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Case Study on San Blue Enterprises Pvt Ltd

Case Authors
GJ

San Blue Team


Sanjeev Shah (Founder & CEO) Mr. Venkat Subramanyan (Executive Director F2F) Mr. Amarashish Phanse (Sr. Manager) Dr PR Roy (Director F2F)

Discussion Date and Location


Date: 19 Dec 2012 Time: 10:00 Hrs 13:30 Hrs Place: Ahmadabad Address: 201/202/203 Sapphire Complex, NR Cargo Motors, Nr Kolkata Bazar, C G Road, Ahmadabad 380009

1. Snapshot

2. Introduction
Indian textile industry is one of the most successful leading textile industries of the world. It contributes nearly 14% of total industrial production of the country and contributes to 3% of the total GDP. The total estimate of the industry is expected to cross $85 billion dollars. In such a potential market, there is never a dull moment for business. Using technology as a platform, San Blue Enterprises Pvt Ltd. Has emerged as an undisputed successor in the B2B textile industry handling. After a thorough study of the market along with expert knowledge from professionals to maintain a sustainable and profitable business, San Blue ventured into using the power of the internet which resulted in Fibre2Fashion.com. During the period of the dot com bust Mr. Sanjeev Shah being a visionary leader, realized the importance and power of the online business. He also identified that the textile industry, though had lots of opportunity had been catered inadequately. Thus, San Blue Enterprises Private Limited became the owner, designer, developer and maintainer of the worlds leading B2B portal for textiles, which is www.fibre2fashion.com. The website gives comprehensive information

about the entire value chain connecting the single textile or leather industry. The company San Blue has come a long way since its inception passing the test of time for 12 years and now apart from being an IT company has diversified into media, print and publications also.[1][2]

3. B2B Industry
B2B directories come as a blessing to the SME as they aid these sectors with a golden opportunity to showcase their products in the international market. Both the exporters and the export industry in India have thrived and succeeded due to the contribution of the small and medium enterprises. The B2B directories, which consist of lists of industries, exert substantial influence on the Indian export sector. The List Of Some Of The Significant Industries In The Indian Export Sector Includes: The Indian Textile Industry: The Chemical Industry The Agricultural Industry The Plastic Industry The Indian Leather Industry

3.1 Indian Textile Industry:


The Indian Textiles Industry has an overwhelming presence in the economic life of the country. [3] Apart from providing one of the basic necessities of life, the textiles industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the countrys export earnings. It provides direct employment to over 35 million people, which includes a substantial number of SC/ST, and women. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation. As per the Ministry of Textiles, the Indian textile industry (valued at US$ 77 billion in 2011) contributed about 14% to industrial production, 4% to the country's GDP and 12% to the country's export earnings in 2011. It provides direct employment to over 35 million people and is the second largest provider of employment after agriculture.

Investment made in the textile sector under the Technology Up gradation Fund (TUF) scheme has been Rs 2 trillion till June 2010. According to the Technopak, Indian textile industry is expected to grow at an average annual rate of 11% between 2011 and 2020 to touch US$ 140 bn. India's share of global textile exports is expected to increase from the current 4% to around 7% over the next three-years. According to the Textile Association of India (TAI), the denim manufacturing capacity, which stands at 600-650 m meters per annum, is set to witness an addition by another 100 m meters wherein 70% focus will be on the domestic market. The textile industry aims to double its workforce over the next 3 years. As a thumb rule, for every Rs1 lakh invested in the industry, an average of 7 additional jobs is created.

