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Unravelling the Threads | Ankit Jaipuria @ ZYOD
18 Plays9 days ago
Dive into the world of fashion manufacturing with Ankit Jaipuria, Co-founder of ZYOD! Discover how ZYOD is disrupting the B2B fashion industry with a cutting-edge supply chain, learn about the rise of fast fashion, and explore opportunities in India's growing market. Whether you're a fashion enthusiast, a business owner, or an aspiring entrepreneur, this episode is packed with valuable insights into the future of fashion .
Akshay Datt, a serial entrepreneur having run ventures in Employability Training and hiring, is the host of "The Spotlight", presented by the Founder Thesis podcast. He has interviewed 500+ founders to date.
Connect:
Ankit Jaipuria: https://www.linkedin.com/in/ankit-jaipuria/
Akshay Datt: https://www.linkedin.com/in/akshay-datt/
Founder Thesis: www.founderthesis.com
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Transcript
Introduction and Background
00:00:00
Speaker
I'm Ankit Jaipurya, founder of Sayad.
00:00:15
Speaker
um So, Akit, you're like a fashion industry insider. You spent a couple of years in multiple startups in this space. Give me an understanding of the industry first. what How does the industry operate?
The Fashion Industry Landscape
00:00:30
Speaker
What's the legacy way and what are the disruptions happening in this space? Who are the major players here?
00:00:36
Speaker
Absolutely. So, Akshay, if you would see, the whole fashion space is in my understanding two parts. One is the consumer front, which are the brands, just say H&M, Uniqlo, Zara, all the brands that you see day in, day out. Ek parte, which is the dark side of it, where not a lot of people know about, it's the whole design to manufacturing phase.
00:01:00
Speaker
We have some legacy players in this field like PDS limited, it's a listed company, then ah Google does exports, it's another listed company. These are basically the manufacturing houses, the people who are managing from conception, how that design actually comes to your wardrobe. And the whole journey is where we sort of ventured as well. So what usually happens... These Gokuldas kind of companies are essentially like contract manufacturers. They will not have their own brand. ah They will work for a Levi's or other like a Zara or someone like that. So they will manufacture as per their specifications.
00:01:48
Speaker
Absolutely. And if you would see and of when someone goes to a store, right if they look at the barcode tag very detail, they will see manufactured bar. And you will
Market Dynamics and Fast Fashion Evolution
00:02:00
Speaker
get to know those dark horses behind your clothes.
00:02:03
Speaker
ah Okay. Okay. Okay. Interesting. Take care. And this is like, typically India has been strong in this space, I guess, a textile and ah fashion exports. And I guess Bangladesh also is like a major player in this space. Yeah. So but the reason why India and Bangladesh are this east side of the world is very strong because governments is a very labor intensive ah process, the manufacturing of garments. So in India, you have ah cheap access to labor, you have ah cheap manufacturing supplies. We also see tailwinds. This is the India's decade. So what they say, manufacturing, ah not just apparel, with all the other sectors,
00:02:47
Speaker
ah India is the front runner. And that shows if Foxconn is also moving Apple's production in in India, that's a testament that all the other sectors are due to follow the same suit. Okay. ah In India, how much of when fashion market is organized and how much is unorganized and branded? Like what's the split there? These organized players like Azara, H&M and Levi's and these kinds would have what share in the market.
00:03:16
Speaker
So India from a demand point of view or a kajima point of view is still fairly unorganized. If you would see, ah my estimate is over 85-90% of the whole market is unorganized. And the rest is organized. And if you would see, that's how Nudio became such a big thing. Their idea was to go to these tier 2, tier 3 cities get good fashion at affordable rates and actually tap into this underserved unorganised market. And that's what what is happening. My father's business is in textile, so he does unstitched clothes for your consumers. And what he has been telling that, ah what he has seen and he has mentioned Zudio specifically, he said,
00:04:09
Speaker
If consumers direct their products, they will be able to do it normally. My dad is basically into wholesale and retail of textiles. He has a retail shop as well and then he supplies to multiple retailers in Rajasthan specifically.
00:04:40
Speaker
okay Okay. And in small towns, that used to be the way people would do their clothes shopping. Like they would get its taste because it was cheaper that way. And again, we labor costs and things like that, whereas branded goods used to be expensive. Although now you're saying Zudio and similar players like Zudio are doing that disruption. Okay. Interesting. oh What is fast fashion? And, you know, who are the players who are doing fast fashion? What what essentially makes fast fashion different from what is not fast fashion or is everything fast fashion today? no So see I think the world is moving towards a faster cycle of fashion. So how we sort of term fast fashion is specifically the whole difference in how the products have evolved over time. So earlier if you would see
00:05:30
Speaker
There were just a few products which were running 24-7. Let's say a blue shirt, which was evergreen, a white shirt, a polo with a horse. You wear it 24-7, 365 days and years. So these were called core fashion. And then you have fashion SKUs. These are SKUs which are are changing with every season. So seven, eight years back, there were primarily two seasons, summer and winter. These are my summer clothes, these are my winter clothes.
00:06:06
Speaker
with time what has changed now it is summer, spring, pre-fall, back to school, winter and what that has resulted in. The core SQs which were the main share of a brand's launch, it is now shifting towards fashion SQs and these fashion SQs because they are changing with every season, which is also increasing from just two summers and winters to now six, seven, spring, summer, all of that.
00:06:38
Speaker
the SKUs are being refreshed at a much faster rate. and so butd but but if this for ah Like a layman, an SKU is basically just one item in your cart. One item like the jacket that you're wearing is one SKU. One style in simple words. take So that style is being refreshed at a much faster rate.
00:07:02
Speaker
And this transition from just one, two seasons and few products to multiple products launched every time at a much frequent rate. This is technically fast fashion, the buzzword that you hear.
00:07:18
Speaker
and Zara was supposed to be the pioneer in fast fashion, right? I mean, about a decade or two back. What did they do differently? They they started launching a much faster pace of SKUs, like every yeah every month or something like that, they would have new SKUs getting launched.
00:07:36
Speaker
Yeah, so that was a success mantra behind Zara. So their idea was, if you go into a store, you will not find the same products every time. So every couple of months, their whole store was was filled with new fresh SKUs. And that created that buzz that, okay, this is a Zara product. And there was a sense of exclusivity as well, because you remember doing something. As well. There of missing out also. Like if I don't buy this now, it will not be, you Absolutely, that FOMO created that ah key in agent or enabler in Zara's journey towards becoming so big. And what is Shane, which is ah like the biggest disruptor today that everyone is afraid of?
