April 22, 2019
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Dhruv Kapoor

E-commerce startup Zilingo raises $226M to digitize Asia’s fashion supply chain

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If you’re looking for the next unicorn in Southeast Asia, Zilingo might just be it. The 3.5-year-old e-commerce company announced today that it has raised a Series D round worth $226 million to go after the opportunity to digitize Asia’s fashion supply chain.

This new round takes Zilingo to $308 million from investors since its 2015 launch. The Series D is provided by existing investors Sequoia India, Singapore sovereign fund Temasek, Germany’s Burda and Sofina, a European backer of Flipkart -owned fashion site Myntra. Joining the party for the first time is new investor EDBI, the corporate investment arm of Singapore’s Economic Development Board.

Zilingo isn’t commenting on a valuation for the round, but a source with knowledge of the deal told TechCrunch that it is ‘a rounding error’ away from $1 billion. We had heard in recent months that the startup was getting close to unicorn status, so that is likely to come sooner or later — particularly given that Zilingo has made it to Series D so rapidly.

Raising more than $300 million makes Zilingo one of Southeast Asia’s highest-capitalized startups, but its meteoric growth in the last year has come from expansion from consumer e-commerce into business-to-business services.

CEO Ankiti Bose — formerly with Sequoia India and McKinsey — and CTO Dhruv Kapoor first built a service that capitalized on Southeast Asia’s growing internet connectivity to bring small fashion vendors from the street markets of cities like Bangkok and Jakarta into the e-commerce fold.

Zilingo still operates its consumer-facing online retail store, but its key move has been to go after b2b opportunities in the supply chain. That’s to say that it is building a network of supply chain pieces — manufacturing, logistics, payments, etc — that it can take to retailers or brands. So, in theory, anyone wanting to get into private labels or fashion selling could use Zilingo as an end-to-end solution to make and source their product.

Revenue grew by 4X over the past year, with b2b responsible for 75 percent of that total, Bose told TechCrunch. She declined to provide raw figures but did say net income is in “the hundreds of millions” of U.S dollar. The company — which has over 400 staff — isn’t profitable yet, but CEO Bose said the b2b segment gives it “a clear pathway” to break-even by helping offset expensive e-commerce battles.

Ankiti Bose and Dhruv Kapoor founded Zilingo in 2015.

The supply chain’s ‘outdated tech’

Moving into the supply chain after building distribution makes sense, but Zilingo has long had its eye on services.

That business-focused push started with a suite of basic products to help Zilingo sellers manage their e-commerce business. Those initially included inventory management and sales tracking, but they have since graduated to deeper services like financing, sourcing and procurement, and a ‘style hunter’ for identifying upcoming fashion trends. Zilingo also widened its target from the long tail of small vendors operating in Southeast Asia, to bigger merchants and brands and even to the fashion industry in Europe, North America and beyond that seeks access to Asia’s producers, who are estimated to account for $1.4 trillion of the $3 billion global fashion manufacturing market.

Zilingo’s goal today is to provide any seller with the features, insight and network that brands such as Zara have built for themselves through years of work.

In Southeast Asia, that means helping small merchants, SMEs and larger retailers to source items for sale online through the Zilingo store. But in Europe and the U.S, where it doesn’t operate an outlet, Zilingo goes straight to the sellers themselves. That could mean retailers seeking wholesale opportunities from Asia or online influencers, such as Instagram personalities, keen to use their presence for e-commerce. Beyond just picking out items to sell, Zilingo wants to help them build their own private labels using its supply chain network.

That rest of the world plan has been on the cards since last year when Zilingo closed a $54 million Series C, but now the next stage of the journey is deeper integration with factories.

“If you think about these factories that make the products, the process isn’t optimized over there,” Bose said in an interview. “The guy or girl running factory likely has no technology, they don’t even use Excel. So we’re going to small and medium factories, increasing capacity utilization, helping to manage payroll, getting loans and other fintech services.”

Kapoor, her co-founder, adds that the fashion supply chain is “is marred by outdated tech.”

“It’s imperative for us to build products that introduce machine learning and data science effectively to SMEs while also being easy to use, get adopted and scale quickly. We’re re-wiring the entire supply chain with that lens so that we can add most value,” he added in a statement.

