It’s Tuesday, and today we’re diving into Showroom B2B, an Indian sourcing platform for the apparel industry. Founded in 2020 by Abhishek Dua and Shubham Gupta, the company just closed its latest funding round, raising $17 million in a Series A led by Cactus Partners, with support from Zephyr Peacock, Jungle Ventures, Accion Ventures, NBD Ventures, Lighthouse Canton, and Alteria Capital.

India’s apparel sector stands at $112 billion. To put that number into perspective, if it were a country, the sector would be the 70th largest economy in the world, rivaling Serbia, Croatia, and Ivory Coast. Some projections suggest that by 2030 it could reach $360 billion. The size and growth of the apparel market stem from India’s massive population and expanding middle class, which since 2014 has grown from 300 million to 520 million.

For us, three aspects are central to how the sector currently operates: how it grows, who manufactures the clothes, and why, despite its size, the supply chain remains inefficient.

The growth is driven by tier-2 and tier-3 cities, as well as by local private-label brands and retailers.

Zudio is a great example here. It is a value-fashion brand launched in 2016 by Trent Limited, the retail arm of Tata Group. While the brand initially focused on major metropolitan markets, it has since shifted toward building its footprint in smaller cities. Recently, Zudio’s executives noted that two-thirds of its new store openings are in new towns and cities.

A similar story is unfolding with Zivame, another apparel company now backed by Reliance. The business plans to open 60 to 80 stores in the near future, with a particular focus on tier-2 and tier-3 cities.

And there are a bunch of other brands and retailers following a similar pattern: offering value-driven yet stylish clothing and expanding rapidly into smaller cities. These cities are growing, their populations are increasingly digital and therefore able to discover new brands, and in many cases the markets are not yet saturated, leaving room to capture meaningful share.

Adding to that are taxes. Apparel pieces priced under roughly $27 are taxed at 5%, while those above that threshold are taxed at 18%, according to the same report. This creates a strong incentive to operate in the value segment, where pricing can stay below the higher tax bracket.

To a large extent manufacturers are anonymous. There are 8.9 million unincorporated apparel-manufacturing establishments, meaning informal manufacturers. Around 80% of textile capacity, which includes garment production, is generated by small manufacturers.

These producers are often located in remote areas, lack a digital footprint, and struggle to access credit. Without credit, scaling operations becomes extremely difficult. At the same time, each manufacturer competes with millions of similar players.

While this structure lowers switching costs for retailers¹, it puts enormous pressure on manufacturers. A single quality issue or delay can result in a brand shifting production to another factory nearby.

Choice is good. But managing thousands of small manufacturers in a sector that has yet to digitize at scale is hard and inefficient. Especially when small retailers still play a massive role. Meaning that neither manufacturers nor retailers have the infrastructure to digitize procurement or properly manage last-mile logistics.

Hence, massive delays. Lead times typically range from six to nine months, with goods often arriving around 30 days late. That’s no Shein. Because lead times are so long, brands and retailers frequently misjudge demand, which leads to inventory pileups. And because inventory remains unsold and manufacturers extend credit to retailers, manufacturers receive payment only after the retailers sell that stock.

As a result, brands are frequently forced to discount. Around 40% of discounted apparel items stem from a mismatch between planned and actual sales. Another consequence is environmental damage. Tons of clothing go to waste, with India contributing to 8.5% of global textile waste.

Then there’s the problem of the actual management. Each brand works with a large number of manufacturers. They require regular factory visits to monitor production, assess quality, verify reliability, and coordinate orders.

Both sides need a more efficient system and that’s what Showroom B2B offers.

Showroom B2B is a B2B apparel sourcing and execution platform targeting tier-2 and tier-3 city brands and manufacturers. The company brings the two parties together to digitize their operations, with the end goal of increasing profits for both. It combines two product surfaces:

⠀Let’s go over what each surface offers.

The company operates both a marketplace, with a traditional user flow of browsing, ordering, and delivery, as well as physical showrooms. On the one hand, this approach dramatically increases supply, since there are many more clothing items to choose from. On the other hand, retailers can still inspect quality, understand how the fabric feels, and see how the color scheme looks in person. That’s how Showroom B2B combines product quality verification with delivery predictability. Beyond that, smaller retailers are offered a handpicked assortment customized to hyperlocal demand.

As with manufacturers, small retailers also have trouble accessing credit and often rely on informal financing from distributors. Informal credit is unpredictable, as it depends heavily on personal relationships and the distributor’s cash position.