00:08:24
Speaker
So what Sheen did technically was, what Zara was doing in 45 days, 60 days, Sheen said, let's do it in seven days. So Sheen became that ah ultra fast fashion player that why not stick to just some SQ's in a month, we will launch every week, every day. And that has been the key driving factor behind Sheen's launch.
00:08:53
Speaker
that they created very low price points so that the barrier to entry to buy new products is not a lot. And ah they would do it at a mammoth pace every day, every week, new launch, new collections. how How did they do this and still remain profitable? From what I understand, the big problem in the fashion space is,
00:09:22
Speaker
your like whatever is not sold in that specific season you end up taking a hit like that brings your margin down like if if you manufactured 100 jackets and 40 remained unsold then that's like a direct hit on your margin um So how did a Scene manage to be profitable, have so many SKUs, reduce the cost for the customer? How how are they doing all of this?
00:09:55
Speaker
And also basically what happened, the full manufacturing side. Let's now deep dive into that because that will give us the understanding what actually was different between a traditional player, what Zara did and what she did, which was basically everything on steroids.
00:10:14
Speaker
so earlier it was volume based low cost sourcing. So people used to buy a lot or brands used to launch tens and thousands of one style and because of volumes they were looking to reduce their cost to improve their P&L but that resulted in a lot of inventory losses, which was one of the biggest problems that brands face. there is a word that ah There is a line in this industry that inventory kills brands. So okay that was the major factor. What Xun did specifically, they took an approach where they will not launch hundreds and thousands of style or hundreds and thousands of pieces per style.
00:11:05
Speaker
but small patches and a higher width. So high width, low depth was the mantra behind means launch. What they used to do, they were once been used to launch these small batches, they were able to capitalize on the market trends, which SQs are working well, which are not working well, and double down on the better performing styles. So what that technically resulted in, they were able to launch a lot of styles. They were not launching huge quantities of poor performing styles. So they didn't have a lot of inventory losses.
00:11:49
Speaker
And then they used to double down on attributes which were working and create similar styles which were in line with the market need. And hence,
Ankit Jaipurya's Personal Journey
00:12:00
Speaker
they were showing what the consumer wanted and they were able to capitalize on those revenues. Fascinating. so Essentially, the the product management philosophy is what they applied. like As a product manager, you are constantly doing A-B testing. And so it sounds like Sheen is doing A-B testing at scale for Cloth, like just 100 of a specific SKU. And if it is selling well, then they scale it up. If it's not selling, then there's no big loss because you just did a lot of 100. And the other thing you told me that they're looking at what attributes are working and then doubling down, which means that they must have a very
00:12:38
Speaker
sophisticated data operation where everything which is selling would not just be that a shirt is selling what maybe they would say a shirt of this color this fashion and there would there must be multiple attributes which they would be then analyzing to come to some sort of a pattern that this is what ah ah is popular in like like this is the fashion today like like people want a high neck or people want a Chinese collar or whatever that That's how they are able to scale up but so fast. I also guess the other thing they're doing different is they are pure online, right? Yes, they I think they have started to put in some stores which were in the pipeline, but predominantly online.
00:13:25
Speaker
which again, compared to Azara, which has to run stores, that again, cuts down their cost. And so all of this costs, they are passing on to the consumer. So while in that you can go and see your jacket before you buy at Zara, but at Sheen, it's so cheap that you feel like even if it's not a great buy, I can still take the risk. I guess that's what must be happening with a lot of shopping that happens on scene. You absolutely coined it very well. Fascinating. Okay. So ah what got you into fashion as a, like your business is in the space of fashion. One is of course you have that family connection, but but what actually got you into fashion? Because I saw on your LinkedIn, you were a management consultant. How how did a yeah management consultant get into fashion?
00:14:19
Speaker
No, I think sometimes something is in your destiny. Even if you run away from it, you sort of get into it. So born in fashion family, because of so much hassle that I had seen during my childhood, I personally never actively planned to go in that. Then somehow took mechanical engineering, learned about supply chain operations.
00:14:45
Speaker
Then I actually interned in ITC as well during my college days. So again, my intern was into hardcore manufacturing operation. And while I was doing management consulting, this was the time where COVID had struck and there was lockdown.
00:15:01
Speaker
What kind of projects were you doing? You were at Booz Allen Hamilton, right, as a yeah consultant. so and i was have boze I was primarily doing ah work across three sectors, which was maritime oil and gas and retail. So I started with a maritime project for a Dubai-based port operator company. And the operational efficiency was the end goal.
00:15:24
Speaker
ah in this It was like a multi-fold project where operational efficiency was one. It was more on the lines of mergers and acquisition, how we can acquire multiple ports and build that for the overall growth of the business. so okay Then I worked with a retail company, which was more on the lines of their top stores program. So some of their stores were getting the biggest revenue. So it was a cosmetic base.
00:15:51
Speaker
a company based out of india so how we can elevate those top stores and then once covid had struck the overall time that i was getting for myself was also more consulting and was also a little slow people were not spending a lot on consultants at those times and then i actually stumbled upon fashion that so If I tell you how it sort of started, I was in Jaipur, my hometown, and one of the founders of Fashindra Abhishek was the person. He was also in Jaipur, so Jaipur being a hub of garments, Fashindra used to have operations there. so And what was Fashindra doing at that time? This is the Fashindra.
00:16:38
Speaker
Yeah, so fashion was
Startup Ventures and Business Model
00:16:40
Speaker
primarily a B2B sourcing company. Their idea was there are global brands and there are manufacturers specifically in the east part of the world, which is the hub for manufacturing and There is a lot of vacant capacities with manufacturers. For example, India's average capacity utilization for garment manufacturers, the SME garment manufacturers, is about 33-32%. And if you would see that there are 80,000 SME manufacturers, these are manufacturers having less than 100 machines, so very small setups.
00:17:22
Speaker
So there was a lot of vacant capacity in the Indian ecosystem and the whole East continent as such. And there were brands who wanted to sort of need help or need to discover reliable manufacturers.