Zilingo encourages retailers and brands to develop their own private labels by tapping into the supply chain network it has built

AWS for the fashion supply chain

Bose said Zilingo’s early efforts have boosted factory efficiency by some 60 percent and made it possible to develop links to retailers while also enabling factories to develop their own private label colletions, rather than simply churning out unbranded or non-descript products.

A large part of that work with factories is consultancy-based, and Zilingo has hired supply chain experts to help provide quality guidance and perspective alongside the software tools it offers, Bose said.

She compares it, in many ways, to how Amazon conceived AWS. After it built tech to fix its own problems internally, it commercialized the services for third parties. So Zilingo started out offering a consumer-facing e-commerce platform but it is making its sourcing networks open to anyone at a cost — almost like supply chain on an API.

That gives its business a two, if not three, sided focus which spans selling to consumers in Southeast Asia through — which is present in Thailand, Singapore, Malaysia and Indonesia with the Philippines and Australia coming soon — reaching overseas retailers through Zilingo Asia Mall, and developing the b2b play.

In Southeast Asia, its home market, Zilingo doesn’t pressure its merchants to sell on its platform exclusively — “we don’t mind if they go to Instagram, Lazada, Tokopedia and Shopee,” Bose said — but in the U.S. it doesn’t have a go-to consumer outlet. It’s possible that might change with the company considering potential partnerships, although it seems unlikely it will launch its own consumer play.

Zilingo was once destined to compete with the big players like Lazada, which is owned by Alibaba, Shopee, which is operated by NYSE-listed Sea, and Tokopedia, the $7 billion company that’s part of SoftBank’s Vision Fund, but its supply chain focus has shifted its position to that of enabler.

That’s helped it avoid tricky times for specialist e-commerce services, which battle tough competition, pricing wars and challenging dynamics, and instead become one of Southeast Asia’s highest-capitalized startups. The company’s U.S. plan is ambitious, and it is taking longer than expected to get off the ground, but that makes it a startup that is worth keeping an eye on in 2019. It’s also an example that the startup journey is not defined since, in some cases, the biggest opportunities aren’t presented immediately.

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Southeast Asia fashion startup Zilingo continues its meteoric rise with $54M Series C

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Many will rightly say that raising money as a startup in Southeast Asia is no easy thing, but up-and-coming online fashion service Zilingo sure doesn’t seem to have problems on that front.

Fresh from raising an $18 million Series B round last September, Zilingo has announced its $54 million Series C to takes it to $82 million from investors to date.

The round was led by new investor Sofina — an investor in Flipkart-owned fashion site Myntra among others — and existing backers Burda and Sequoia India. Zilingo’s other existing investors, including Tim Draper, SIG, Venturra, Beenext, Manik Arora, all took part with Amadeus Capital joining the party, too.

Raising this much money is rare over the lifecycle of any startup in Southeast Asia, but to do it less than 2.5 years after launching your product is unprecedented.

E-commerce is a hot space in the region but few companies have made the jump to Series B and beyond with success, in order to make the leap Singapore-headquartered Zilingo has gone about things in a different way to others in its immediate space.

Beyond consumer sales

The company started out in Thailand in 2015 when it was founded by Ankiti Bose (CEO) and Dhruv Kapoor (CTO). Bose, a former analyst with Sequoia India and McKinsey, had the idea of bringing traditional sellers online after visiting Bangkok and marveling at the rich variety of fashion items being sold at street markets.

Now, however, the company has risen above online sales to a position as a platform that caters to merchants, retailers and brands for both B2C and B2B sales. That’s been enabled by an early focus on providing basic services for retailers beyond just an online storefront.

We noted when we first wrote about Zilingo that the company offered a seller management tool which handled processes like inventory management, stock and sales for small retailers who might not already be digital. Aside from boosting touch points with merchants, its key target, these services have evolved over time and become both an additional revenue generator and an important defensive moat for Zilingo’s business, while not to mention providing insight and direction for product development.

Zilingo’s e-commerce site sells directly to consumers in Indonesia, Thailand, Singapore, and it ships internationally to four more countries. Its tech team is in India while it has supply bases in Singapore, Thailand, Indonesia, China, Bangladesh, Vietnam and Cambodia, but it has pushed on.

With financial services from third parties, a ‘style hunter’ that aggregates upcoming trends from fashion watchers and icons, product sourcing, and content and photography services, the targets have expanded to include professional fashion sellers, SMEs, brands, and B2B buyers located outside of Southeast Asia.