4. Industry and Organizational Challenges


Textile supply chains compete on low cost, high quality, accurate delivery and flexibility in variety and volume. Several challenges stand in the way of Indian firms before they can own a larger share of the global market: Scale: Except for spinning, all other sectors suffer from the problem of scale. Indian firms are typically smaller than their Chinese or Thai counterparts and there are fewer large firms in India. Some of the Chinese large firms have 1.5 times higher spinning capacity, 1.25 times denim (and 2 times gray fabric) capacity and about 6 times more revenue in

garment than their counterparts in India thereby affecting the cost structure as well as ability to attract customers with large orders. The central tendency is to add capacity once the order has been won rather than ahead of the demand. Customers go where they see both capacity and capabilities. Large capacity typically goes with standardized products. These firms need to develop the managerial capabilities required to manage large work force and design an appropriate supply chain. For the size of the Indian economy, it will have to have bigger firms producing standard products in large volumes as well as small and mid size firms producing large variety in small to mid size batches (the tension between the organized and un-organized sectors will have to be addressed first, though). Then there is the need for emergence of specialist firms that will consolidate orders, book capacities, manage warehouses and logistics of order delivery. Skills: Three issues must be mentioned here: (a) there is a paucity of technical manpower there exist barely 30 programmers at graduate engineering (including diploma) levels graduating about 1000 students this is insufficient for bringing about technological change in the sector; (b) Indian firms invest very little in training its existing workforce and the skills are limited to existing processes; (c) there is an acute shortage of trained operators and supervisors in India. It is expected that Indian firms will have to invest close to Rs. 1400 billion by year 2010 to increase its global trade to $ 50 bn. This kind of investment would require, by our calculations, about 70,000 supervisors and 1.05mn operators in the textile sector and at least 112,000 supervisors and 2.8mn operators in the apparel sector (assuming a 80:20 ratio of investment between textiles and apparel). The real bottleneck to growth is going to be availability of skilled manpower. Cycle Time: Cycle time is the key to competitiveness of a firm as it affects both price and delivery schedule. Cycle time reduction is strongly correlated with high first pass yield, high throughput times, and low variability in process times, low WIP and consequently cost. Indian firms have to dramatically reduce cycle times across the entire supply chain which is currently quite high. Indian firms need a strong deployment of industrial engineering with particular emphasis on cellular manufacturing, JIT and statistical process control to reduce lead times on shop floors. Penetration of IT for improving productivity is particularly low in this sector. Innovation & Technology: A review of the products imported from China to USA during JanuaryApril 2005 reveals that the top three products in terms of percentage increase in imports were Tire Cords & Tire Fabrics (843.4% increase over the previous year), Non-woven fabrics (284.1% increase) and Textile/Fabric Finishing Mill Products

(197.2% increase). None of these items, however, figure in the list of imports from India that have gained in these early days of post-MFA. Entry into newer application domains of industrial textiles, nano-textiles, home furnishings etc. becomes imperative if we are to grow beyond 56% of global market share as these are areas that are projected to grow significantly. Synthetic textiles comprise about 50 per cent of the global textile market. Indian synthetic industry, however, is not well entrenched. The Technology Up gradation Fund of the government is being used to stimulate investment in new processes. However, there is little evidence that this deployment in technology has accompanied changes in the managerial regimes a necessary condition for increasing productivity and order winning ability. Domestic Market: The Indian domestic market for all textile and apparel products is estimated at $26 billion and growing. While the market is very competitive at the low end of the value chain, the mid or higher ranges are overpriced (i.e., dollar pricing). Firms are not taking advantage of the large domestic market in generating economies of scale to deliver cost advantage in export markets. The Free Trade Agreement with Singapore and Thailand will allow overseas producers to meet the aspirations of domestic buyers with quality and prices that are competitive in the domestic market. Ignoring the domestic market, in the long run, will peril the export markets for domestic producers. In addition, high retail property prices and high channel margins in India will restrict growth of this market. Firms need to make their supply chain leaner in order to overcome these disadvantages. Institutional Support: Textile policy has come long ways in reducing impediments for the industry sometimes driven by global competition and, at other times, by international trade regulations. However, few areas of policy weakness stand out labor reforms (which is hindering movement towards higher scale of operations by Indian firms), power availability and its quality, customs clearance and shipment operations from ports, credit for large scale investments that are needed for up gradation of technology, and development of manpower for the industry. These are problems facing several sectors of industry in India and not by this sector alone.