00:17:40
Speaker
So that was the thought behind Fashion Girl. We had become a marketplace in between. And ensure these brands are able to discover these reliable suppliers. And these suppliers would be able to get your consistent demand, reliable demand, and grow their business. So there were traditional players doing that. So there were players like Lee and Fung at the time. So they were they are called traditional buying houses. So buying houses are basically brands are working with a licensing office or a middleman who is basically channelizing, coordinating ah for a brand sitting in the West for the East content. So that was the whole sort of structure. The idea of fashion levels
00:18:27
Speaker
solving was primarily on the lines of why not disrupted using technology. It's still very manual. People are talking through mails, phones, and there is a long lead time of 90, 120, 150 days. So a technological solution to manage this ah coordination between brand and manufacturer is where the disruption was. So I met Abhishek in Jaipur. He said, and as founders do, Abhishek said, oh, I'm in Jaipur, let's meet for lunch. I was like, okay, I'm free, I have no plans, let's meet. So we connected a lot. I think the that day we didn't speak anything about fashion. We were talking about our old IIT Delhi days. So he was an IIT Delhi senior,
00:19:17
Speaker
and we were talking about our library, what we used to do. There was a place called Vinti Vintani, which was basically a hangout spot after every seminar or class, we used to sit there, chit chat with our peers. So we talked about that, we checked a lot and I was like, I was always passionate about doing business, fashion as a space,
00:19:44
Speaker
is something that I have seen from my childhood and I think all the stars were meeting where my mechanical engineering experience, my manufacturing ah experience, a wheel meeting in Jaakur over lunch and I thought let's take that move and At that time, joining a seed stage company or a startup for that, uh, for sorts was also not very common. Shark Tank was not life. So my parents were like, which is the company. Management consulting is like the dream job, right? You were essentially putting the dream job to join an unknown startup at that stage. Uh, yeah, I get it.
00:20:23
Speaker
So I remember that conversation. So my mother asked me, I would be like one of the first few employees there. So they were not able to digest obviously shocked and played a very good role over the years and people are now more active towards startup. But yeah, that was the sort of thought process behind.
00:20:48
Speaker
my joining fashion when I joined in the founder's office. So I was there to solve everything and all the problems that used to come. Earlier, it was primarily focused on how we can standardize the operations. So when I joined, we were working with them. One question. Fashionsa would follow like a OYO rooms model, like OYO rooms takes inventory of hotels, gives it their own branding, manages the revenue,
00:21:17
Speaker
yeah And like the end consumer thinks he's checking into a OYO rooms, although it's not OYO's own property. Was it something like that where the brand thinks that they're buying from Fascenza and Fascenza is then getting it done through these SMEs? Or was it that the brand knows that I'm working with these SMEs?
00:21:38
Speaker
but I would say see fashion but had a full stack approach that from a brand's POV, they would be supplying and billing the goods. There was transparency that it was done through a third company.
00:21:57
Speaker
Got it. That's how a buying house sort of used to work as well, where brands used to give orders to the buying house. The sole responsibility to execute it was for buying house, but the customers knew that this is the middleman lives room office and they are coordinating with.
00:22:15
Speaker
folks. And that was the essential ah part of the business where brands had so many things to solve. They said, you look after my back-end supply chain. So they didn't really care who is at the back-end because the trust was and ah in the middleman licensing office or fashion line in our case.
00:22:38
Speaker
Okay, got it. Okay. And ah in fashion, sir, you were part of one of the initiatives, right, like a startup within a startup. How did that happen? So what was happening ah through that whole journey? So first, I was in the supply part. So we had my idea was to expand supply i was looking after expanding the whole or ah building that playbook that how we can expand the supply and then looking after the whole supply chain operations. Then we went into our fundraising which I was very much involved in that gave me a whole bird's eye view of the industry how the industry was working what are the players then those names like Sheen came up and
00:23:30
Speaker
At that time, ah this was one defining sort of factor that ah we need to create something which was the first fashion which we talked about. So this discovery model, this buyer-supplier connect That was already being done at Fashioner we wanted to do. Why not create a supply chain only focused on fast at low MOQ. So that is the turnaround time. From what design to delivery, how fast we can do it. Where the market is at six months, can we do it in ah less time?
00:24:09
Speaker
and minimum order quantities, MOQs. It was basically brands were struggling with inventory losses. They were being forced to buy thousands, 2000 pieces. Why not give them small small quantities to the likes of 1500 pieces?
00:24:25
Speaker
So that was the thought process that let's create a new kind of supply chain which gives 50 MOQs and 21 days lead time. That was the starting thought. I also connected a lot with Ritesh. Ritesh is my co-founder. He was the founding member of passions are So he and Abhishek, they were childhood friends. They had done few startups together. Then fashion was something and which Ritesh was already involved in. So heni runs he was, prior to fashion wear, he had his own brand, ethnic wear brand called Yuftha, which was both on primarily ah doing online sales and some B2B sales. And then he,
00:25:17
Speaker
was one core member to sort of launch passions on. And that time we connected very well that this sounds very disruptive. ah He had actually worked with Sheen when Sheen was not banned in India as well. and So he was one of the suppliers back in the days, a few years back, where he had supplied to Sheen for a few orders in a year.
00:25:42
Speaker
ah before Sheen got banned. So he was also very excited about Sheenan. Surprisingly, he was also from Jaipur. So we used to travel a lot together, given that we were from the same cities, there was a lot of connecting points, and we decided, okay, this is a very interesting a problem that we need to solve for. And we discussed this with ah the founders, Pawana Bishik, and we decided, let's do it.
00:26:09
Speaker
as a startup within a startup, and by that, UConn was launched. so We created a separate team, separate break office to sort of run this ah idea to create this fast supply chain where we are ah in six months of journey, we scaled to about $500,000 in a month. And we realized when we started this, everyone was looking at us as a disbelief that we are working at a six-month cycle, 21 days is not possible. I remember there was one brand, Shararat, if I'm not wrong, a small D2C brand. We delivered our first foods in 18 days.
00:26:57
Speaker
well i I think that sort of showed if you want to do this ultra-fast supply chain, Sheen has already done it on scale. You have done it in India as a proof of concept because technically, if you would see cutting takes one day, stitching takes two, three days, finishing, packing. If you add up the actual process times, you just see it's like eight, 10 days of operations while you are taking six months.
