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Exporters must reduce delivery time to compete with startups

By Mansoor Ahmad
November 24, 2018

LAHORE: Pakistani value-added exporters are trying to capture a larger share in the apparel market, but their major buyers –the global brands are in fierce competition with pure play startups. These startups have replaced brands as trend setters.

The brands now are not the only trend setters in the global apparel market. Many of these startups have been successful in replicating trendy styles and in the shortest possible time.

The big brands that outsource their products to companies stationed thousands of miles away cannot match the speed with which the new tech savvy small manufacturers’ timeline.

Our exporters must realise that the apparel making scenario is undergoing a rapid change. Gone are the days when designs introduced by the brands were the trend of the day.

The designs were created after extensive research and development six months ahead of the season. But with mushroom growth of online stores, a design developed six months back may not click with the consumer.

It is because the new online stores are introducing newer designs every day at the start of the season and they have the ability to deliver the product within weeks.

The international brands place orders for millions of pieces. Because of huge customer following, the prices of all big brands are very high.

It is not because the cost of production is higher but it is due to outsourcing the product to destinations where costs are very low.

The orders are placed in bulk and stringent quality control by buyer ensures that the quality is not compromised. They pay the producer six to seven times lower than their retail price.

At the start of the season, these brands sold at full retail price, but as the season waned off, the price in ‘sales’ gradually reduced to fifty percent of original retail price. Even at that price the brand earned almost 300 percent profits.

Usually all the designs marketed by the brand were totally sold by the end of season. This does not happen anymore.

The startups have made a big dent in to the profits of big brands. Most now are unable to sell their designs at full price even at the start of the season.

By the end of season, many brands offer the same designs at 70-80 percent discount.

They are regularly losing market to the online upstarts.

To meet the challenges posed by upstarts, the large brands are making hectic efforts to shorten the delivery period of their apparel brands. Some are thinking of outsourcing their brands nearby home.

The brands from United States would explore suppliers in Latin America and the European brands might prefer suppliers in the nearby African countries.

They need to do that because instead of depending on few designs for the whole season they would concentrate on frequently changing designs during the season and getting them delivered in weeks from nearby destinations instead of months in case they outsource in Asia.

Since their profit margins are very high they do not mind paying a little more to the suppliers near their home.

This would not be accomplished immediately, as finding quality suppliers near home would take some time. In the meantime, the current suppliers would try to reduce the threat taking up the challenge of prompt delivery through automation and better logistics.

Our exporters should also realise that speed to market and in-season reactivity were now more critical than ever to apparel players’ success. Suppliers that are most efficient in delivery will be preferred by the buyers.

The delivery time needs to be shortened. Logistics would be crucial in timely delivery.

The supplier from countries from where shipping frequency was high, would have advantage over countries where ships were available sporadically.

Instead of shipping two or three containers at a time; the suppliers would be required to load the first available apparel container on ship leaving the earliest.

The suppliers would have to work out the feasibility of sending some goods by air. The digitalisation of all processes would be a must.

Pakistani exporters can also try their luck with new trendy designs and prompt online delivery. They must realise that the apparel industry is at crossroads.

Speedy delivery would be preferred over marginal cost advantage. Integrated sustainable strategy would be part of basic compliance.