5. Competition
Every now and then online B2B marketplaces are coming up to provide almost anything related to any industry. They are connecting sellers and buyers from every part of the world

and providing them the opportunity to enhance their business. Some of the popular competitors have been discussed below: ALIBABA This is one of the most popular B2B sites and has more than 80 million registered users. The site brings many exporters and importers together through one platform. It has also developed a special Chinese marketplace for trades within China. Moreover, it makes trading easier for smaller traders and also has an escrow service for its users. See Exhibit -1 INDIAMART It is Indias largest B2B marketplace that connects exporters and importers from different parts of the world. According to estimates Indiamart gets more than 1.6 million daily visits and around 9 million page views per day. The site uploads information about different contracts and tenders that mainly include Government contracts. See Exhibit -2. Made-in-China This B2B site has been developed to provide information about all the Chinese suppliers. It is regularly updated and contains up to date information about quality Chinese suppliers present on the web. It has helped many Chinese suppliers grow and meet the needs of different people in different parts of the world. See Exhibit -3. Few others in the market are : ECPlaza, TradeIndia, Toocle, EC21 and Global Sources

6. Overview San Blue Enterprises Pvt Ltd


Fibre2fashion.com was established in 2000 and is owned and promoted by San Blue Enterprises Pvt. Ltd. - an ISO 9001:2008 company. It is amongst the worlds largest B2B platforms for the global Textile-Apparel and Fashion industry, unbiased and committed to serving the demands of the entire value chain. We are not only an e-trade platform facilitating the sourcing & marketing requirements but also a provider of first-hand information on various aspects of textile, apparel and fashion industries, 24x7, globally.

Fibre2fashion also helps small, medium and large business houses from across the globe to capture and increase their market share by providing cost effective and innovative brand promotion solutions for reaching to the largest international target audience in the shortest time.

7. Strategy View San Blue Enterprises Pvt Ltd (Fibre2Fashion.com)


The strategy view of San Blue Enterprises Pvt Ltd is being evaluated from three perspectives. This includes (1) value chain analysis; (2) strategy map analysis; (3) and overall strategy framework analysis.

7.1.

Value Chain Analysis

The Value Chain Analysis helps in understanding the overall process flow and operations of the company. It helps to understand the following questions: What are the key activities involved? What is the sequence of those activities? How the activities reinforce each other? How the value gets added from one activity to another.

The value chain analysis for San Blue Enterprises Pvt Ltd brings forth the key primary activities as (1) gathering information about all sections of the textile industry; (2) provide the

collected information to users under two categories such as restricted information to free users and full information to registered members; (3) prepare and provide comprehensive reports periodically about the industry; (4) publish news articles about all that is happening in the textile industry; (5) provide IT business solutions. The key support activities include (1) focus on gathering quality data; (2) focus on proper research and analysis for producing best analysis reports; (3) setting up technology infrastructure; (4) and building click-and-mortar infrastructure.

7.2.

Strategy Map

The Strategy Map view helps in understanding the key strategic themes and associated tactical activities, which help to achieve those strategic themes. The key strategic themes for San Blue involve (1) aggregation of suppliers; (2) building trust and transparency across the value chain; (3) creating information symmetry between the supply side and demand side; (4) withstand operational complexity; (5) and enabling customer interface.

7.3.

Strategy Framework Analysis

The Strategy Framework Analysis helps in the cross-sectional evaluation of San Blue across the following dimensions as (1) segmenting strategically; (2) exploiting trade-offs; (3) leveraging unique activities; (4) and capitalizing on industry dynamics.

8.0 Business Model View San Blue Enterprises Pvt Ltd


The business model is defined as a blue-print of strategy. The business model includes the pans implemented by the company to increase their sales and hence the revenue their by increasing its profit and also decreasing the expenditure. The business model view of San Blue is being evaluated across the following dimensions as: Who is the customer? What is being offered? What kind of customer relationships exists? What kind of organizational structure and leadership is in place? What kind value network is being setup? What are the performance indicators and metrics? How experimentation and learning is being carried out? How technology integration and innovations are being carried out? What is the revenue and cost model?

What kind of socio-economic performance is being achieved?