00:27:28
Speaker
So, theoretically on paper, everything was ah easy or achievable, but practically because it has been done in such a way over decades, it's an old industry that we are talking about, that disruption in the mindset was also required.
00:27:47
Speaker
So that was the whole starting point of UCOMP. UCOMP started growing really well in that time and then we sort of realized it is not a small project, it's a whole company that we have to sort of but run and build and That's how we sort of decided that now we have to actually relook at things and restart this because from a small idea, it scaled very fast.
00:28:21
Speaker
ah So instead of 500,000 monthly revenue, what percentage of fashion sales revenue would that be? Like was it a single digit percentage or was it a meaningful percentage?
00:28:33
Speaker
It was ah not a significant percentage with respect to the overall revenue. Fashion was something like that. Yeah, it was in single digits. ah No single digits in fact. Fashion there was doing a huge business at back time. I think neither was, but it was becoming significant.
00:28:58
Speaker
It was something which you will not unnotice. So why aren't you running Ucom within Fiscenza today? I think there were two primary reasons for the same. First,
00:29:12
Speaker
what we started with an idea that we are in the same industry and it will give us some benefits, some cross ah learnings. I think that was very different because the two business modules were very different.
00:29:29
Speaker
The customer segment would be very different, I'm guessing. At that time we were working with SMEs, small D2C players. Fashionware at that time was primarily with enterprises. And I think more or less the whole business model. One is a manufacturing-led business where We are creating oleos and myriads of apparel manufacturing and another is a marketplace make my trip sort of business. So that whole business model though was in the same industry.
00:30:07
Speaker
ah the whole process to execute it was
Supply Chain Challenges and Technological Transformations
00:30:10
Speaker
very different. And that was an understanding right from the start, because ah when we were doing Yukok, we had actually opened a new office in a different location. There was a whole new different team sort of built from zero to one. So one was that, secondly, I think at that point,
00:30:36
Speaker
Fashindra being still very early in the journey of its whole inception and running one more company under a bigger umbrella was also not the wisest of the third and it was a distraction. So that's why we decided in the longer run, it would be wise that we sort of move out. Otherwise it would become more complex and would not lead in good of any of the companies.
00:31:06
Speaker
or ah What does the margin profile look like for the buying house? Essentially, from what I understand, buying house is like a decades old business, which now, Fashionsa, Yukom are essentially a digital technology enabled of Tal.
00:31:23
Speaker
What kind of margin does the buying house keep in this? Like if a brand is ah selling a jacket for 10,000 rupees, how much would the brand have bought it for? yeah And out of that buying price, how much would have actually gone to the manufacturer? How much to the buying house? Rough estimate. Yeah. So you see the good thing actually about this industry is And I would say it it's a two-edged sword. Your strength and weakness is the same thing. SQUs or the style is not standardized. So what that results in? As a weakness that your operations need to be so adaptable that you are able to take care of this changing SQUs.
00:32:10
Speaker
the other side of it is because there is no standardization of your style, the margins are uncapped. So, from fabrics and your final garments, this industry commands 60 to 70% gross margins.
00:32:26
Speaker
How? You're saying 60 to 70% at each step. Like the the brand gets 70%. Okay. No, the overall margins from fabric to final selling price of the garments to the brands. Okay. With buying houses, the margins vary from 10 to 25, 50% ah Obviously, it depends primarily on the style as well. So let's say if you're doing a commodity style like a white t-shirt, which is more commoditized in nature, you will be at the lower spectrum of that. If you're doing a very exclusive SKU, let's say a dress with a lot of frills, which is not a commodity in nature, you will be able to command higher margins.
00:33:14
Speaker
BDS or Lee & Farm, these traditional buying houses, they were operating at 15, 20% on an average. And they had been scared.
00:33:28
Speaker
go So if you're doing like 10 million in sales, then about 2 million-ish would be the gross margin that at scale one would expect. Okay, very profitable. Okay, understood. So then what next? When you decided that you need to do it on your own, how did that journey start? Did you need funds to start? or So of what happened at that time, so September, October was the time we decided we need to sort of part.
00:34:01
Speaker
waves and sort of close this up. And at that time it was actually um ah not so expected to change as well. You are building something with so much passion and heart and then ah you sort of come to the conclusion that you have to actually sort of close this. So the next two, three months from September, October were primarily focused upon sort of keeping Ucom as a brand alive and we were handing it over and merging it with the fashion's main vertical and December,
00:34:43
Speaker
ah it took the complete December of the same to sort of do it and at that time actually me and Ritesh we had and not plan that we would do this again or we would do all of it. And we had about 30, 35 people who were working in UCom, which ah was also one sort of responsibility. Because when you start a company, you are basically not just working towards an idea you have. People who are financially dependent on the same. So we had 30, 35 folks as well ah who
00:35:21
Speaker
where their future was not defined. They were like, what next? There was nothing. It was completely black for us and for them as well. Then, ah I think it was late December when Mina and Vitesh were sort of say um were having a chat. I think it was some evening or the we were in Jaipur, I remember, and that way we sort of come to two points in summary of that conversation. One, I think this is something that we need to do because it's not for us, it's for India as well. Because it's the right time India is being looked at as a reliable place for global apparent supply chain and
00:36:12
Speaker
It's bigger than all of us and people are in need of this. That's why we scaled so fast. Secondly, I think it was a moral responsibility that we were feeling that it's something that we would need to do with all the 30, 35 people that we were working with.
00:36:32
Speaker
and I think what happened next, we sort of discussed this internally with the 3035 UCOMP people. We told them that, see, this is the situation that UCOMP, as you guys know, is now shutting down and we are in the process of transfer. We would be,
00:37:01
Speaker
running a business for this fast fashion supply chain. We don't know the name yet. We don't know how we would do it. But this is something we started and we feel really passionate about it. And you ah it's up to you. You have two options. One, ah you can help us and continue doing what we have already done.
00:37:26
Speaker
Or if you need any help, me and Ritesh will leave no stone unturned to find you a good job. To our surprise, all 35 folks said, let's do this.
00:37:39
Speaker
We'll see how it will happen. We promise them one thing that if we are able to secure any funds, anything, we would be ah ensuring that you don't suffer financially anytime. And in three months, we will have any waste clarity. Internally, me and Litesh, we decided I'll move to Jaipur. I thought that I would put one land on lease, get some loan out of it.
