Daybreak - How a four-year-old homegrown company is helping Mango and Next change the fashion game

Episode Date: February 19, 2025

The global fashion industry is shifting dramatically. Brands like Zara that once ordered a minimum of 6,000 pieces per style, have dramatically reduced their orders to about 600 pieces. And it isn’t just a quantity thing, production timelines have shrunk from 150 days to less than half of that. The result? Well, fresh designs every two weeks. This shift in the industry was made possible because of middlemen like Groyyo, who get small factories to manufacture clothes in small batches in record time.The company’s strength lies in what other larger factories find challenging. When a brand places an order for 500 pieces to be readied in 60 days, large factories—those capable of producing batches of at least 2,000 garments—typically struggle to justify the operational adjustments required.  This isn’t the first time the textile industry has seen such moves. Other B2b Fasionplatforms like Geniemode and Fashinza also went down the same path but ended up burning over 100 million dollars trying to digitise this unorganised space. But Groyyo managed to recognise exactly what they were missing – a focus on international markets. Tune in. Listen to 'One Billion in 10 Minutes', our new mini series based on The Ken's inaugural case competition. The Ken app Apple Podcasts Spotify

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. The global fashion industry is shifting dramatically. Brands like Zara that once ordered a minimum of 6,000 pieces per style have drastically reduced their orders to about 600 pieces. And this isn't just a quantity thing. Production timelines have shrunk from 150 days to less than half of that.

What's the result of all of this? Well, in simple words, fresh designs every two weeks. This shift in the industry was made possible because of middlemen like Groyo, who gets small factories to manufacture clothes in small batches in record time. Just like that, the four-year-old company managed to clock 4.30 croix. in revenue in the year ended March 24. But surprisingly, it was actually during the pandemic, when most industries were struggling to keep the lights on,

that Groyo saw the most success. You see, this B2B fashion aggregator swooped in at exactly the right time with two distinct business models. In the first, the aggregator takes orders directly from international apparel brands, managing the entire value chain. So, for instance, if they secure a shirt order from management, at $2 per piece, they may contract with a small factory at $1.80. In the second model, brands reach out directly to factories, bypassing Groyo initially.

However, the latter still earns a commission by moderating the relationship between the two and also being involved in the manufacturing process. Groyo has managed to expand its network from 150 to 250 factories across countries like Bangladesh and Turkey within a span of one year. Today it serves 60 international brands, with each factory generating an annual revenue of 30 to 70 crore and selected for its specialized capability. So Delhi NCR factories focus on fashion garments like leather jackets, Bangalore on structured pieces like bottoms, Tirpur on cottonware and Bangladesh on winter clothing.

The company has made its mark by doing what other larger factories find challenging. There's a reason it partners up specifically with smaller factories. Because at the end of the day, when a brand places an order for just 500 pieces to be delivered within 60 days, large factories aren't able to justify the operational adjustments required. Which is why small and medium factories end up having an edge. The margins are bigger and they have more flexibility on the table. So brands can get an inventory that is smaller and more frequent rather than waiting on one big package. But the thing is, this isn't the first time someone has tried to do this.

Other B2B fashion platforms like Jeannie Mode and Fashinza also went down the same path but ended up burning over a hundred million dollars trying to digitize this unorganized space. But Groyo managed to recognize exactly what they were missing, a focus on international markets. Welcome to Daybreak, a business podcast from the Ken. I'm your host Rahil Filippos and I don't chase the news cycle.

Instead, every day of the week, my colleagues, Nekda Sharma and I come to you with one day, business story that is worth understanding and worth your time. Today is Wednesday, the 19th of February. Today, 90% of Groyo's business comes from international brands. The reason for that is simple. See, when you walk into a popular bustling shopping mall in pretty much any city, you will notice it's the likes of Zodio that's pulling in the crowds.

That tends to happen when you sell shirts for 200 rupees and jeans for 800 rupees. But the flip side is that when retailers are for trendy clothing at affordable prices, usually it is the manufacturers and aggregators that see their margins getting squeezed. That doesn't happen with international brands. Subin Mitra, the co-founder and chief executive of Groyo, explained to the Ken how it works.