8.1. Customer Segments


San blue through its Fibre2Fashion.com had done its customer segmentation only on a single vertical that is textile. When person came to Fibre2Fashion he knew that he wont get any other information except that pertaining to textiles. He had to come with a clear cut idea that he will get all variety of textiles, leather, and machinery equipments relating to textiles etc but it will only be textile and nothing else. The CRM team was totally dedicated to serving their prospects and customers. They also had a MIS system in place that ensured multiple communication to happen or products or bouquet of services to be offered from different categories across the board. There was also one segment where people whore not even aware of how to pack their products or grade them.

8.2. Value Proposition


San Blue has been providing business intelligence through products like Cotton reports, Market Watch Reports etc for different customer segments. The customer for this business intelligence reports are basically people from industry. To cater solely to technical textiles San Blue has also launched www.technicaltextiles.net . San Blue has also been providing subscription based information. Intensive information, business intelligence about market trends, finding markets or buyers for particular products can be accessed if one subscribes to their offered memberships.[4]

8.3. Customer Relationships Building Trust and Transparency


To maintain a healthy relationship with the customer they made a dedicated CRM team to address the customer complaint. San blue has conducted a work shop where they convinced their manufacturer about joining the Fibre2Fashion. By doing so San blue has connected them to global buyers of their handloom products. The textile machinery equipments which are sold online are of proper quality and the transactions between buyers and sellers are held in a transparent and secure manner.

8.4. Organizational Structure and Leadership


San Blue Enterprises Pvt Ltd has been a CEO led company. Mr.Sanjeev Shah, who was the founder, serves as CEO. There exists a Board of directors which assist the CEO in decisions. Below the CEO, there is a Director followed by Operations Director. The total hierarchy consists of various positions which include heads of various departments of the organization followed by line managers, client managers and other IT folks. See Exhibit 4.

8.5. Value Network Collaborations and Partnerships


On April 2011, Fibre2fashion entered into a strategic alliance with Textiles Intelligence to assist the emerging markets in South Asia called as TAOSA (Textile and Apparel Outlook South Asia) & TTPASA (Technical Textiles and Performance Apparel South Asia). The agenda of this alliance was to provide the companies in South Asia with research-based knowledge and information about the textile and apparel industry.

8.6. Performance Indicators and Metrics


The basic Performance indicator for Fibre2fashion was the no. of subscriptions their clientele had opted for. They provided two types of services primarily, one was the premium membership and the other was the corporate membership. The quality of information provided and the authenticity is also a critical performance indicator about the company. The trust created by the company among its subscribers also acts as a performance indicators. Website hits were also a measure of the performance and popularity of the website.

8.7. Technology and Innovation


Though this sector was not much technology savvy but still San Blue has a MIS system in place to segregate information through its databases. Fibre2Fashion is search engine optimized from leading search engines like Google or any other search engine so as to provide fast and effortless availability of information. It also provided business intelligence through its products like Cotton Report, Market Watch Report and other business intelligence reports related to the textile value chain, in both manmade as well as natural fibres. They used business intelligence to find markets or buyers for a particular product and also to foresee a trend for the past ten or twenty years or how things would shape up in the future, such areas are clearly demarcated for subscribers. San Blue also had a CRM team in place to look after the customers prospects and cater to their complaints or any particular information needed by them. They had a single-direction response team which focused vertical only on textiles.

8.8. Pricing Model - Revenues and Costs Streams


Pricing depended on the types of services provided and the value of the services provided. The services were basically subscription-based. There were primarily two categories of

services one was the premium membership and the other was the corporate membership. Corporate membership was for MSMEs and corporate clients like Reliance and others, while premium membership was for MSMEs, SMEs and start-ups, not corporate organizations. The rates in premium memberships were pitched according to the services provided. The services they offer can also be categorized on the basis of online and offline services. On the online front, they offer branding and promotional avenues through banner and email campaigns, search engine optimizing, social networking, advertorial services, articles, news and PR campaigns. The companys main expenditures went creating the virtual infrastructure and on collecting the information as to cater to the customers need of it. Apart from this maintaining the workforce of about 100 odd people, CRM applications, outsourcing of IT infrastructure also add up to the costs. Different Services Provided By Fibre2fashion: Premium Membership See Exhibit 5 Ad Solutions See Exhibit 6.

