Small buyers, importers and wholesalers account for 70% of apparel exports from India

Bangladesh, the world’s second largest apparel exporting country, supplies garments to a total of 3,600 global brands, buyers and retailers, claims Mapped in Bangladesh (MiB), an organisation which digitally tracks export-oriented garment factories in the country.  MiB adds that the Bangladesh readymade garment sector relies on too few buyers with a majority of its exports going to just 10-15 buyers. The claim is radically opposite to the buyer dependency of Indian exporters!

It is estimated that the top 50 buyers, which include direct and indirect sourcing of top brands, retailers, chain stores across the globe, collectively buy around US $ 5 billion worth of products annually from India, which is 30 per cent of the country’s total apparel export of US $ 16 billion. The remaining 70 per cent of apparels shipped from the country are being sourced by wholesalers, importers, boutique buyers and smaller chain stores.   

As per apparelresources.com estimates, backed by feedback from the exporters working with wholesalers and importers, a ‘good’ wholesaler for the industry is one that annually places orders of at least US $ 5 million in a manufacturing destination and the number of such buyers in India is hard to map as they work not only through buying agents but also directly with the manufacturers.

Companies working with small brands and boutique buyers are of the opinion that though such buyers exaggerate a lot when sharing buying volumes, but from experience, it can be safely said that their average sourcing remains between US $ 0.5 and 1 million, annually, which individually is a small amount but when multiplied by the number of such buyers, the amount is sizable.

On record, there are around 600 small or medium-size buyers from 65 countries that have visited the IIGF event in the past few years and combining both the editions of the show, the buyers collectively have shown business potential of around US $ 340 million per annum.

There is also a segment of retailers having around 150 stores across the globe and even have their liaison offices in India but their sourcing from India is only around US $ 1 million or even less on an annual evaluation. A case in point is Netherlands-based The Sting Company, known for its men and women products, which owns around 160 stores with a turnover of €400 million but its sourcing from India is just Rs. 50 crore (US $ 0.714 million). And this is despite the fact that its sourcing from India had no Covid impact. Why sourcing has not increased or is limited, is another debate!

Which segment of buyer is India’s lifeline?

Industry insiders and industry watchers strongly believe that Indian factories, especially small and medium-size factories, should give priority to small/emerging buyers or buyers having small orders and high stock keeping capabilities, as they are not preferred by other apparel exporting countries. At the same time, such buyers wish to source more from India, mostly because of the flexibility in order sizes and production capabilities.

As per industry estimations, there are thousands of buyers who source less than US $ 1 million annually from India. In fact, these are international MSMEs and they correlated with over 20,000 manufacturing units in India many of which are having less than 300 machines. The advice by most buying offices/agents is that Indian MSMEs should tap these companies religiously, as they provide good round-the-year business for small manufacturers. The bigger companies/exporters are mostly being fed by the top 50 buyers, but they too have their own set of smaller buyers that give them good value if not volumes.

Companies having 150 vendors in India

Some leading brands that are dedicated to sustainability and transparency, have their vendors in public domain and few of such apparel giants have more than 150 vendors in India. Buying professionals are of the view that having a good number of certified vendors doesn’t mean that their sourcing is also more.

25 to 30 per cent reduction possible

Due to Covid, India’s apparel export has been down by around 30 per cent, so there may be at least 25 to 30 per cent reduction in the figure of brands’ sourcing.  But taking the average buying pre-Covid era in mind, the buying capacities from India by some of the top buyers are as below:

Some other major buyers who are sourcing in between US $ 10 million and US $ 40 million (few may be exceptions):