COVID-19: Light under the Darkness ….Garments Industry

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The world economy will expect to face a recession (-2.2% total GDP). What are you thinking right now?

When will it end?

Frankly, I am also confused. But we have seen China has overcome this situation within 90 days. Perhaps Italy, France, and Spain are flattening their curve. If it is so, then they step in the third stage. Maybe at the end of May, we will also see them overcome the COVID-19 situation.

Germany, Japan, and Korea are in better shape from the beginning. They will get rid of this situation within this timeframe as well.

So far, statistics indicate this is a cycle of 80 days to 110 days.

Bangladesh and India appeared in the second stage, called the booming stage. The next 24 days will be critical. Stay put and keep your family safe.

Light under the darkness:

You are worried. I am afraid too. We are all going to suffer for this COVID-19. But in my article, I will try to show some lights (especially for mid-level garments) under the darkness, and we need to get prepared when the pandemic will be over, and we must jump on the money right away.

Garments Market share of Bangladesh:

The total garment export market in Bangladesh is USD 34.13 Billon. Currently, the number of active factories is about 3000 in number. Out of which 570 factories are big who are holding more than 72% of market share. On the other hand, nearly 800 factories are small and whose production unit consists of less than three lines. The rest of the factories are mid-range.

Mid-range is going to suffer:

This mid-level factory is in trouble as they are stuck in the middle. Small has the advantage of adaptability, and big have a more excellent economy of scale, but the mid-level has nowhere to go. Perhaps mid-level will not be the first choice of some of the big buyers who are cutting stores, capacity, and calling lay-off.

What can you do?

You have plenty of works to do. The most important thing is to manage the exiting buyer or find new buyers.

When will it end?

“There is no point getting caught up in the worst-case scenario because if it does not happen then you have wasted time. If it does happen, then you have lived it twice”

__ Michael. J. Fox

Believe me. The COVID-19 situation will be over within June. If you are doing business with Europe, then you will get a response from your buyer before that. If you are USA based, then you will get an answer from your buyer after the middle of June. So, get prepared.

How can I? My buyer left me:

Then it is better than before. You must create new opportunities. You do not have alternatives. But the question is, HOW? Look if you fall in the dark. Even you can see if you spend some time there, closing your eyes and find the mild light in the dark.

“We are stubborn on vision; we are flexible on details……. We don’t give up on things easily.”

__ Jeff Bezos, Amazon

Let’s find the light in the dark (Opportunities):

A. Online business is enormous (41% Market share):

The total clothing market in the world is USD 1.5 Trillion (2020), and the online market contribution was USD 620.6 Billion or 41% of the overall market in 2019. The market will expect to grow further at 12.2% per year and reach a total market size of USD 991.64 by the end of 2024. After the COVID-19, it is in a super increasing trend. https://www.statista.com/study/38340/ecommerce-report-fashion/n;

Online is such a big hike, but our buyers are still the traditional store-based sellers

Top Six Tricks to Do Business with Online Buyers:

1. Small MOQ: Ready to do any small quantity. Maintain a robust supply chain and prepared to provide 100 to 1000 pieces per color/style. Sounds weird right!

2. Be a trend catcher: At least the next six-month upcoming designs we need to include in our offering list. Here the buyer will not provide a green seal sample. Instead, we will offer them different styles.

3. 200 Styles: At least be prepared to provide 200 designs in a month. R&D expenses will be high. It’s a pull strategy. We need to understand the market perceptions.

4. Air shipment: Faster is always better. Heat it when it is hot. Don’t delay because the next opportunity will not come.

5. Be committed: to quality and time. Commitment is the key factor. If there are less number of complaints, you will get more orders. Generally, buyers have less time to bargain with you.

6. Price: Ask price at least three times. This level of pricing is fair enough. Don’t laugh. In some cases, we have seen it is five times than your traditional orders.

Online Buyer References: (Start with these, don’t delay, send e-mail today!!!)

N.B. There are thousands of online buyers out there.

a) Alternative Online Buyers:

Alibaba.Com: Start with Basic Plan: Go to sell on Alibaba.com. Reach millions of B2B buyers globally. You may start with a BASIC PLAN with collaboration with other manufacturers. The initial cost would be USD 2399.