00:38:07
Speaker
put some money together and we will start the same. So that is how ah January Zayad came into inception. How much money did you then invest like by putting your land on lease and all that? like So I'll tell you what happened at that time Akshay. So my idea was by putting land on lease I would be able to get 40-50 lakhs But fortunately, I will thank this to the startup ecosystem and how we were able to find few angels. There was one specific angel that we found. His name is Nikhil Bandhaka, one of ah our angel investors, as well as one of my mentors as well in this poll.
00:38:56
Speaker
journey. So what happened at that time, ah we were actually ah now going that we need some funds, and we need to build a business. And ah we were having conversations with Lightspeed, which eventually became a seed investor as well. And ah while we were having this conversation, Nikhil, he actually and was excited about the idea. He really liked ah what we were trying to build and the whole journey. And he actually ah gave us a loan when the company was not registered. He had to transfer the money in
00:39:40
Speaker
one of our family's business account. And we actually started our operations through that. And fortunately at that time, the light speed ah also got excited and things
Sayad's Growth and International Strategies
00:40:00
Speaker
were going well in track and they were also onboarded as the seed partner.
00:40:08
Speaker
Our fund process usually takes two to three months after the whole ah agreement, those documentations. Lightspeed also gave some ah amount about $500,000 once the company got registered. So the banks and everything got registered end of January. And at that time, Lightspeed also gave us ah some part of the amount that they had invested so that we can continue running the operations. From the loan that we had taken, first month we ensured everyone gets their salary.
00:40:45
Speaker
that now it's all sorted let's move and start building this and then rest is history we kept on building that out. So you had a global thesis on day one that you will do fast fashion you will build a fast fashion supply chain for global brands or you started with domestic and then went global. ah The idea was that everyone needs a solution of agile fashion or fast fashion because the inventory losses was profound not just domestically internationally everywhere and the second pieces that we had was that China plus one is the real thing now. India is at the forefront of it and the whole ecosystem around you is anyways
00:41:40
Speaker
still not the best if we compare India, especially from a government political stability as well. Sri Lanka economic dollar crisis, Bangladesh was also going through turmoil. We recently saw the whole political fiasco which happened. So global theme was always there. Initially we started with domestic because that was the first entry where we can ah meet the clients pitch them, sell the idea, sell the vision, and slowly ah we kept on building on from that. Okay, okay. The the vision was essentially like what you told me, 21 days minimum order quantity of 50, like to be able to deliver that. So the idea was there were a lot of learnings when we were doing UCOMM and we were running UCOMM. What we realized was
00:42:38
Speaker
three major things that we have to focus upon to solve the problem. The problem from fast fashion technically now boiled down to one word which was inventory loss. We have to solve for this.
00:42:54
Speaker
So that became the problem that we need to solve for for from a demand point of view. From a supply point of view, we took a three-pronged approach towards it that turnaround time is one major lever that we would have to do it fast. So now it's from six months to six weeks, which we are focused ah upon. The MOQs have to be adaptable and agile.
00:43:24
Speaker
So we have to offer brands whatever they can sell. So it was not fixated on doing just 50 or doing some piece. It was doing win what the brands want. For example, actually, if you start your brand, probably 50 would also be a high number. But let's say if you are a Zara, probably 1,000 would be a lower number for you. The idea was to solve for inventory losses.
00:43:48
Speaker
and build our supply chain in a way where we can solve for that and third was becoming a one-stop shop from designs to delivery so which means instead of just focusing on manufacturing we have to be the whole design-to-delivery, whole-suit solution player, where we are not just helping them with manufacturing, but also giving them design inputs, creating our own designs, and offering them a one-stop shop where they can pick and choose and launch their collections. ah So, a traditional buying house like Lee and Feng, do they also do design? Do they have designers?
00:44:27
Speaker
so I would say these traditional buying houses, their focus also moves towards design to expand their margins. So PDS is a very good example, ah which is a similar player like Lianfang where they were very much focused on design. Because the more you focus on designs, the better you are able to capitalize on those fashion SKUs and hence higher margins.
00:44:54
Speaker
okay right right right yeah you don't want to be just supplying white t-shirts you want to supply frilly dresses and it is much easier to supply frilly dresses if you have in-house design and strength so for the brand which comes to you it's a lot easier for them okay interesting i guess this is pretty much the china philosophy right like say A lot of these, like say a boat and these kind of D2C brand would have started like this only, like so ah somebody in China would have given them the entire design, the the way it looks, everything would have been done for them ah before they, maybe at scale today they would be doing all of this in-house, but all these D2C brand must have started like that, I guess.
00:45:39
Speaker
so Yeah, I think that was also how Sheen also became such a big player because they also were able to source ready designers from the Gumsar market in China, where manufacturers used to create those designs. And to your surprise, actually, it it is something which India also was doing in the ethnic category.
00:46:01
Speaker
so manufacturers who are creating these kurta kurtis, especially for this unorganized market, they are creating their own designs and own styles, which they offer to customers and they pick and choose and launch from. So India was not far off from China in the model and the thought process. It was just that it was not expanding into the Western category which we, as Diode, wanted to become an agent of to transition this through this global trends of ah design standards of worst in products, show up presence, and so on and so forth. Okay. Okay. Got it. What categories are you largely operating in? So ah obviously, women's becomes one major category. So women's, where is the category that we started with and is one of the
00:46:54
Speaker
um and women's v speaker esten what more okay so We are doing both these categories. Then ah as we were scaling, we expanded into men's, specifically shirts and kids wear as well. So now we are across these categories. And how much of your revenue is domestic? How much is global? See, it depends on a quarter to quarter basis, but our domestic revenues Obviously sometimes the whole change is before festive season in India, the domestic demand would be high. But let's say before Christmas and ah the whole period of year and holidays, Western share would be high. So 45 to 65,
00:47:51
Speaker
70% is where domestic varies and the rest 50 to about 40-50 is ah your international trend. And what are the dominant countries like US? ah Our most dominant countries would be Japan, UK, Middle East and US, these four. it like Like you supply to uniqlo, is it? Like I'm assuming if you said Japan, then Uniqlo would be the biggest. Not Uniqlo at the moment. But there are a lot of major brands in Japan. and So there are a few brands like Urban Research. So they have like multiple stores all across Japan. We supply to that. And then there are ah group companies like Reliance by the name of Adastria. So that's like a reliance of Japan. So they have multiple brands under there. OK, got it. Interesting.