8.9. Social and Economic Performance


The services provided by Fibre2fashion helped villagers and small business companies to sell their goods at a healthy rate. The portal they created helped buyers meet sellers thus leaving both parties better off. They also provided free services to some extent in some special cases. They also helped in upbringing of government institutions and NGOs by connecting them to the seller and helping them earn money for their hard work.

9.0. Recognitions and Awards


San Blue received many recognitions and awards, which included (1) Ranked No. 1 by Alexa.com for Textiles & Non-woven. (2) Ranked No. 1 by Ranking.com for Textiles Ranked among top 20 B2B sites by BSG Ltd. (3)

10.0. Future Action Points


San Blue is looking at innovative ways of marketing, branding and promoting their services.. They are approaching non-conventional industries who seek audience from this industry and

providing the glow to them. They are trying to focus upon each and every part of the value chain and trying to optimize them. Thus recently it launched a website called www.technicaltextile.net to cater customers and help them who are solely committed to textiles business. There is a lot of option for people interested in textiles like Agro textiles, Clothing textiles, Sporting textiles, Medical textiles, Geo textiles, Building Textiles etc. As the technology San Blue would also like to leverage this technology and would make optimum use of the technology to improvise its value chain and add new avenues to it.

11.0. Key Learnings


San Blue followed the B2B portal approach to address the persistent issues related to information asymmetry in the field of textiles. San Blue has clearly demonstrated that a combination of emerging technologies, market needs based innovations, operational efficiency and ability to sense the customer mind-set can lead to a sustainable business model. The key component in this success is the companys ability to tap the potential of a fertile yet unattended sector in bringing about the market differentiation. The key learnings from San Blue are the following:

Find a niche (value proposition). The companies that are able to identify the true market need and design a value proposition accordingly have better chances of success. Finding such a niche requires understanding of the market, creative approaches, and significant research.

Focus on individual needs and not want. Consumer always looks for solutions to their need and not to the want. The need varies with each consumer. The companies that are able to design their value proposition, which can fulfill the individual needs and give a choice to the consumer have better chances of market acceptance. San Blue offered multiple memberships to its customers which had different useful benefits. Online auctions are conducted and up to date news articles on textile industry are published for the customers to enrich their knowledge.

Focus on technology and innovation. The companies need to focus on innovative use of hitouch technologies, which can meet the operational complexity while making the things (affordability, accessibility, availability, transparency) simpler for the target segment. The innovations should not be restricted to product or process innovations. There is a need for business model innovations, which can bring about a creative aspect and paradigm shift in sourcing, delivery and distribution. San Blue on the technology front apart from offering online and offline services have also started cloud based storage systems. They have also introduced the iSupplier which is an online community where suppliers can showcase their performance through a series of certifications, standards and compliance levels that are widely recognized across their particular industry. Build alliances with key stakeholders. Collaborations and partnerships are important for the competitiveness and sustainability of any business. San Blue achieved significant results through its partnerships with textile firms and firms of various other sectors which support textile industry. Also, partnerships with venture capital firms provided the needed capital to build the technology platform and the market. Operational excellence is the key. The real-time information sourcing and delivery plays a critical role in the success of any business, especially, which has online interface with the consumers. This requires an ongoing focus on operational excellence. San Blue has achieved this operational excellence since its inception for the past thirteen years.

Exhibit -1

Source: www.alibaba.com

Exhibit-2

Source: www.indiamart.com

Exhibit-3

Source: www.made-in-china.com

Exhibit 4:

Exhibit-5 : Premium Membership:

Exhibit 6: Ad Solutions

Source for Exhibits 5 and 6: www.fibre2fashion.com

References: 1. http://www.fibre2fashion.com/ Retrieved on 17/03/2013 2. http://www.insideviewtechnologies.com/directory/fibre2fashion - Retrieved on 17/03/2013 3. www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdf 4. www.technicaltextile.net/