Assort your offerings and leverage the power of digital marketing. Please note that small MOQ and quick delivery are keys. Share initial investment costs with others. Trust me. It is effective. https://bit.ly/2RFU018

ZILINGO (online shop): …………The next big trend……

It is an e-commerce platform in the fashion industry. It was founded in 2015 by Ankiti Bose and Dhruv Kapoor, and has operations spanning Indonesia, Hong Kong, Thailand, Philippines, Australia, India & the United States. Today, the company works with close to 50,000 partners across the fashion supply chain. Click the link below. You will be surprised. https://bit.ly/3erZ9Uq

Five Key Notes of ZILINGO:

The current valuation of the company is $970 Million. It is a big right. You can be one day.
They are interested in working with Bangladesh mid-level manufactures as founder member Ankiti Bose said in her last interview. Excellent news, right!!
As per their business model, they make a direct investment in manufacturing.
They are trend catchers, which is one of their biggest strengths.
They keep 10% to 20% profit margin on retail price.

b) Alternative Market Niche: (Geographical based):

Bengali Market: Ajman is a free trade zone, United Arab Emirates. There is a growing garment export market consists of 715 wholesale shops called Bengali Market. Currently, they are offerings low-end products for Iran, Africa, and other Middle East markets. It could be a niche for the mid-range maker. Don’t be surprised. Keep an eye on it.

Keynotes of Bengali Market:

MOQ is 1000 to 4000 pieces per style
The wholesale market price is good enough to offer a fresh order.
To catch the buyer, you must ready to provide at least 20 styles in a container. Remember, small MOQ is a dominating factor everywhere. You are master on this right! Because giants cannot offer small-quantity, but you can.
Mid and high-end customers of Dubai’s mainland market and Night market can be served from here. Night Market is a market of Brands. You want to compete. Then make your brand.
The investor visa is very cheap. You must keep it. Dubai (near to Ajman)
is a place of connections and business.

Another Geographical Segment:

India: Don’t forget about India. The buying power of India is growing, and they are importing from different countries. If Indonesia and Thailand can export to India, we also can serve them.

Brazil: Target some alternative countries where the COVID-19 effect is low. Moreover, Brazil is a big market.

Local Market: Do not underestimate the power of the local market. You can think about chain shops

Approaches:

Work Alone: Are you creative? Believe in work alone. Then add your creativity along with the prevailing guidelines. Minimum order quantity (MOQ), variety in offerings, be a trend catcher, air shipment, committed to quality and time. In addition to that, please do a website from Word Press and use digital marketing techniques to hunt buyers.

Collaborative Approach: (Together is better): I am sure some of the things are now haunting you. Your first question is that how can you be a trend catcher, how you can deliver a variety of items in required MOQ sizes? It is easy to say in the paper but challenging to do in reality. I agree with you entirely.

But trust me. I have seen these things are happening in Bangladesh and they are doing good business.

But there are some problems as well. You have to put much effort into R&D and production process, and you cannot extend your organization based on a significant investment. Here the economy of the scale does not work. You have to understand the market perceptions and need to stay one step up.

But the very big problem is where the money is. Right now, you start to see some potentialities, that’s for sure. There is a light under the darkness.

But where is the money? COVID-19 eats all your dreams and money!! Right!! Then work collaboratively.

“The problem with the world is we draw the circle of our family too small”

__ Mother Teresa

Two is better than one: Think 100 factories like you in a common platform for a common goal. Survive and kill giant competitors.

Enormous capacity with variety (Competitive Advantages): You have something that others do not have. You are proven top-class entrepreneurs, 100 leaders, can do small quantity, but combined have a large capacity. Even the biggest manufacturer cannot compete with you in capacity and offerings variety. Venture Capital is looking for this Competitive Advantages. ZILINGO is a strong example in front of us.

Let’s Search for Investors: (Check the possibilities):

If you can create a common platform, then the investor will find you. I will give you some references for investors.
Or we can invite a company like ZILINGO to invest here. If it is not, then we can approach to Govt.
Even the Government may help you to provide funds for working capital, which is may not be possible if you work alone.

References of Investors:

https://www.sequoiacap.com/ Sequoia Capital is an American venture capital firm. It has backed companies that now control $1.4 trillion of combined stock market value. Zilingo got investment from Sequoia Capital.

https://wavemaker.vc/ Wavemaker Partners is an early-stage venture capital firm founded in 2003. They have over US$380M in assets under management, have invested in over 350 portfolio companies.

https://bit.ly/2RGYG6R https://goldengate.vc/ The firm makes investments in a number of select industries, including technology, financial services, retail and industrial, through leveraged buyout transactions

https://capital.rakuten.com/ Rakuten Capital has invested in more than 60 companies including Lyft, Cabify, Carousell, GoJek, and Pinterest.

https://www.gojek.com/sg/

https://tcrn.ch/2yePH60

World Recession: (Don’t be afraid): Bangladesh will not go through a recession. But surely our expected growth (7.8%) will be reduced by 1.1% (GDP $3.02 B). We will see severe unemployment of nearly 1 Million. It will disrupt us seriously. But trust this pandemic will be finished on the 15th of June.

From the individual point of view, we can control the macro factors or act of God, but we can do our plan and action within our limitations with a positive mindset.

Keep trust in yourself; have patience. Soon this stagnation will be over. Then you will be top of this as you have planned earlier.

Always there is a light under the darkness………

Stay Safe & Stay Motivated.

Saraf Khan,

[email protected];