufacturing and gain enhanced transparency into the supply chain.
Manufacturers that work with maru.co are handpicked by the platform’s sourcing team and integrated into the platform with their own supplier profile after passing a rigorous vetting process.
The platform allows them to expand their business, fill empty capacities in factories faster and increase margins on their productions.
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| Dashboard maru.co |
A new generation of fashion brands is winning the market
In the past decade, a new generation of brands has started to transform fashion retail and the way people shop. Brands like Boohoo, Misguided, Everlane or Lululemon were born on platforms like Instagram, Facebook, Amazon or Shopify, which enabled them to connect to their consumers directly, offer their items for less by cutting out wholesale and distribution middlemen and scale sales rapidly.These new winners in fashion are faster than incumbent retailers and respond to the ever-changing demands of a new generation of consumers by churning out new styles on a continuous basis as opposed to a seasonal basis. Those brands value transparency and sustainability and appeal to the conscious consumer by opening up about their supply chains and by using organic and recycled materials.
In a time where incumbent retailers continue to stick to their antiquated, static business models, Digitally Native Consumer Brands (DNVBs) are the new growth winners in their respective categories. These brands need a flexible supply chain with lower MOQs, shorter lead-times and a full-service approach from manufacturers with material sourcing, design finishing and technical product development support.
Traditional fashion supply chains are not fit to cope with the changing needs and pace of modern retail
The industry supplying the goods to these companies, however, hasn’t changed much over the past decade and still primarily caters to the needs of fast fashion giants with high order quantities, long lead-times and a focus on supplying goods for the lowest price; regardless of what the true cost of a garment is.With multiple hundreds of thousands of clothing manufacturing companies in Asia alone, the global apparel manufacturing industry has the right partner for every brand somewhere. However, finding and connecting to those factories that fit a brand’s requirements and demands is a tedious, time-intensive and expensive task: buyers typically have to travel to potential factories around the world and go through multiple iterations of sourcing rounds before a reliable, trustworthy partner can be found.
Manufacturers, who are often not very tech-savvy, have zero to little online presence and therefore limited possibilities to connect and market to customers abroad directly.
They have to rely on external partners like buying houses and agents to bring in orders, who in exchange take a significant cut on every transaction going forward and own the customer experience.
However, similar to the manufacturers they represent, these middlemen also rely on analogue processes themselves and often only repeat, pass on and most of the time dilute the information they get from the brand or supplier while providing little tangible value that would justify them taking a cut.
The administrative and manual effort involved in managing the process and following up on each order with the available tools is rather high and unscalable. Agents tend to either add big margins on top of the initial buying price, receive hidden kick-backs from suppliers that drive up the price or simply do not take orders from brands with smaller order quantities at all, because the economics do not add up.
The communication between buyers, factories and agents in apparel supply chains runs on outdated, inadequate communication stacks that have not improved much over the past decades.
Highly complex apparel supply chains with many actors involved are managed via email, spreadsheets, WeChat, Whatsapp and often phone calls. Information and important files like techpacks, measurement charts, etc. that change frequently throughout the process, are scattered across all these communication channels, leading to confusion, mixups and errors.
In the extremely time-critical apparel procurement process, any errors can result in production and shipping delays which create additional cost (e.g. in the form of air freight charges) and, eventually, losses for both: buyers and manufacturers.
In a market with already immense price pressure, extra cost further intensifies the burden on manufacturer’s margins, who often turn to illicit ways to improve their bottom line. Think: underpaying workers, unsafe factory building construction, usage of low-quality input materials & chemicals or subcontracting in unlisted factories, to just name a few.
Highly complex apparel supply chains with many actors involved are managed via email, spreadsheets, WeChat, Whatsapp and often phone calls. Information and important files like techpacks, measurement charts, etc. that change frequently throughout the process, are scattered across all these communication channels, leading to confusion, mixups and errors.
In the extremely time-critical apparel procurement process, any errors can result in production and shipping delays which create additional cost (e.g. in the form of air freight charges) and, eventually, losses for both: buyers and manufacturers.
In a market with already immense price pressure, extra cost further intensifies the burden on manufacturer’s margins, who often turn to illicit ways to improve their bottom line. Think: underpaying workers, unsafe factory building construction, usage of low-quality input materials & chemicals or subcontracting in unlisted factories, to just name a few.
Digital sourcing platforms bring manufacturers & brands closer together
To tackle these challenges and level out the playing field for the new winning brands in fashion, maru.co has built the digital operating system for sourcing and manufacturing.The platform is built to cater directly to the changing needs of fast-scaling Digitally Native Vertical Brands (DNVB) and direct-to-consumer brands.
maru.co digitises the entire procurement process from quote to delivery with their turn-key supply chain technology.
Brands and retailers can connect to vetted factories in the platform’s global manufacturer network, compare quotes and possible suppliers for the item they want to produce, place orders and steer product development and production processes using intuitive project management tools.
Buyers on maru.co can bring products to life faster, take the confusion out of fashion sourcing & manufacturing and gain enhanced transparency into the supply chain.
Manufacturers that work with maru.co are handpicked by the platform’s sourcing team and integrated into the platform with their own supplier profile after passing a rigorous vetting process.
The platform allows them to expand their business, fill empty capacities in factories faster and increase margins on their productions.
Online presence and increased awareness
Suppliers that work with maru.co put their marketing on autopilot and automatically get connected to the right brands. The platform provides them with a modern online presence where they can provide comprehensive information about their factory. This helps them to decrease customer acquisition costs and increase the quality of incoming leads.Relevant leads & RFQs
Suppliers typically receive a lot of RFQs, but only a few fit their unique set of preferences in terms of e.g. quality level, pricing or brand positioning. maru.co’s algorithm eliminates the noise and makes sure that only those leads and RFQs are sent out, that are actually interesting and worth a supplier’s time.Increased Margins
Bringing buyers and manufacturers closer together and streamlining communication along the supply chain allows the platform to pay out higher sums to our production partners. They can use this money to invest in e.g. growth or improved production capabilities.Streamlined Communication
All projects on maru.co are supported by an experienced supply chain professional that steers the process and jumps into the conversation if there are misunderstandings or wrong expectations on any side.Easy integration into current workflow
To enable any manufacturer to use the benefits of maru.co, the solution integrates into the work-flow and communication tools they are used to and most comfortable with (e.g. email, Whatsapp, Wechat, etc.).A new business model for fashion manufacturing
To remain competitive in the long-run, apparel manufacturers have to rethink their business models and manufacturing strategies. Producing huge quantities for a few large brands with 16-18 months lead times is an unsustainable, a dying business model, which any forward-thinking supplier will recognise. Manufacturers have to look for strategies to move closer to buyers and own the customer experience instead of giving it to agents & trading companies. Successful manufacturers will eliminate all factors and partners along the supply chain that does not add value to the final product and eliminate confusion and streamline communication by incorporating digital tools into their day-to-day workflows.Max Grosse Lutermann is the founder of maru.co. Maru.co is building a digital procurement platform for the fashion industry. Using the platform buyers can connect to vetted, manufacturers and manage their whole supply chain using smart digital tools and automation. |