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Vietnam, as an emerging powerhouse in clothing manufacturing, ranked fourth worldwide in clothing exports in 2022, demonstrating a significant growth rate of 13.1% compared to the previous year (WTO). Other studies also reveal that Vietnam's clothing production and textile industry have been steadily growing since 2010.
This growth in the clothing manufacturing market has been critically contributing to Vietnam's GDP.
However, Vietnam's garment manufacturing industry is now facing challenges regarding its next steps. While the value of manufacturing and exports has been exponentially increasing, the value generated locally has not shown a corresponding increase. This means that although the scale of products manufactured in Vietnam is expanding, the added value is not proportionately increasing.
The Vietnamese fashion manufacturing industry faces similar issues. Global brands seeking to manufacture clothes in Vietnam are entering the market, but this has not uniquely strengthened Vietnam's position.
McKinsey identifies "fragmentation of the supply chain" as one of the factors for the industry’s stagnant added value. Simply put, while the Vietnamese manufacturing industry is growing quantitatively by absorbing demand and supply, it lacks efficiency or technological capability to handle these demands and supplies productively.
In this context, Inflow has developed an on-demand platform that tracks the textile manufacturing process in real time.
Inflow anticipates that technology and products can simplify and streamline Vietnam's clothing production process. By digitizing the production process, the platform makes it easier for global brands to find and decide on manufacturing partners, and for manufacturers to optimize their production processes and try self-production.
Asia Tomorrow interviewed Le Khanh, founder of Inflow, to discuss the issues Inflow aims to solve, the solutions it offers, and the structure and trends of the textile industry, including Vietnam.
Hello. I'm the founder and CEO of Inflow. My name is Le Khanh(Khanh Lê).
My company Inflow was established in 2022. We focused on building an on demand manufacturing platform for global fashion brands where we utilize the strength of Vietnam's supply chain in garment production and helping international brands simplify the entire production process, reduce turnaround time and allowing them to produce smaller batch of production before launching a bigger collection to the market,
I had my own fashion brand like 15 years ago. It was built in Vietnam. I usually sold products online and in my store as well. I ran the brand for about three years before deciding to stop, and then went on the new business venture.
After my fashion brands, I actually joined the digital marketing industry where I had a chance working for clients like Unilever, Pepsi, mostly FMCG, consumer products to help them market their product to any consumer. I did that for around 12 years and fully quit the industry by the end of 2021.
That was when I started looking for a new startup idea. And Vietnam garment production came to my attention because of this industry and our country's potential.
I also saw that there are a lot of untapped opportunities for brands when they want to produce in Vietnam. Inflow aims to increase effectiveness for our customers and ensure quality control while they place the production in Vietnam.
For clients at the moment, one of the problems for them is to find and manage trustworthy suppliers in emerging markets like Vietnam.
In addition, with e-commerce fast growing these days, they have a pressure of producing, launching fast to the market while being more flexible in terms of production quantity.
So true. Actually, the consumer trend cycle is shorter. For every trend it only lasts for two or three months. It’s compared to traditional fashion planning which is usually trapped from 6 to 9 months. Also it's more diversified lately. This shift leads the brand to feel more pressure on following the consumer trend and launching new products rapidly.
The garment industry in Vietnam is really traditional. For example, the factory can take a really long turnaround time for production. It even took over 4 to 6 months for product development and shipping.
So that's why Inflow comes in and uses our technology platform where we manage our factory capacity and performance to help our clients reduce lead time in production and also allow them to produce more styles in a very short time. That is our unique offer to the market.
Yes. So all of the production is fully tracked through our production dashboard and online system of Inflow. Also we keep track in real time of things like production schedule progress with our factory partners as well.
In terms of manufacturers, our platform and standard operating process allows them to focus on making the garment while our software supports them with management features for time and output.
Furthermore, Vietnam is really strong in terms of OEM(Original Equipment Manufacturer) production while relatively weak in original product development or design. Therefore, our team supports our manufacturing partner in terms of product development so that they can sell more in variety.
