Solution in sight for SMEs

Sourcing the right raw materials, at the right price, without incurring inventory costs, is now no more a challenge

The woodworking sector in India is growing fast and multiple factors are offering more business opportunities in this industry. Be it online retailing of furniture, entry of international brands, the ‘Make in India’ mission, the ‘Smart Cities’ concept, or the booming hospitality sector, each of these initiatives is encouraging domestic manufacturing and sourcing.

Indian furniture factories are adopting mechanised manufacturing for higher volume low wastage; consumers are becoming more conscious about functionality, rather than just aesthetics; benchmarks of end products are rising to those of imported furniture.

Existing factories are increasing capacity to grab more business volumes, and emerging entrepreneurs are growing fast with new channels of sales. But margins are becoming lean for manufacturers due to competition.

For small and medium enterprises (SMEs), the key to stay competitive in this market is to procure raw materials at best price and manage inventories under a just-in-time model. But the challenge is that these two metrics are inversely proportionate.

SMEs get raw materials at 5% to 25% higher price, compared to large enterprises. The former also face the challenge in getting credit and a smooth buying experience.

So credit becomes another crucial factor for SMEs, because their customers pay after completion of projects. Procuring raw materials on credit compels them to go to their existing suppliers and rely on brands and choices they offer. This often means compromising on multiple elements like colour, trend, functionality, delivery schedules, availability of stock, etc.

SME marketplace

Woodzon, a company founded in Bengaluru in 2016, is offering a chance to SMEs to scale up and transform the sector. It sources raw material at competitive prices across categories – among them plywood, laminates, adhesive, edge band tapes, hardware, tools and machines – to sell it to SMEs directly.

It sources raw material directly from manufacturers, offering a direct-from-factory model to SMEs. Woodzon states it has more than 75,000 SMEs on its platform and is currently focused on manufacturing hubs in Karnataka, Andhra Pradesh, Tamil Nadu and Kerala.

With more than 1,100 registered suppliers, it claims to have become India’s largest online B2B marketplace dedicated to the woodworking industry.

SMEs get up to 20% lower price when they procure through Woodzon and also get credit facility through finance partners such as Lendingkart, Electronica Finance, Capital Float, etc.

Woodzon is also offering revolutionary buying experience which includes real-time tracking of product delivery, additional cash back and freebies through affiliate programmes, product comparison and wider range of brands, combo offers and many more.

When SMEs go digital via portals like Woodzon, their purchasing power and project flows become transparent and boost their credit-worthiness. This makes it easier for SMEs on the platform to borrow from banks.

Boon for industry

In the current scenario, where the government is pushing more people into digital payments, and where demonetisation has opened a level playing field for e-commerce trading, SMEs can look forward to better exploiting the market potential and a better trading system shortly.

Woodzon looks at the Goods and Services Tax (GST) as a boon at this stage because the ‘one nation, one tax’ policy reduces a lot of unnecessary paper work on taxation, improves shipping across the country, promotes the hub-and-spoke model for inventory management, and offers easy tax compliance.

Not just buyers, suppliers also find this model as a game changer because they get bulk orders with upfront payment. In the current scenario, credit and payment collection eat a major portion of their profits.

Similarly, brands benefit a lot through much wider reach, focused branding, product awareness creation, product recommendation based on profile, gather customer feedback for product betterment and so on.



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