San Blue Pvt Ltd - Case Study

7/28/2019 San Blue Pvt Ltd - Case Study

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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

DirectorF2F)

Mr. Amarashish Phanse (Sr. Manager) Dr PR Roy (DirectorF2F)

Discussion Date and Location

Date: 19 Dec 2012

Time: 10:00 Hrs13:30

Hrs

Place: Ahmadabad Address: 201/202/203 Sapphire Complex,

NR Cargo Motors, Nr Kolkata Bazar, C G

Road, Ahmadabad 380009


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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 B2Btextile 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
http://www.fibretofashion.com/http://www.fibretofashion.com/


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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 countrysexport 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.


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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


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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 studentsthis 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


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(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 regimesa 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 industrysometimes driven by global competition and, at other

times, by international trade regulations. However, few areas of policy weakness stand

outlabor 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


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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 ofdifferent 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 toserving 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 theshortest time.
http://www.alibaba.com/http://www.indiamart.com/http://www.made-in-china.com/http://www.made-in-china.com/http://www.indiamart.com/http://www.alibaba.com/


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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


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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.


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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.


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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?


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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 organizationfollowed by line managers, client managers and other IT folks. See Exhibit4.
http://www.technicaltextiles.net/http://www.technicaltextiles.net/http://www.technicaltextiles.net/


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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 OutlookSouth 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


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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 SolutionsSee Exhibit 6.

8.9. Social and Economic PerformanceThe 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 AwardsSan 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 (3)

Ranked among top 20 B2B sites by BSG Ltd.

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


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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 acombination 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.
http://www.technicaltextile.net/http://www.technicaltextile.net/


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Focus on technology and innovation. The companies need to focus on innovative use of hi-

touch 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.


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Exhibit -1

Source: www.alibaba.com

Exhibit-2

Source: www.indiamart.com


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Exhibit-3

Source: www.made-in-china.com

Exhibit4:


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Exhibit-5 :

Premium Membership:

Exhibit6:

Ad Solutions

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


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References:

1. http://www.fibre2fashion.com/Retrieved on17/03/2013

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/
http://www.fibre2fashion.com/http://www.fibre2fashion.com/http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdfhttp://www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdfhttp://www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdfhttp://www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdfhttp://www.technicaltextile.net/http://www.technicaltextile.net/http://www.technicaltextile.net/http://www.ficci-b2b.com/sector-overview-pdf/TEXTILES.pdfhttp://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.insideviewtechnologies.com/directory/fibre2fashion%20-%20Retrieved%20on%2017/03/2013http://www.fibre2fashion.com/

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San Blue Pvt Ltd - Case Study