Hope you are well and staying safe.
With the advent of 2020, we couldn’t have imagined what was in store for us. Now, nine months into this global pandemic, we are grateful for our people, our merchants, the amazing recovery of our business, and for the opportunity to have faced and lived through tough times together as a team.
We have undertaken some crucial decisions and have collectively experienced steep personal and professional growth. But COVID-19, amidst all its adversities, has also presented unforeseen opportunities for us as a company. The world as we know it has changed.
Highlights from the last 6 months, rapid recovery and resilience - A Report Card
Amidst lockdowns and the threat of the highly-communicable virus, offline and traditional sourcing became completely unviable for most merchants. Our supplier base as well as our buyer base were left with limited choice and had to rapidly adopt digital channels since traditional high-contact methods of sourcing, sampling and exchanging swatch books became highly inconvenient and high-risk overnight. While COVID initially resulted in a direct hit on our sales, this rapid move towards digital channels has led to a quick recovery and a huge improvement in profitability since then for us.
We have recovered back over 85% of our volume.
In the meantime, our marketing spends have reduced by over 90% and a big driver for that is that our customers’ intent to use digital channels has increased dramatically post COVID. With increased organic demand and inbound sales along with optimized marketing, our new customer acquisition cost has also lowered by over 60%. And hence, very remarkably and with record speed, our EBITDA/burn has improved by over 73% since before COVID.
We have been Operating Margin Positive for the last 6 months and continue to improve profitability rapidly - as merchants see the value in digital sourcing, which is not only more efficient and faster but also safer given the pandemic.
I want to thank you for your immense hard work as a team, your resilience, your creativity, and your amazing focus on opportunities despite the adversities. We have seen immense growth in topline since the first month of the pandemic as more and more merchants try to procure digitally. This has all meaningfully and consistently improved the quality of our business and presents very exciting growth opportunities across the digital supply chain.
Making a difference in the lives and livelihoods of the merchants we work with
COVID-19 has disproportionately affected SMEs and retail businesses especially those who are in Fashion and Lifestyle.
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, helping them access logistics, payments, etc speedily.
On Zilingo’s factory services, 100% of our pre-COVID factories are now back in business, back online, and raring to go with a focus on digital solutions for their supply chain. Our other services (Marketing etc) have not only recovered over 100% but have seen disproportionate growth in new segments driven by merchants’ need to scale digital channels during the pandemic.
This has made a world of difference.
This means our platform partners have digital distribution and their stock is liquidating quickly. This means inventory is moving fast and the digital supply chain is delivering its promise. This means merchants can pay wages to employees, factories can pay workers, there’s food on their tables, their kids stay in school, and so on.
SMEs which are digitizing fast, have a huge advantage over those who are not.
Evolving with what the times demand - Key Leadership Changes
We have never shied away from evolving or from making brave decisions. The pandemic has been a humbling experience for most businesses, governments, and systems. You and I have together learnt a great deal and continue to learn every day from it - making not just big sweeping decisions, but continuously chipping away every day at our goals, applying our learnings on all aspects of our lives and our work, to ensure the best possible outcome for our business and the larger ecosystem it impacts.
As we move onward along with our goals, it is time to ensure that the leadership and organization structure also fully reflect the changes that the business has gone through and what it needs going forward.
We have fully merged and integrated our erstwhile Marketing team under our SME Sales, Enterprise Sales, and Communications departments. We have benefitted from the tailwinds of COVID-19 immensely as far as tech adoption on the supply chain is concerned, our teams have responded well to these organizational changes and this has resulted in Zilingo remaining agile and integrated. We believe this is an opportune time to make these changes permanent including in our leadership and prepare for what the next 1-2 years require.
With this in mind, our Chief Marketing Officer, Marita Abraham, would be transitioning to an Advisor role at Zilingo. Marita is someone I trust immensely and she has been instrumental in building and scaling our business. Most recently she has led the transformation of the Marketing team to serve not just shoppers but also merchants and traders on the platform, establishing Zilingo as a leading B2B player in the region. She has also played a significant role in the company’s restructure during COVID-19 and made drastic strides towards profitability.
In her new role at Zilingo, she will continue to support the leadership and me in an advisory capacity.
We have also integrated the Corporate Development and IR functions with Financial Control, Accounting, and Taxation. This integration is now complete.
Our context and focus has shifted away from strategic development and moved towards profitability and bolstering cash reserves to prepare for the uncertainties around COVID-19. With that, our Group Finance Director, Venkata Narayana who oversees financial controls, accounting, and taxation for the group, will also take charge of additional responsibilities of IR and Corporate Development and our CFO James Perry will return to his prior role as an Investment Banker, at Citigroup. We wish Jim all the very best!
Thank you, team, for your amazing support and stellar performance over the quarter. Take care and stay safe!