00:48:49
Speaker
ah so What is the role of tech in this? Everything from designs to delivery, as I say. So the first, I would i would break tech into two parts. One is the design. The other is your operations management. So the designs is specifically where ah we have broken down that subjective styles into objective attributes.
00:49:15
Speaker
And with those objective attributes, we are doing two things. One is predictive analytics. So we are able to sort of profile for the particular consumer that these other attributes which are working and we should create on that basis, give us design recommendations or that's a recommendation engine.
00:49:36
Speaker
We recently worked the upon generative designs as well. Because we were getting so many attributes, why not create from a sketch to a final garment using a whole data set that you have created? So that was one part. The second was because of technology, we were also able to break that style into components. So imagine how a modular kitchen works or a modular way of working, you have different components and we are able to optimize each leg of of operations on that. So anything in the company from let's say the first part which is cutting
00:50:21
Speaker
to the last part, which is packing. So there are some major steps. Your major raw material is your fabric, which comes in-house. Then you cut that fabric into a specific pattern. For example, the hoodie that I'm wearing, so you have, you see the stitch. So yeah these are six different pieces of fabric sewn together to make this hoodie.
00:50:45
Speaker
so cutting those fabrics into those components, then stitching them together, finishing it, ironing it, packing it. So every step is broken down into that component of the style and that component of the style helps us estimate the timelines.
00:51:04
Speaker
also the possible quality gaps that would be there in a specific component for a specific brand. So you are able to optimize the whole operations as well through tracking those data sets of each components. The One shot that we are currently focused upon is the automation. So as I coined the whole term, the whole industry was reactive. First, we made it proactive by bringing that everything together in the central ERP, then using that data set to make it predictive,
Operational Complexities and Future Opportunities
00:51:40
Speaker
and then the final leg is making it automated.
00:51:44
Speaker
where we will bring in automations across different legs of or stages of the lifecycle of the whole manufacturing of apparel and create further efficiencies out of that. Okay, interesting. What is the ah part of technology which is helping in the actual manufacture by your SME partners? what What do they experience?
00:52:13
Speaker
like like So actually how we see ourselves as brains of manufacturing and we see our manufacturing partners as the executing arms. So what was happening traditionally the factory owner used to work manage each and every things as we discussed that these styles are not standardized. So there are different operations, different instructions that needs to be done. So that factory owner ah used to plan all the styles
00:52:48
Speaker
on a piece of paper, or if he's a little advanced, he would be using an Excel worksheet. And he used to plan and give instructions on ordering the raw materials, then what needs to be put in cutting, what is the next step of stitching if something goes off, what needs to be done. What we did,
00:53:08
Speaker
with the whole ah leg works, we actually targeted the grassroots level folks, the quality in charge, the merchandiser who is actually managing the production floor and basis that we started giving them their daily rosters in simple words.
00:53:26
Speaker
that ah If you are doing 10 styles, ah in 5 styles you have to do cutting today, in 3 styles you have to do stitching, then in the remaining 2 styles you have to pack and dispatch. So, daily these folks who were executing at the factory floor, they only need to sort of log in there portal, the yeah ERP that we have given, we will give them instructions, this is the task that you have to do, which will fit in the longer term plan of the whole product lifecycle and they just have to execute. So the whole hassle of managing such a complex supply chain which was done manually through that factory owner is now being done through technology and that
00:54:11
Speaker
creates that delight factor for the partners that we are working with, because earlier they were occupied in the day-to-day hassle. Now their time is freed up, which basically technically makes them investors in Xyot. So they have to invest in putting the KPAG, putting the machines, and we would help them run into it. Okay. ah Typically, your SME manufacturing partner is a 100% with you or like is it excess capacity utilization?
00:54:46
Speaker
So see, what we realized was we have to be the major player for that. So of in almost most of the manufacturers, we are 100% wallet shared. There would be few where we will be like 50, 60%. But on an average, it's over 70, 80% if I take the whole spectrum. So we are one of the major players. That's why we are able to control those processes at such a strong rate.
00:55:14
Speaker
compared to just passing on the orders and leaving for them to execute. And I guess once a manufacturer signs up with you and he sees steady revenue, timely payment, all of those benefits coming in, then it also incentivizes him to invest in scaling his capacity. Oh, absolutely.
00:55:37
Speaker
So we have two things in this one, not just steady revenues, but also the whole hassle that has gone away. There are some factories where owners are coming just once a week for a couple of hours where they were involved for 14 hours a day and still things were spilling over.
00:55:58
Speaker
Secondly, there were factories which started with just 30-40 machines and now there are 100 plus machines and that's dedicated with Xayat because they saw that consistent growth in remaining. By machine, you mean the sewing machines?
00:56:13
Speaker
the swing machines. Okay, okay, okay. Fashion still happens through like that human labor intensive process, like people are sitting on swing machines and stitching stuff. Yes, yes. not be sort out So that's a very labor intensive. Like a factory set up with a manufacturing plant, that's not how it happens. No, no, most of the manufacturing ah across the globe is a stitching machine, a person behind stitching machines. the clothes Wow. Okay. Do you see that getting like impacted by technology?
00:56:51
Speaker
See, there are certain leaps and bounds in some parts. For example, there are automated machines for, let's say, a standard white or standard t-shirt, brown neck t-shirt, or some parts of the shirts where you have some automation.
00:57:11
Speaker
built-in, but most of the SQUs or styles which are not standardized, it still requires intricate stitching techniques, which still is artisanal and labor intensive. How? I have seen technology from a hardware perspective coming to picture.
00:57:30
Speaker
where their IoT enabled stitching machines, defining the tension, defining the stitch per inch, how fast the cloth would be moving from that needle. So these are being standardized using technology, but still it's very nascent and not very popular, especially in the mass market. Yeah, I guess the the premium ah for such an IoT machine would not be appealing today.
00:57:58
Speaker
Yes. And again, I mean, labor arbitrage, India can afford. So it makes sense. Okay. Interesting. I think it's crucial as well. let's I think after construction, textiles and apparel is the largest or highest employment generating industry in India. So it's a very critical industry for any government, especially India.
00:58:24
Speaker
ah What's the hard thing about this business? of you know like The grass is always greener on the other side and someone might listen to this podcast and say, wow, 20% margin. I should also get into this. ah Do you have some warning for such people that this is not as easy as it seems? What what are the hard things in this business?
