88Spares Wants to Weave a Connected, Efficient Textile Industry
Jakarta. 88Spares, an online business-to-business marketplace for the textile industry, plans to offer its services in the first quarter of next year to small and medium-sized Indonesian businesses to help improve their competitiveness by cutting out the role of middlemen.
Their website has been accessible for viewing and vendor registration since the beginning of September. At least 700 vendors have been queuing to join the marketplace so far, according to Hartmut Molzahn, 88Spares co-founder and chief executive officer.
"We are creating the platform and nobody has done it before," Molzahn said in an interview on Friday (15/09).
The Jakarta Globe talked with two of four the 88Spares founders, Hartmut Molzahn and Rosari Soendjoto, about the progress they have made so far as well as their plans for the future. The interview took place in Nusa Dua, Bali, on the side of the Textile Manufacturers Federation's annual meeting.
At first, 88Spares wanted to help small and medium-sized companies in the textile and garment industry get cheaper spare parts for their machines through a reliable online platform.
The idea came in October last year but the brand was launched in April at the Indonesia International Textile and Garment Machineries Exhibition 2017.
Molzahn said textile and garment manufacturers welcomed his idea of an easier and cheaper way to get spare parts directly from the source, bypassing the role of middlemen who drive up both the manufacturer's cost and the price of the end-product. According to his calculation, manufacturers can cut up to 20 percent of their usual cost by using his service.
"What we believe is that digital technology can help them along the value chain to make the product much cheaper in the end," he said.
"By not going to the trader but directly to the manufacturer, the manufacturer can make more money and the garment maker can still produce cheaper," he said, noting that lower prices can also lead to more export orders.
New Idea
After the exhibition in April, 88Spares decided to expand its services beyond spare parts, and extend it to yarn and fabric to cater to the needs of garment manufacturers who have some difficulties in finding specified fabric.
"I got a lot of requests over the past few years to find people who can make the fabric because we have this gap," Molzahn said.
Through the expansion of services, it became easier to compare 88Spares with existing business-to-business general marketplaces such Alibaba or Bizzy.
Still, Molzahn said his past experience as an Indonesian-based executive of a spare parts manufacturing and trading company makes him stand out in the industry.
Molzahn said he is not afraid playing in a niche market. He said the textile industry is considered the "backbone of industrial growth" in Indonesia and contributes to about 2 percent of the global textile and textile products supply.
"As long as humanity is not deciding to go naked, this customer base will grow because people spend more on textiles and the population is growing," Molzahn said.
Fighting Goliath
Despite the company's goals, one of the co-founders Rosari Soendjoto said she is well aware that 88Spares are facing at least two giant challenges.
Firstly, the company will have to overcome dealing with aging business owners or brick-and-mortar retailers who prefer to run their businesses in an old-fashioned way.
The second challenge is that it will start a war with smugglers and others who have made a fortune by maintaining high prices for end buyers and shortchanging vendors.
"But we are the first of its kind, and for the textile industry, we believe in our business model [...] We hope we can help Indonesia by contributing to the foreign exchange," Rosari said.
Rosari said the founders have been bootstrapping their way to make 88Spares a success so far, by pouring in their own money into the company.
"We will announce something soon," she said, hinting at fresh funding in near future.
She declined to explain further but if there is any new funding, she said the money will go to the site's technology instead of marketing.
"I believe if the technology is perfect then the vendors will come by itself. Still, we can't be so rigid in our planning," she said.
The Jakarta Globe was invited by online marketplace 88Spares to attend 2017's annual Textile Manufacturers Federation (ITMF) meeting in Nusa Dua, Bali.
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