Through its online auction marketplace, XSTOK, aims to revolutionise the way the textile industry sells its surplus. Currently, the app has 300 registered sellers and 8,000 registered buyers and the company sees the respective numbers going up to 500 and 25,000 by the end of this fiscal. In the same time period, it also aims to ramp up the number of auctions to 1,000.
Think of the textile industry in our country and you cannot think past its volatility. Just two years ago the industry had found a way to work past the worst phase by riding a wave of increased production and profits. Cut to today and several mills face a serious crisis attributable to excess production, fluctuating weather patterns leading to uncertainty in cotton pricing, closure of certain key dyeing units, a lack of reinvestment in businesses and much more. There are, however, certain companies that are taking it upon themselves to show the necessary initiative to lessen the industry’s burden. XSTOK is one such company which is an online B2B auction marketplace for surplus stock across fabrics, home textiles, apparel and yarns. “XSTOK is a transactional platform, which means the buyer can search for products, review real-time inventory, buy the products and make the final payment through our website,” explains Sanjiv Khandelwal, founder of XSTOK. The company monetises by charging sellers a listing fee and a commission based on sales but it levies no charges on buyers.
One of our most prolific buyers is 72-years-old and he logs in everyday to review new inventory. He loves the ability to get information on various products available at different mills without having to call each one individually
Effecting change through technology
Khandelwal and his co-founder, Mihir Shah, launched XSTOK’s app in June 2015 with the objective of creating ‘more choices, better prices’ for both the buyer and the seller. The brainwave for this business came to Khandelwal through his past business experiences as a yarn manufacturer. Given the rise in Internet and smartphone usage and penetration across India, the founders saw the opportunity to revolutionise the way the industry sold textile surplus. Changing the way an industry has operated for nearly 200 years certainly poses multiple challenges and XSTOK won over the sceptics with the simplicity of its app. By highlighting the easy access to accurate information the founders communicated the convenience factor to industry veterans and saw a change in attitude. “One of our most prolific buyers is 72-years-old and he logs in everyday to review new inventory. He loves the ability to get information on various products available at different mills without having to call each one individually,” shares Khandelwal. He also explains that younger business owners who manage family businesses appreciate the change as it saves them trips to the mandis (markets). The company offers products from brands such as Bombay Dyeing, Mafatlal, Welspun, Garden Vareli amongst others and has on board 300 registered sellers and over 8,000 registered buyers. Since its inception, XSTOK has conducted nearly 400 auctions and hopes to up this number to 1,000 by the end of this fiscal. Its current reach extends to over 30 cities in India.
Facing up to a challenge
In Khandelwal’s own words, to ensure that buying through the app is as easy as surfing it, XSTOK has established key back-end processes. “We check the quality of the material offered on the auctions, give samples to buyers when needed, ensure goods are transported to customers on time and that suppliers are paid on time,” lists Khandelwal. The company is also aware that the key to growth is to grow its numbers, both in terms of sellers and buyers, and routinely conducts workshops to industry members on the benefits of adopting its technology.
What was relatively less of a challenge for the founding duo was to get people to invest in them. It helped immensely that the founders brought with them relevant business experience to run this venture; Khandelwal ‘s forte is understanding textiles, e-commerce and building trading platforms for B2B businesses while Shah was working as director –Tech, Media and Telecom Investment Banking at Bank of America Merrill Lynch based out of London and New York. Upon his return to India in 2014, the duo set about doing the spade work for XSTOK. Through their social network, the founders raised seed-funding of Rs. 3 crore in September 2015, in a round led by Oliphans Capital with participation from individuals such as Jeetu Panjabi (Capital Group), Manish Chokshi (Asian Paints), Anupam Mittal (People Group) and Vineet Suchanti (Keynote Capital). “This investment will be used towards hiring more people and expanding our geographic reach from 30 cities to 120 cities/towns,” says Khandelwal while adding that strategic partnerships were made based on the investors understanding of the B2B space and its operating realities and not just on investing ability. “While none of the investors are hands-on they have all been very forthcoming with connecting us to potential sellers, large buyers and professionals in the fields of IT, marketing and strategy. They also advice us on hiring the right professionals, build infrastructure and to manage our growth,” shares Khandelwal.
XSTOK’s has charted out a clear plan to court growth in the future; to achieve 10 per cent market share of the US$ 11 billion textile surplus market in a span of three years. To get there, it plans to grow its user base and conduct auctions at double the pace and frequency. By the end of this fiscal, it plans to conduct nearly 1,000 auctions while growing the number of registered sellers to 500 and registered buyers to over 25,000. The company also plans to increase its product offering beyond fabrics, home textiles, apparel and yarn to include allied commodities. “In nearly a year of operations we have established a growth rate (y-o-y) of 100 per cent and we expect that to continue in the next fiscal,” says Khandelwal. As a parting thought he prophesises that technology is the way forward for the Indian textile industry, “This market is currently fragmented, opaque and slow. Technology can expand reach and bring in a new order where sales are decided on the basis of the best bid.”
FOUNDERS: SANJIV KHANDELWAL, MIHIR SHAH
INDUSTRY: ONLINE AUCTION PLATFORM FOR TEXTILE SURPLUS
USP: USING TECHNOLOGY TO MITIGATE THE PHYSICAL LIMITATIONS OF SELLING TEXTILE SURPLUS
INVESTMENT: RS. 3 CRORE FROM OLIPHANS CAPITAL WITH PARTICIPATION FROM INDIVIDUAL INVESTORS