00:58:46
Speaker
I think wherever you see a high margin profile, there is a lot of story behind that, that it must be difficult because you only get margins if something is difficult. So in this industry, if you would see from a manufacturing perspective, demand, operations and finance,
00:59:08
Speaker
you have to solve all these three elephants. It's not like a SaaS business where you get early contracts and then you don't have to work upon getting new ah ah new demand. Every season, every order, every month, you have to discuss with brands, showcase styles, and get those orders. So you have to work on demand every month, every minute.
00:59:32
Speaker
Then comes operations. You're constantly competing with other vendors for those brands because that brand can buy their inventory from. You are one among many vendors. The stickiness is low, essentially. You have to concentrate. I will not say stickiness is low because as we have discussed, the operations are so complex. It's a very sticky industry. Brands don't change their suppliers very easily.
01:00:00
Speaker
But the idea is that brand is working with some top five, six suppliers. See, no brand would work with just one player. You don't put your eggs in one basket. So you will have five, six, seven players as core suppliers or strategic suppliers to a brand. So you would always be there as a customer, but the effort goes in creating those designs, creating those styles at a much frequent rate, which actually ah is taking a lot of time, you don't have those surety that you could have peace about it. If you are not creating designs, you would not secure a large amount or you would not seek that growth very organically if you are not working on designs.
01:00:46
Speaker
okay so so by to ensure share of wallet, you have to constantly have a pipeline of designs for your customers. Absolutely. Okay. okay Then you have operations and oh don't get me started about it. I can sort of rant about it all day all night. Because see, the the of thing that we discussed is, which we covered, it's a labor intensive industry. See why you are dealing with thousands of labors working behind a stitching machine and not just stitching machine. ah People are cutting, people are finishing and it's not like you have everything in one place where raw materials, they are coming from a whole different industry where you have multiple points there from fiber converting into yarn, yarn converting into
01:01:43
Speaker
weave fabric or knitted fabric and that knitted fabric going into chemical processes and we were all scattered across multiple places then you are coordinating across each and every step of the value chain and then it comes inside the factory where you also have 10 more steps where there are multiple change of hands so when you have so many change of hands and a long supply chain process. It comes with a lot of challenges which you can expect and which which are ah sometimes not in your expectations as well. For example, in monsoon, there was rain which was non-stop. You cannot have proper dying because it's rains happening. Your cloth is not able to dry properly.
01:02:33
Speaker
school There are these problems, these challenges, which come in and go throughout the leg of the operations. And to top it all, you have to solve it every time with every different design. It's not one solution fits all. OK. That's interesting. How big is your ah this team which is managing the operations? You would have got coordinators, I guess.
01:03:01
Speaker
So currently we are overall 100 people, give or take a few in the organization. I think in operations we would have about 20, 25 people, but I consider the supplier partners and the as my extended arms, and if I count them, we will have 1000 plus folks who are running day in, day out, inside our operations. Okay, okay, like the with the manufacturer, he would also have like a quality control guy. Yes. Okay, okay. And ah so how do you ensure the consistency of the product? And before that, actually the first question is,
01:03:49
Speaker
If there is a problem with the final product, is it the manufacturer's loss? Who eats that loss? ah actually There are a lot of measures that have i been taken, not just by us, but traditionally in the industry as well, to avoid such situations. Because if a product is being made incorrectly, it's not just a loss of the be of the entit entity that's making that, but also the customer or the brand, because they are losing out on potential sales. right So both brands... The delivery is delayed.
01:04:26
Speaker
Yeah, the delivery gets delayed. So both brands and manufacturers, they have multiple checkpoints of in-line midline. So in-line is basically when the ah style is under stitching, they are checking before the style is put into manufacturing.
01:04:44
Speaker
All fabrics are being checked, approved, in order to avoid that case. So most of that is mitigated there. I think the industry average is somewhere about 2%, 2.5% for the overall reactions. But yeah, outliers can be there when, ah due to unforeseen circumstances, there is a big sort of loss. In the business model that we are in Xayab,
01:05:12
Speaker
ah Technically, legally, that lies down to the manufacturers working with us. But more on the operations side, see, as I said, we are a very strategic player to that manufacturer as well. So we would leave no stone unturned to rectify it or use that to sell to some other customer if that's ah permissible in that situation. So we would not operationally pass it on. Legally, technically, yes, that's how the whole business model is, but officially you have to take care of both your suppliers and brands together. And again, this is where the tech would come in, like the inline and the these quality checks, probably someone would be taking a photo and that photo would go to the brand.
01:06:03
Speaker
for approval and like all of that process. Yes, yes. So the there are photos that ah that goes in and out. Then there are physical samples. You create one piece just to sort of ensure that this is what the final requirement is, which is called PT sample, pre-production sample. So that's basically a replica of how the whole shipment would look like. Like a prototype. Okay, okay, okay. Interesting.
01:06:33
Speaker
Okay. oh What is, and how big is your tech team? My tech team would be about 15 to 18 people at the moment. Okay. Fairly sizable. Like, are you using AI for this quality control things and all? Like like and and can an AI look at a photo and detect that there is a problem with this?
01:07:01
Speaker
So that's certainly that's what is in our pipeline. We have not come to the quality part yet, but for predictive analytics from the operations we are using it on the design part of recommendation engine or finding ah similar designs through an image or creating a final garment from a scratch ah from a sketch. That's something that we have already built and working upon.
01:07:30
Speaker
ah like visualization for your clients. So clients can visualize what it'll look like and stuff like that. Yeah. So that's there and also the predictability in the overall operations. Okay. Okay. Okay. Interesting. Interesting. So ah what is, you've raised about, I guess, 20 million so far, right?
01:07:49
Speaker
yeah about three and a half in our seed round and about 18 million in our series so 21.5 21 million okay okay what did you need the funds for there's 18 million is a fairly large round uh what did you need these funds for I think um the primary sort of fun deployment strategy that we have is, again, sort of three parts. One, as we are expanding internationally, we have opened our offices and we have our offices in Japan, we have our offices in UK, we have our offices in Australia as well, which is fairly decent. So we are expanding the teams internationally. The reason is C,
01:08:33
Speaker
It's a business where you need to have those designs, have those relations as well-built because you are talking about ah hundreds and thousands of dollars worth of orders. So that constant engagement is required in this sort of industry that we are in. So that was one to expand internationally, which has been one primary focus. Second was also to expand our supply base in multiple clusters. So India has been divided into pockets of capabilities, where Bangalore is a hub for denim manufacturing. Laudhihana is a hub for your winter wear, is active wear.
