Reliance’s attempt at organising kiranas (mom-and-pop grocery stores) is well documented. Distributors of FMCG companies are already up in arms as Reliance Retail’s economies of scale and buying power have helped it undercut them and sell to kiranas at a lower price. Reliance is fast becoming a master distributor of sorts. 

But there is another B2B category that has flown under the radar. It’s the category in which Reliance first tried its hand at being a B2B player: fashion. 

According to a report by the consultancy Mckinsey in 2019, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world. But the business is still largely unorganised, with formal retail accounting for just 35% of sales in 2016 and likely to reach around 45% by 2025—still a relatively low proportion.

Ajio Business, Reliance’s B2B play in the fashion retail market, got its first order almost exactly three years ago—on 26 November 2018. It has since onboarded more than 3,000 brands and 130,000 small fashion stores across the country, according to information posted by the company on Google Play Store. But it is not the only company trying to dress up small town India in a big way. Its rival, B2B e-commerce startup Udaan, has also made major strides in becoming a master fashion distributor. 

The clothes sold on Ajio Business are very different from those on Ajio.com, the B2C portal. You won’t find the likes of Levi’s, Superdry, or Armani here. Instead, you’ll see national or regional brands such as Campus, Luck, Highlander—the kind of labels you find in 1,000 sq ft stores. But smaller and more local doesn't mean all and sundry, because Ajio Business can be quite picky about who it onboards.

The company essentially built its business around two teams. The first is the sourcing team. These were executives with specific skills in the fashion industry; graduates from NIFT and people with textile experience who went travelling across the country's major apparel clusters to set up the business—from Tirupur in south India and Ahmedabad and Surat in the west, to Agra and Delhi in the north. Agra, for example, is famous for its footwear. 

But it wasn’t as easy to list on Ajio Business as it was on rivals like Udaan and Meesho, said some of the sellers The Ken spoke to. Ajio would ask for patents and trademark documents in order to avoid fake products from being sold. 

“Mukesh Ambani and Manoj Modi were adamant on the quality of products sold on Ajio,” said one of the executives mentioned above. Reliance has plans to integrate Ajio Business sellers with Ajio.com, giving them access to its B2C customers as well. But as of now, this integration is still a work in progress. 

The sales team, meanwhile, were executives with experience in telecom and FMCG companies tasked with onboarding retailers. The company first started off with pilot projects in Mysore in Karnataka, and parts of Andhra Pradesh and Telangana in 2018. A retailer being onboarded needed to submit 10 documents—such as GST and licence numbers, proof of business, photographs of the shop, etc. The idea at the time was to make every one of these shops a payments bank branch for JioMoney, Reliance’s fintech venture, though not much action has been seen on that front recently. 

But just like in the case of sellers, not every retailer could shop on Ajio Business, and the platform has been restricted to an invite-only model. Another of these executives that The Ken spoke to said that the reason for this was to ensure there is control over where and how the products are being sold. It was only in late 2020 that the app was even listed on Google Play Store. 

A lot of transactions on the platform are also offline and Ajio Business’ foot soldiers often go to the shop owner to collect the payment and deposit it at the nearest Reliance Trends store. But not every pincode has this service enabled. 

Unlike Ajio B2C, Ajio Business is very much an operations-driven business, rather than a tech-first venture. The former Ajio executive quoted above says the number of employees employed in Ajio Business was in the thousands by 2020, while the B2C business likely had less than 300 executives working from the central office at that point, mostly in tech.

Meanwhile, rival Udaan’s positioning is slightly different from Ajio Business, a second executive claimed. They are seen more as enablers of business, solving some of the niggling issues that always existed in the market.

B2B sellers used to share product catalogues through WhatsApp with potential retailers, who then placed orders on the app or through calls. But the problem was, who would take care of the logistics and payments? 

Udaan, which already had a sprawling B2B supply chain spanning multiple categories like food, FMCG, electronics, etc, diverted its fleet to collect such orders from apparel sellers. And it integrated its app with WhatsApp well. For instance, sellers have been sharing links to their products through WhatsApp by clicking on the WhatApp icon in the Udaan app. 

Udaan also didn't have quality control checks that were as strict as Ajio Business, so knock-offs could be sold through it. And Udaan did not have an invite-only model, which helped it onboard more sellers. 

All this led to Udaan taking a lead over Ajio Business. One of the executives quoted above said that last year, Udaan was doing at least 1.5X the business of Ajio Business, mainly driven by sales in the Hindi heartland—in states such as Uttar Pradesh, Bihar, Madhya Pradesh, and Rajasthan.

Which explains why Ajio Business is intent on capturing the northern region, even though it is quite strong in the southern states and parts of the west. 

The company has been trying to poach executives from Udaan to acquire know-how on the market. Last year, for instance, it hired Sadanant Kamat from Udaan as its general manager of planning and analytics. It has also been offering discounts to retailers, something Udaan rarely does. ‘Daily discounts’ had sort of become a buzzword inside Ajio Business, said the executive quoted above, and around 70% of the sales in 2020 were happening through daily deals.

But headhunting and discounts apart, Ajio has something else up its sleeve that Udaan does not possess—private labels.

Reliance offers many of its brands to retailers on Ajio Business, including apparel labels such as Netplay, Awasa, and Dhuni, and footwear brand Jiverse. All these are brands available at Reliance Trends stores, which are present in many tier-3 cities and not just in posh locations and malls. (Reliance had 2,850 fashion retail stores as of March 2021.)

“For them (small-town retailers), having access to this inventory is itself a big thing,” said the second executive quoted above, noting that a Reliance Trends store could be synonymous with a mall in a “pretty tier-3 kind of city". 

"So Reliance Trends brands being sold there was a big deal for them. They buy in bulk.”

As of 2020, Ajio Business’ daily revenue was ranging between Rs 1 crore (US$133,000) to Rs 10 crore (US$1.3 million)—the latter a benchmark that the company was achieving once or twice a month by the end of that year. And according to the executive quoted above, these sales were mostly driven by Reliance’s own brands. 

Just as in grocery, it looks like private labels are increasingly becoming the name of the game in fashion too.

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