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.
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.
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 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.