The idea is no longer just about bringing the longtail of market sellers online, but instead to enable increased efficiencies for all. That means organization services, financial products and sales for the longtail merchants, but trend analysis, B2B sales/sourcing and more advanced options to the more sophisticated end of brands and larger retailers.

Zilingo co-founders Ankiti Bose and Dhruv Kapoor

“We realized that the longtail is a good way to start, but if you want to build the biggest player in this space, then you have to have all the supply,” Bose told TechCrunch. “The reason they’d stay with us is because they have a dependence with us.”

Bose said that Zilingo doesn’t pressure its merchants to use for consumers sales — although it is obviously preferential — which means it has a potential in that allows it to start working with those who are on rival services, which chiefly includes Rocket Internet’s well-funded Zalora business.

So a brand using Zalora for sales, for example, might source its products or materials from sellers on Zilingo. Further down the line, Zilingo could use that relationship to persuade it to open a store.

That has seen revenue skyrocket. While Bose isn’t revealing exact sales figures, she said that revenue has grown “over 10X” in the last 12 months with more than 10,000 sellers and two million products now on the platform.

That jump is primarily thanks to a move into Indonesia, Southeast Asia’s largest economy, the emergence of B2B sales — i.e. labels or merchants using Zilingo to buy fashion items to then sell to consumers — and some of the optional, paid-for services such as loans or credit. Now, Bose said, the once-core B2C business from accounts for just 40 percent of the revenue.

That platform strategy goes some way to explaining why investors are doubling down on the business despite a “bloodbath” — as Bose puts it — in the B2C fashion commerce space in Southeast Asia.

Zalora is the big player, while others include Pomelo and Singapore’s Love Bonito, both of which have raised low double-digit USD rounds to move into brick and mortar retail. Zilingo, meanwhile, has transcended the sales race by building a product that can live without a dependency on its e-commerce service.

Looking to U.S. and Europe

The company is putting that to the test this week with the launch of a B2B service for U.S. and Europe-based fashion sellers and labels. is a destination where smaller retailers and other B2B buyers can source fashion items from Southeast Asia-based resellers for similar prices to that which top global fashion names enjoy, but without the commitment of massive order volumes.

Zilingo Asia Mall

“Major global fashion brands source most apparel from Asia at $1.5/piece for massive quantities of over a million pieces,” a Zilingo representative explained. “We saw how Zilingo could leverage its existing Asian supply chain network built from its consumer business to drive value for the American and European fashion businesses. ZAM has figured out how retailers can source quality, current products at $2/piece for quantities as low as 200 and also make it an easy experience.”

“Some 49% of all exports globally in fashion come from ASEAN, China and Bangladesh [so] we are basically sitting at the source,” Bose told TechCrunch.

“Merchants want to buy from our B2B platforms and sell on B2C channels, Zilingo could be one of them,” she added. “It’s a high margin profitable business and we want to scale that up.”

Future plans

Zilingo said it still has its Series B round in the bank so that, combined with this newest funding, gives it quite the war chest for investment.

Aside from pushing its international strategy, the company plans to add more tech services to its merchant ecosystem while also expanding its e-commerce site deeper into Southeast Asia. The Philippines is top of the list, but opening up in Vietnam and Malaysia is also on the planner.

The company will also continue to build its brand and market share in its existing Southeast Asian markets. There’s a particular focus on Indonesia where it recently signed up actress Pevita Pearce to front its first TV ad campaign.

As for raising more money right after the Series B, Bose said that the timing felt right.

“The logic behind raising this round is that Southeast Asia is heating up but fashion doesn’t have a big leader because Zalora is stumbling, but it is also the only high margin vertical in e-commerce,” she said.

“When things are going well, there’s momentum, and we figured that we might as well use that because this is a fantastic time to be running a startup in Southeast Asia — people are taking the region seriously,” she added, referencing increased investments from Tencent and Alibaba.

Unbelievably, Zilingo closed the Series C round “weeks” after its Series B, according to Sequoia India managing director Shailendra Singh. Bose explained that investors had begun to see the results of the B2B push and were keen to double down right there and then.

Luckily for the rest of the market, there are no imminent Series D plans at this point… apparently.

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