The pandemic has had a major impact on the global supply chain, with 60% of U.S. adults saying in an August 2021 Gallup poll they couldn’t get a product they wanted in the past two months due to shortages. Hardest hit by the impact is the fashion industry, which employs millions of workers in stores, suppliers and manufacturing plants around the world. Bangladesh, one of the largest exporters of ready-to-wear, saw export revenues plummet from $34.13 billion in 2018 to less than $28 billion in 2020 as Western brands struggled with pandemic-related border restrictions.
Fashinza, a Delhi, India-based supply chain “marketplace” for fashion brands and retailers, was co-founded months before the disruptions. But CEO Pawan Gupta says the platform is designed to address exactly these kinds of supply chain challenges by providing: access to execution options that would not normally be available to global companies.
“While Exploring [the] business-to-consumer fashion e-commerce [industry]we were shocked by the tortuous supply chains,” Gupta, who co-launched Fashinza with Abhishek Sharma and Jamil Ahmad, told TechCrunch via email. “While brands increased their selling price by a margin of 75% to 80%, they still made only about 8% to 10% profit and lost money due to large inventory wastage or loss of inventory. [They] struggled with… opacity as multiple middlemen and their manufacturers were thousands of miles away.”
Gupta describes Fashinza’s product as “design to delivery” in the sense that brands can not only find manufacturers and place bulk orders, but also analyze trending designs in fashion. Customers can also use Fashinza to track time and action calendars, a tool used in the apparel industry to track production milestones to ensure on-time delivery.
On the production side, Fashinza is working with factories to run its software stack, called FactoryOS, for sampling, inventory, and finance tasks. The software tracks clothing lifecycles and uses the data to train algorithms for matching brands with suppliers, Gupta said, and predicting metrics such as turnaround time.
In an endorsement of Fashinza’s approach to supply chain managementthe company announced today that it has raised $100 million in Series B financing ($60 million in equity and $40 million in debt), led in part by Prosus Ventures and Westbridge with participation from Accel, Elevation and ADQ with a valuation of $300 billion. The round brings the total amount raised from Fashinza to $135 million, which Gupta says will be used to refine the company’s supply chain technology and expand it into new markets, including sourcing raw materials.
†Business-to-business marketplaces are here to stay. We can’t imagine a world where, even in 2030, brands would have to make 100 calls, send 200 emails and wait six months for [a] bulk order,” Gupta said. “The whole experience is broken and doesn’t work in this fast paced world. But the solutions… have to be vertical and highly adapted to… industries.”
A growing market
Before starting Fashinza, Gupta co-founded Curofy, a social networking app for doctors, while Sharma previously helped found e-commerce retailer OfferBean. Together with Ahmad, they launched Fashinza in 2020, which now employs 200 people. Gupta expects the workforce to grow to 250 by the end of the year.
Fashinza makes money by charging suppliers a “use-based” fee for each order and by providing value-added services such as logistics, fintech and business-to-business payments to both brands and manufacturers. Gupta states that Fashinza can realize cost savings by: improving the unit economy on the supply side, leveraging “unused capacity” and “improving production efficiency” through technology and data.
Secure, Fashinza has no shortage of competition in a supply chain management market that Statista predicts could be worth $30.91 billion by 2026, up from $19.58 billion by 2022. Shipium offers e-commerce retailers Amazon-like supply chain technology, while ShelfLife provides a marketplace of raw material suppliers based on what brands really need. There are also sustainable procurement platforms such as Sourceful, which fall somewhere alongside supply chain financing platforms including Tradeshift.
Gupta states that Fashinza’s focus on the fashion industry differentiates it enough, indicating its customer acceptance to date. He claims that more than 200 brands and 150 factories are currently using the platform, mainly concentrated in India, Bangladesh, China, US, UK, United Arab Emirates and Vietnam.
Historically, it has been challenging to convince fashion and apparel brands to adopt technologies to modernize legacy processes, including sourcing. For example, a 2020 study by McKinsey found that while 74% of brands expect the digitization of product development and sourcing to accelerate, only 20% plan to make country and supplier selection technology common practice.
But Gupta believes that Fashinza has the gear — and the funding — to succeed. Indeed, the startup will benefit from the ongoing investment boom in the supply chain management market, which is a Injection of $11.3 billion last year from venture firms.
“The solution Fashinza has created is essentially technically driven, which sets us apart from our competitors. Imagine the disruptions caused by Uber and Amazon in their respective sectors. Fashinza is doing something similar in the business-to-business apparel manufacturing industry,” says Gupta. †End-to-end production can be managed through Fashinza’s platform with … transparency and control – without the need for sourcing managers to leave their offices, no need to rely on multiple intermediaries, and no room for unannounced delays.”