Inflow online systems integrate with their software and ERP management systems. So for every production line, whichever is produced for our clients, we keep in track of the input of capacity every day.
With factories that don't have the software, we help them to onboard our simple version of software. We require them to apply it to their daily production and update this online management system for the production progress like every day.
Right. We use the application of technology to boost efficiency of the production and also help clients in terms of preventing late order and also like finding areas where they can speed up the entire production process through our software.
Since we are in the garment production industry, simplifying the whole production process and ensuring quality outcomes is really important for our customer.
So that's why when we discuss with our customer besides the production and the technology, we need to assure them that we have the team of professionals to take care of their outcome as well.
I think one of the strongest motivations for me and the team is to grow the company, to win the customer because we as a startup are at the growing stage. We need to get validation in this market.
In the early days of B2B enterprise, the founder usually needs to be present in the business meeting to make sure that our product is well presented and to convince our clients to feel secure so that they can decide to move forward.
Plus, our clients are often large corporations or well-known brands, so it's always required to have really careful preparations to make sure that we understand the business and essence of garment production.
Internally we all understand that garment production for a fashion brand is everything. If you can change the whole process to be effective with technology, outcomes always never lie. We want to share this vision with our customers, so we try our best to prepare prior to every meeting with our client in order to make them feel we care for their work deeply.
When we built inflow, our mission was all about boosting efficiencies, reducing the workload of the entire sourcing process our customer usually takes.
So we went through different customer segmentation and brainstorming. In the end, we realized that solving the bigger problem is where we can unlock the full potential of Inflow as the platform. So that's the reason we decided to focus on a single customer segment before we expand and scale to all the customers.
(In terms of the size of fashion brands), they have more pressure to be effective in every angle of production. Recently they are so required to launch fast into the market.
In addition, bigger brands tend to have many product SKU (Stock Keeping Unit), which means the operation process is much more complicated. That can only be solved through the use of technology. Compared to small brands which have one or two SKU with relatively small quantity, medium to large fashion brands have different problems.
We charge for transactions, not for SaaS itself.
Q.Is there any other competitor?
In Vietnam we don't have one yet. In the India or Bangladesh market, we have discovered a few similar business models with Inflow. However, I believe that inflow is more focused on-demand manufacturing while similar startups in other countries were more focused on sourcing.
It's quite different for us. We focus on improving customer satisfaction and also the efficacies of the supply chain.
In contrast, sourcing is mainly about simplifying, finding the right manufacturers. It stops there. Consequently, the clients have to handle everything after finding the right manufacturer.
For us, we are more devoted to delivering an end to end experience for our customer as a fashion brand.
I think the challenges for us at the moment are still about building trust in the market because we are relatively new in the market. Building trust and winning more customers are one of the goals we are focusing at the moment. At the same time, improving the entire system is our mission to drive so that we can serve our customers better.
Our plan is to scale up within our customer profiles since the overall customer target that we're aiming for the yearly revenue is quite large. They have a massive volume of production every year. So expanding among our main customers is one of our strategies into winning more shares.
Last year, Inflow was strongly rooted in the Southeast Asia market. From this year, we're targeting larger markets such as the US, European and other Asian markets. In order to do so, we are actively setting up sale channels in key countries so that we can promote our platform and our products to more clients.
Additionally, we kind of focused more on the supply or management system, which we are actively fine tuning the system, so that we can onboard more factories and operators to integrate with our system.
We are building and improving some features like product analytics to give our customer a better recommendation for trends, style before they decide to produce.
So that is something that we are developing at the moment.
I'm originally from Vietnam so I was thinking about how to build a Vietnamese startup. However, I was able to scale globally. It became clear for me that market size calculation is crucial for an early startup to make sure that the venture will have a sustainable growth in the upcoming years as well, not just a short growth.
I think this is really important for this time around because right now there's still a winter of funding. The founder should think more about generating revenues, surviving and sustaining the company as long as possible in this time.
Written by Jinny (Underdogs)
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