Leveraging its data advantage, Showroom has built several financing offerings, including a BNPL option, working capital loans, and credit lines. Because the company has data on a retailer’s true size, traction, product mix, and broader market context, it can better evaluate creditworthiness and price risk accordingly.

On the enterprise side, Showroom provides an AI-driven platform with features such as demand forecasting, supplier matching, end-to-end transparency, sustainability tracking, cost analytics, etc. By using the platform, retailers can align sourcing with expected demand, track production in real time, ensure product quality at different stages, measure environmental impact, analyze costs, and make pricing decisions.

We can think of the platform as a control tower. Everything is standardized, everything is measured, every action is tracked. This allows retailers and Showroom itself to surface any inconsistencies, to deal with issues immediately as they arise, and use that experience to tweak the flow and improve system performance over time.

While the core focus is on retailers, the platform would not be viable without digitizing manufacturers as well. They onboard onto the platform and operate through their own app. Through the app, they upload catalogs, track orders, and manage logistics. Manufacturers can also obtain credit and even advertise their business to prospective customers.

The Showroom team supports each manufacturer during onboarding so they can become comfortable with digital operations more quickly. The company then routes additional orders to these manufacturers, since they now have access to a broader demand base. Manufacturers can focus on production, while Showroom handles retailer matching, logistics coordination, and other back-end processes.

As I was studying the business, the word I increasingly associated with it was efficiency. As an intermediary, the only way a company like Showroom B2B can survive is by making it more efficient to work through an intermediary than to go direct.

In theory, going direct makes sense. Imagine a manufacturer, a distributor, and a retailer. Why wouldn’t a retailer just hire a group of truck drivers and move goods directly from the manufacturer to its stores? The costs seem similar, but without a distributor taking a cut of the margin and potentially with greater speed.

However, a distributor works with dozens of retailers. They have built the physical and digital infrastructure. They possess tacit knowledge of how to organize the supply chain efficiently. For those reasons, they can have an edge over an internal team.

To become a true value-add partner to the ecosystem, Showroom had to build an environment in which it made economic sense for participants to join and remain, while also ensuring the unit economics worked for itself.

And one way to understand Showroom’s model is to break down the value it has created into three layers:

On top of all this, there is no commission on goods sold. Manufacturers and retailers do not pay a commission on transactions, meaning that only the value-added services are monetized. Put differently, Showroom earns revenue only from services that the participants cannot easily replicate on their own.

The company only makes money from those value-added services, like logistics solutions and bulk-order handling operations.

The business has been expanding rapidly. It has been doubling revenue every year for five years and is already profitable. The company works with 8,000 retailers, including 20 large retail chains.

I don’t believe in a future where every company vibe codes its own software. But for larger retailers, what Showroom offers is still not at the level of a full ERP or CRM system. There is a chance that larger retailers, which I assume are the biggest revenue drivers, will either build on top of their existing software stack or that the vendors they already use will launch a dedicated module that copies Showroom’s functionality.

Launching owned production facilities also gives me pause. While it is capital intensive, that is not the main issue for me. The bigger question is why this step is necessary. It could be a capacity issue, but as we learned, there is significant available capacity in the market and many manufacturers are not fully utilized. Or is it so difficult to find consistent quality manufacturers that the company has to build its own factories? If that is the case, it would suggest that software alone does not fully solve the issues manufacturers face and that not many can be deeply integrated into the system. It would also imply that scaling the company may require moving further into an asset-heavy model.

Both risks are manageable. The company works with retailers on long-term contracts, which ensures higher switching costs and improves revenue predictability. The longer it works with these customers, the better it can personalize the service: selecting the right manufacturers, predicting fabric and color preferences, establishing more efficient delivery schedules, and refining production cycles. Over time, Showroom becomes more embedded in the client’s operations.

You can imagine a scenario where the entire supply chain is so optimized, from material sourcing to specialization by geography and skill, that opening a factory focused on a single client or category becomes economically rational.

There is meaningful compounding in better supply allocation, faster repeat cycles, and improved assortment management. These improvements drive stronger outcomes for clients and, at the same time, improve Showroom’s own unit economics.

What’s the one lesson investors and founders can take away from Showroom B2B?

There are still hundreds of billion-dollar-plus markets that require coordination. There is an opportunity not only to capture a share of these massive markets, but also to meaningfully accelerate their growth.

1: Although there are still some switching costs: a brand still needs to get to know the manufacturer, to establish some semblance of a process, etc.