01:09:17
Speaker
The North Park, Jaipur, Delhi, these are more into woven garments. And south of India, Tirupur is primarily to knit-swear, your hoodies, t-shirts, joggers, all of those. So expanding into different supply clusters in order to expand our product offerings and become a one-stop shop in not just few categories, but all the categories as we grow along.
01:09:42
Speaker
And third and the most important is to build those techs. We are in a very heavy ops industry. We need to build technologies which not just help us become more proactive, but also have those predictive and generative ideas and tools to enhance the overall customer experience and easier operations.
01:10:07
Speaker
Okay. Can you teach me a bit about how to do international sales? Like you crack these accounts in Japan, which sounds really challenging because ah there is a language barrier. you know How do you do global sales?
01:10:24
Speaker
I think there is a very fair, a simple strategy that we have adopted now, which I think is quite effective. The first is to get entry into the market. ah And what we have sort of learned, the best way to get an entry into marketing, not just apparel, but any B2B space, is there are a lot of expos that happen internationally.
01:10:50
Speaker
where there is a potential customers, brands meeting with potential manufacturer suppliers. So once you get into that ah expo, that's your let's say first entry three point to build those first few connects to start or get things moving.
01:11:09
Speaker
where people are interested to work with you, that's why they have come to the whole pavilion and everything. In these expos it's divided country-wise, it's the China pavilion, it's the India pavilion and so on and so forth. So that's I think the first entry point. The second is once you have a fair bit of understanding in that geography,
01:11:31
Speaker
A local presence is very much important. As you rightly mentioned, both of us don't speak Japanese. So we hired local Japanese folks, hired a local presence there so that that customer relationship building becomes more seamless. They can talk in the same language. They can meet on a frequent basis rather than us flying from one country to another country to meet. It's ineffective and takes a lot of time as well.
01:11:59
Speaker
And then third is constant engagement in our situation through designs, but in any B2B industry would be through that key defining product. And then you build an anchor client, you take that client as your model that if we solve the problem of this client, there will be hundreds of these in the market. So just sort of then get your head down and solve these problems that come across for the client's life cycle of that product or any service that they want. and And how do you hire local guys? You look for someone who has already worked in a bike household, understand the language, how to speak to the what jargons are used.
01:12:41
Speaker
ah already have some relationships also, I guess. Is that what you would look for? Yeah, so we look at people who are in the industry so that they have that warm connects as well and they understand the space because see they are the face of your company in that geography. And ah you can sort of get that through multiple ways. is If you are in the market going through these expos also create a lot of connects, then There are a lot of agencies that you get to know who are actually for helping finding these international folks to represent you. And once you have those one or two entries and then it's networking, networking, networking, go and talk to people, you will find someone and then just keep on going with that. Okay. What is it that you are personally most involved in?
01:13:38
Speaker
Like where does the bulk of your time go? So ah if I tell you the split of responsibilities that me and Ritesh, my co-founder have, I look after the demand part, which is marketing and sales and the product and tech. He looks after the supply chain operations part. So as now we are in the plans or the works of expanding globally, growing. My time goes specifically into meeting, setting up these new ah locations, offices, building those businesses, keeping with the customer.
01:14:22
Speaker
I have a strategic alignment and that takes most of the time. And one thing that I personally sort of enjoy as well as the product and tech, how I can make this less human or reduce the human touch out of it. So product and tech is the second main vertical where my time sort of goes. Okay. Okay. ah Let me end with this.
01:14:47
Speaker
what For somebody who wants to start a business in 2025, what do you think are, with your knowledge of your industry, what do you think are interesting opportunities for people to explore?
01:15:01
Speaker
I think, as you rightly said, that idea is a commodity execution of work methods. So I think the first sort of advice I would like to give is, if you want to start something, then start doing it. I think there is no other way about it. And I sort of see it as well, see two of the The biggest companies that we had Flipkart were the first early movers in start. See, Flipkart was, the idea was Amazon, it was a commodity.
01:15:33
Speaker
Right. It was the execution. Ola, Uber was already in the market. These are the two major companies that have actually been the godfathers of the Indian startup ecosystem. So, idea is always a commodity and there is every space which is exciting. And ah Instead of waiting for the opportunity to find the right space, right idea, I think the most important thing is to get on with it and start doing it. Fortunately, we are in a country like India where
01:16:09
Speaker
the next decade or the coming few decades is going to be golden for us. There is great opportunity in local market, in local supply, so that anything that anyone picks, I think there is a goldmine to explode that. I'm going to say something controversial. I feel like the Zion idea and the fashion's idea are not that different. Are you executing better? I think I would like to say it's a multiplayer market. So there is a portion for everyone and anyone who wants to do it. No brand would want to work with just ones out zodo one or one fashion. So there will be many players. And the best thing is with ideas like this and companies like this, we are actually empowering the Indian ecosystem. And I think that's the major focus to bring India at the forefront of a parallel manufacturing supply chain.
01:17:06
Speaker
Oh, okay. This is not a winner-take-all market. There will always be... There is enough opportunity here for multiple large businesses to coexist. so Okay. Okay. Okay. Interesting. Why did you name it Zion? It's such a hard name. What happened?
01:17:25
Speaker
So I think my personal preference was always four letters. So me and Ritesh, we like smaller words. So Yukom, for that matter, four letters. Okay. Zayod is a again four letters. So our idea was we wanted to create something which sounds futuristic. See, Zayod has the ring to it.
01:17:52
Speaker
And you know that Z, like Zomato is kind of weird Z fashionable, right? like So that was one primary sort of factor. And one more thing, we wanted to create that global company. And Ziod has just two pronunciations, Ziod or Ziod, across all the global languages. So we wanted to have a name which is easy to ah say in any major language and has that catchy vibe to it where ZYOD, you can even sort of communicate and it sticks, even if people say ZYOD, ZYOD, even though it's ZYOD. Okay, got it, got it. Amazing. Amazing. ah Thank you so much for your time, Ankit. It was a real pleasure.