Late summer will see launch of 'private marketplaces'
All it needed was a radical thought to reimagine the way textile players interact and share materials, one that helps the industry grow sustainably, with a digital approach to material sourcing. And this is exactly what the Stockholm-headquartered startup, Material Exchange, did - having built a highly secure vault containing approximately 40,000 digital materials from some of the largest material suppliers, it works directly with the world's leading retail, apparel and footwear brands to analyse, optimise and digitise their material sourcing and development processes. CEO Darren Glenister explains Paulami Chatterjee how it is helping brands and suppliers better manage their material inventory in the face of the pandemic.
What was the trigger that led to the setting up of Material Exchange? How did you go about creating this huge repository of approximately 40,000 digital materials from some of the largest material suppliers in the world?
The way fashion interacts with materials continues to be stuck in the past. Material suppliers continue to send physical material catalogues hoping that brands will find something that might be selected for the upcoming season. Many of these material books are left over, unused and often contribute to unnecessary textile waste. Material Exchange decided to develop a radically different approach to the existing sourcing model, which is predominantly based on overconsumption and waste. The industry was looking for an alternative solution to traditional sourcing, one that reimagines the way the industry interacts and shares materials, one that helps the industry sustainably grow for the future, a digital approach to material sourcing.
As you launch this new Open Marketplace for suppliers and brands, what are your expectations from the new launches? How is it going to make communication easier for brands and suppliers?
As many brands and suppliers operate on a global scale, communication and efficiency have become a problem as teams are connecting remotely across many time zones. Material Exchange enables both brands and suppliers to create, manage and add their team members to the platform which allows for seamless communication and collaboration. Material meetings, group messages and team meetings can all be held within the platform. Materials, testing reports and detailed material data can all be shared via the inbuilt communication tool, helping teams communicate with customers across the globe efficiently and creating visibility into productivity.
How many material suppliers, brands etc have you been able to tie up with since your launch?
The Open Marketplace was launched early April 2021 for suppliers, to enable them to digitise and upload their materials to the platform in preparation for the brands and buyers joining in late spring. Material Exchange already has over 350 materials suppliers leveraging the platform and work with over 100 individual brands, all of which have been invited to be part of the Open Marketplace. We have seen a fantastic response from suppliers already, many of them are excited by the dynamic new look and easy to use system, and they feel it will be a vital tool in their future. We are evolving the way our brands use Material Exchange. No longer do brands require a formal contract to search and view materials. Individuals representing brands can sign up for their own personal account and begin searching materials, suppliers and material data immediately.
How did Material Exchange fund itself? And what is the business model?
Material Exchange was created and had initial funding in 2018. In 2019, Material Exchange completed a €2 million seed investment round with Inventure - an experienced Nordic-based venture fund. Fast forward 12 months, during the height of the pandemic, Material Exchange completed a €5 million investment round led by Norrsken VC that also included leading VC funds, Partech, Lyra Ventures and DayOne Capital.
How did the pandemic impact this exercise and launch?
The pandemic highlighted flaws in the traditional material sourcing processes, many saw digitalisation as the silver lining that the industry was in desperate need of. As many of the analogue processes such as in-person material meetings and material trade shows ground to a halt, this meant materials could not be sourced and products struggled to be made. Material Exchange stepped in to help; we gave brands and suppliers access to our platform for free to enable the footwear and apparel industries to continue to collaborate during the most uncertain of times. Many of the brands and suppliers have chosen to stay with Material Exchange and incorporate our platform into their existing processes, to not only source the right materials from the right suppliers quicker, but prevent future disruption to supply chains if such an incident should occur again. We have spoken to many of our customers, both old and new, to understand their current and future needs. We developed the Open Marketplace around these needs and in view of emerging trends such as 3D.
Blockchain, AI, VI - newfangled terms that are increasingly becoming part of the industry vocab. Any thoughts of leveraging your solution on these lines?
As the industries and technology is developing rapidly, we're planning to use AI technology to help match the right materials to the right buyers.
The pandemic is here to stay, ebbing and receding in waves - at least that's what we understand as of now. How has this impacted customer behaviour? What do you predict for the future?
The pandemic has highlighted the areas and processes of the footwear and apparel industries that are in need of real transformation - or digital transformation rather. Many brands are now considering how much of their workflow could become digital, bringing 3D design to the forefront. As a result, brands are now looking for digital materials and quality material attribute data to enable them to create virtual products, and limit the reliance on physical materials and traditional sourcing methods.
How do you ensure transparency across the value chain of your digital materials?
Material Security is of the highest importance to us, information, materials and data are protected within the platform; it's up to the suppliers who are able to see this information. To increase transparency across the value chain, suppliers are able to disclose company and material information to customers and prospects. Each supplier has their unique company profile page where they can add their company information such as location, company contacts, production capacity and much more. Suppliers can also disclose key information such as sustainability accreditations, certificates and material tests, all of which can be uploaded into their company profile to be viewed by brands. The Open Marketplace is the only tool that directly connects suppliers, materials, documents, material data and brands in one centralised location.
Hand-touch-feel - how does digitisation, 3D compensate for that?
The touch and feel element is such an important tool when selecting the right materials, it enables designers to examine the materials and gain an insight into its applications and durability. When we digitise a material, we obviously lose the 'touch and feel' element. However, Material Exchange has worked closely with the GS1 US -- an internationally recognised information standards organisation -- for two years, as part of the Apparel and General Merchandise Initiative, along with leading fashion brands, to develop the globally recognised attribute standards for digitising raw materials. The standardised data provides brands with consistent and accurate material data for product development processes to replace the loss of the 'touch and feel' element in material sourcing.
What is the Material Exchange Scanning Hub like? How would it work across different geographies, and in India?
The scanning hubs enable suppliers to accurately showcase their materials in a digital form, in 2D or 3D. The scanning hubs in China and Europe are now fully functional, and are ready for suppliers to send their materials to digitising. The scanning hub in India will be operational by the summer with the latest, state of the art digitalisation equipment.
What upgrades/ new are you looking at following the €5 million funding you received last year?
We are currently in growth mode; we're looking to attract the best talent from around the world to add to our growing and hardworking teams. We plan to diversify into different countries around the world and help more brands and suppliers connect through our platform.
What are the other challenges brands and suppliers are facing with remote working? How can Material Exchange help them better manage such complexities?
As the footwear and apparel industries work remotely, they have limited access to the in-person interaction with customers and prospects that they would have in the normal world. Material meetings to share new materials as well as brand exclusive materials are restricted. By leveraging Material Exchange suppliers are now able to create, manage and share bespoke digital material books with their current brand customers as well as showcase their entire material inventory to new prospects from around the world, opening up new opportunities and revenue streams in untapped markets, helping the industry to continue to work efficiently in times of remote working.
What next on the cards?
The Open Marketplace will go live in late spring for brands and buyers. By then we hope to have even more suppliers fully functional on the platform. The Open Marketplace symbolises a new era for material sourcing and a new sustainable era for the footwear and apparel industries.
In late summer we will be launching the Private Marketplace(s). Private Marketplaces are an invite-only, digital material showcase, organised by brands who invite specific suppliers to source materials based on theme, purpose, season, type and more, all in complete privacy. Rather than searching through thousands of materials in the Open Marketplace, brands can organise a Private Marketplace to quickly and accurately source the right materials for purpose. (PC)
Published on: 16/04/2021
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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