It's been a year since Covid first impacted our lives and our business.
These last 12 months came with a steep learning curve, brought a lot of gratitude for the present and it definitely taught us that tough times don’t last, but tough people do.
I thank you deeply for soldiering on as we together navigated through challenging times!
We are grateful to you and to all our merchants as the business grows from strength to strength and as a semblance of normalcy starts to settle in.
At the heart of Zilingo are all our merchants and partners and it’s incredible to see all of you making such brave and strategic moves in 2021 to add momentum, drive growth and sustainability to become their preferred partner through such tumultuous times. As we maneuver through the current business landscape in 2021 with reinforced fervor, grit, and ambition to shape the future of the global supply chain, we would like to share our optimism about the current market, our path towards profitability, and how we intend on making the most of the unprecedented opportunities in front us.
THE WORLD WE OPERATE IN, HAS CHANGED FOREVER.
Rapid Growth in Digital Distribution: Over USD 100Bn of fashion, lifestyle, and beauty consumption shifted online from offline channels over the last few months. While overall there was a dip in demand in these categories, their digital distribution grew significantly - which presents a very attractive path for businesses in digital sourcing to work closely with brands and merchants who distribute digitally.
Comfort & Value-for-Money: We witnessed a massive flight towards value-for-money and casual, everyday products. While essential categories thrived, we saw a major dip in non-essential categories such as luxury, high street fashion, and formal wear. This, in hindsight, was obvious and our ability to help merchants predict, prepare and pivot were very handy in bringing back volumes to these businesses.
The Advent of Digital Factories: The unfortunate events of last year have jolted consumers into demanding transparency and efficiency which only expands the need for digitization of the factory floor and will further bolster demand for our Z factory and production software products and services.
The Big Shift to Digital Sourcing: Brands are increasingly leveraging technology through virtual trade shows, digital marketing initiatives, online showrooms, and inside sales to overcome sourcing gaps. These practices have led to decreased lead times as well as increased efficiency and ROI - all these changes may have been forced by COVID but these changes are irreversible.
Supply diversification from China: As geopolitical issues along with the pandemic disrupted China’s fashion exports supply chain, we have now seen the dramatic rise of South East Asia and South Asia as preferred fashion export hubs. The trend of global companies reducing their exposure to China’s textile and clothing suppliers has become a shift that is unlikely to reverse in the near future as the demand for transparency and sustainability keeps rising.
COVID-19 ACCELERATED GROWTH AND PROFITABILITY ACROSS SEGMENTS, PAVING WAY FOR DIGITIZATION OF THE SUPPLY CHAIN A LOT FASTER THAN EARLIER IMAGINED.
Core business revenue and margin growth: Through this arduous year, most merchants that were ‘super winners’ and benefitted from the tailwinds of Covid, were those who were swift to think on their feet and digitize their businesses as quickly as possible. We worked together with those who gained due to their eCommerce sales and recovered too. While the topline recovered as countries slowly crawled out of COVID-19 restrictions, operational profitability grew by 40% in that time as the pandemic compounded the demand for all things digital, which in turn has enabled innovation, efficiency, and new ways for agile businesses to scale up.
Serving Direct-To-Consumer brands on digital sourcing and services puts us on a path of immense growth: The growing scale and increasing maturity of the DTC brands, propelled further by covid tailwinds and we being their digital sourcing partner has brought great synergy and scale to us as well. We witnessed the sharpest profitability growth by almost 7 times last year in the segment that serves international DTC brands while the topline also grew by nearly 5 times in that segment. Opportunity in adversity.
Since before the pandemic, the apparel and retail industry had been rather slow at adopting technology, however, the shift to digital sourcing has reduced lead times by two to eight weeks and added immense efficiency in the process. With the introduction of virtual sampling and contactless sales, we have over $100m of revenue in the pipeline with global DTC brands who are aggressively moving towards digital sourcing amidst the current volatile business climate.
OPTIMISM ABOUT THE FUTURE
COVID-19 has disproportionately affected SMEs and retail businesses. This year we fortified our mission to use technology to make commerce fair, connected, and transparent as we quickly reassessed the evolving needs for businesses along the entire supply chain. Due to our combined efforts as a team, we have been successful in bringing the majority of suppliers on our platform out of severe COVID-19 impact - helping them transform quickly through the B2B commerce business by helping accelerate online sourcing, digital invoicing, access to logistics, payments, etc, speedily.
It’s fundamental to our mission as an enabler to increase the growth, scope, and speed of trade that our merchants and partners engage in. The movement towards Direct to Consumer gained momentum last year as physical sales channels became redundant. Brands either had to rely on their online stores or serve the strategically most important online channels themselves. As a result, a DTC strategy became a must during lockdowns. At the same time, the rise of conscious consumers paved the way for accountability in manufacturing. With more and more consumers asking relevant questions on labor practices and ESG, brands are now being driven into responsible investing. Riding on that wave, we are certain that our solutions will continue to be a game-changer as we leverage smart, technology-led solutions to digitize the supply chain and enable brands to grow limitlessly in the coming years.
When I look ahead, there’s a lot to look forward to - opportunities, challenges, learnings, and a shot at doing things differently. Thank you, again, for your continuous support and love.
Take care and stay healthy!