Essentially in the domestic market, retailers already have in-house factories, vendors, sourcing, quality teams and even designers. So aggregators end up adding very little value. The margins also end up being as low as sales, 5%. But when it comes to exports, they unlock significant value. Because suddenly they're responsible for identifying suppliers, managing the supply chain and even curating designs. So, in these cases, margins end up reaching 20%. There are, of course, other players in the space, the likes of

Shahi and Gokaldas, two of the largest garment exporters from India. But what sets grow you apart is how flexible it is. Shahi and Gokaldas generally set a minimum order of 3,000 pieces per apparel, but Groyo caters to orders as small as 300. Mitra explained that Groyo isn't just connecting manufacturers to brands. It's also standardizing factories by going deep into the supply chain. So brands are able to give it specific instructions on what they want the order to look like. And for aggregators, it means managing a network of stakeholders,

including manufacturers, fabric suppliers and specialists in printing, dyeing, stitching and packaging. But pulling all of this off has proven anything but seamless for other B2B players trying to replicate Groyo's model. More on that in the next segment. Have you checked out $1 billion in 10 minutes yet? For those of you who haven't, it is our latest mini-series based on the Kent's inaugural case competition where India's smartest business school students were asked what they would do with $1 billion dollars if they were running a quick commerce company. In episode one, we dive into the two winning strategies for the OGEE grocer, Big Basket,

where both teams set out to leverage the Tata ecosystem, but in radically different ways. Which strategy is going to win? Well, tune in and find out. The links are in the show notes of this episode. Listen for free while you can, by the way, because this series is going behind a paywall on the third of March. And now, back to the episode. The Indian Apparel Export Market is not for the faint of heart.

Sure, it is valued at $40 billion, which is why so many players have tried to enter the space, but many have been burnt in the process. Just take inframarket and Zetwork, for example. Both scale their billion-dollar businesses by optimizing construction and engineering supply chains. But both were eventually humbled by fashion's never-ending complexity. Industry experts blamed a flawed execution strategy.

In fact, a similar scenario unfolded years after Gurugram-based Fashinza launched in 2020. The B2B apparel aggregator had a strong start, raising $75 million from a bunch of top-tier investors. But soon, its gross merchandise value started to drop. It lost several key executives and its workforce got slashed by half. And what's probably most alarming is that all of that happened, within 18 months. Again, this was an execution problem. This is a company that restructured itself thrice since launch all in a quest for product market fit. Initially, it relied on category heads to drive growth, but when that didn't work, it switched to regional teams, hoping local leadership

would help. That approach ended up failing as well. And then there was genie mode, another fashion startup that launched around the same time. A garment manufacturer we spoke to said that the company saw stagnant growth and hefty losses due to operational delays. The manufacturer said their experience with Genie Moore was quote-unquote horrible. They ended up losing a lot of money in the process. Now, what these players have in common is that they all prioritized top-line growth to attract venture capital. They all wanted to work with manufacturers with revenues over 200 crore rupees.

But Groyo ended up going in the opposite direction. From the get-go, it was dead set on 10%. tapping into smaller, more flexible players. But even this approach isn't without its challenges. Stay tuned. The benchmark for large-scale B2B apparel manufacturing is PDS global. Now, PDS managed to crack the code for European customers by developing a unique sourcing model.

Instead of owning factories, PDS built a web of global partnerships. It pitched joint ventures to buyers with strong brand ties, offering them the chance to set up operations, anywhere, from India to the United States. For instance, the company would ask the American luxury fashion brand Ralph Lauren to join hands to launch a business in India. It would fund it for the first two years and then give a stake in the local subsidiary.

Now, Grow yours approach is drastically different. The company identifies SMEs and addresses basic issues like cleanliness, compliance and worker safety within them. Mitra explained how it then introduces its app, allowing manufacturers to track everything from fabric cutting to packaging while digitalizing inventory and optimizing capacity. This keeps factories updated and also

ends up minimizing delays. Groyo also has an in-house team to help factories with basic standards. While the company knows it is unrealistic to compare small factories to giants like Shahi exports or Gokal Das, its focuses on ensuring compliance with essential

requirements like sanitation and other core processes. Mitra explained that while it typically takes two to five weeks to transform a factory. Groyo avoids factories that need heavy equipment upgrades or major process changes. But the catch is that maintaining even basic standards becomes tricky when dealing with too many small factories. Getting brands on board, maintaining quality and giving factories a makeover is a time dream,

especially when they are expected to meet the standards of global brands. And yet, Groyo's founders are confident that the long-term payoff outweighs these challenges. Especially now, when production is shifting away from China. Suddenly, Groyo's network of tech-enabled SME factories offers the ideal solution. The company also solves for design. While other brands take at least two to three weeks to go from designing to sampling and apparel, Groyo does it in just a week. The company has its own design studio that ultimately creates collections from scratch,

but also works with brands to develop products. Essentially addressing the design capability gap that small manufacturing, manufacturers typically face. Groyo still isn't going after all brands. Just two months ago, in fact, the company decided to pass on Marx and Spencer, recognizing that they weren't yet ready to meet MNS's standards. What the fashion aggregator has truly recognized, though, is the global fashion pivot towards smaller batches, quicker turnarounds,

and more diverse sourcing. And that for now is their winning strategy. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted by Rahil Filippo's and edited by Rajiv Sien.