Borzo survey: MSMEs in India’s apparel face logistics, sustainability issues

Rising competition and the fast-fashion trend are driving businesses to optimise their operations and logistics to stay ahead, informs Alina Kisina.

The MSMEs in Apparel and Textile sector is an integral part of the Indian economy, contributing significantly to employment, exports, and industrial growth. As one of the country’s largest and most diverse industries, it encompasses everything from raw material production to ready-made garment manufacturing. According to the India Brand Equity Foundation, the industry is expected to grow at a 10 per cent CAGR, reaching $350 billion by 2030, with exports projected at $100 billion. Currently, the sector is evolving rapidly due to the booming e-commerce market, shifting consumer preferences, and a growing focus on sustainability. However, rising competition and the fast-fashion trend are driving businesses to optimise their operations and logistics to stay ahead.

As businesses work to maintain profitability, logistics and delivery have become essential to ensuring smooth operations. In light of these trends, Borzo (formerly WeFast), a global same-day delivery company conducted a survey to explore the challenges faced by Apparel and Textile MSMEs. The survey was conducted across 15+ cities, including Mumbai, Delhi, Pune, Hyderabad, Bangalore, Jaipur, Ahmedabad, Kolkata, Gurgaon, Noida, Lucknow, Indore, Chandigarh, Surat, Ghaziabad, Faridabad, Thane, and Nashik.

The survey reveals how companies are adapting to modern demands by tackling diverse consumer preferences, addressing logistics pain points, embracing sustainability, and managing the costs associated with daily operations, all while striving for growth and efficiency in an increasingly dynamic market.

The key findings of the survey include:
Categories of products sold: According to the survey, apparel accounting for 78.5 per cent is sold predominantly, whereas fabrics make up 31 per cent, and home textiles contribute 7 per cent. Industrial Textiles and Raw Materials made up smaller portions of sales, contributing 1 per cent and 3.5 per cent, respectively, focusing on a strong focus on finished products in the form of apparel.

Business challenges: In the apparel and textile sector, 40.5 per cent of businesses face challenges with logistics and deliveries, followed by 32.5 per cent struggling to meet fast fashion demands. Skilled labor issues impact 30.5 per cent of businesses, while 23 per cent grapple with rising operational costs. Customer acquisition is a challenge for 21.5 per cent, and 20.5 per cent face difficulties in managing inventory effectively.

Average order value: The majority of respondents (38 per cent) reported their average order value ranging between Rs 1,000 and Rs 5,000, highlighting this as the most common price bracket for transactions. A significant portion, 23.5 per cent, stated that their orders are typically below Rs 1,000, indicating a substantial presence of smaller-value transactions. About 22 per cent of businesses have average order values ranging from Rs 5,000 to Rs 10,000. Orders with higher values are less common, with 7.5 per cent falling between Rs 10,000 and Rs 25,000 and only 6.5 per cent exceeding Rs 25,000.

Monthly order volume: The survey also reflects that 51.5 per cent of businesses process fewer than 50 orders per month. However, 32.5 per cent of businesses handle between 50-200 orders monthly, while the rest, only 6 per cent, process between 200-500 orders. Only a few, over 4.5 per cent of businesses process over 500-1000 orders, and only 4 per cent process over 1000 orders.

B2C vs B2B business model: The survey reveals that in the sector, approximately 70.5 per cent of responding MSMEs primarily operate on B2C models, while 19.5 per cent maintain a balanced mix of B2C and B2B sales, highlighting a strong orientation towards B2C business model. Only 10 per cent focus primarily on B2B trade.

Impact of festive season: The festive season is a significant growth period for the sector, with the survey revealing that 36 per cent of businesses reported a 20 per cent-30 per cent increase in orders compared to the previous year, and 35.5 per cent saw a 10 per cent-20 per cent rise. Notably, nearly 24 per cent experienced an order increase of over 50 per cent, while only 3.5 per cent reported a 10 per cent-20 per cent decline during the festive season.

Monthly shipments via same-day logistics: According to the survey, 71.5 per cent of MSMEs in the sector have a monthly shipment value between Rs 50,000 and Rs 2,00,000 through same-day logistics. Another 7.5 per cent ship goods worth Rs 2,00,000 to Rs 5,00,000, and 3.5 per cent ship products valued between Rs 5,00,000 and Rs 10,00,000. Only 2 per cent of businesses handle shipments worth Rs 10,00,000 to Rs 50,00,000. Meanwhile, approximately 14 per cent of businesses ship products worth less than Rs 40,000 per month.

Logistics pain point: According to the survey, 63.5 per cent of MSMEs identify high delivery costs as the primary challenge in their logistics operations. Delivery delays come second, with 49 per cent of businesses reporting this issue. Additionally, 20 per cent face limited delivery options, while 20.5 per cent struggle with over-reliance on third-party courier providers.

Importance of same-day delivery: Same-day delivery is vital for the majority of businesses, with 81 per cent considering it extremely important for their logistics operations. Meanwhile, 12 per cent view same-day delivery as important but not the only delivery option. Only 3 per cent of businesses regard same-day delivery as less significant in their operations.

Preferred Delivery Timelines: As consumer preferences shift towards quick deliveries at convenient time slots, businesses are adapting to these demands for both incoming and outgoing shipments. According to the survey, 58 per cent of businesses prefer a same-day delivery window of 30 to 60 minutes, while 6 per cent are comfortable with a 1–2-hour window. Only 12 per cent are flexible with delivery at any time during the same day, reflecting the growing demand for faster delivery services. Meanwhile, just 14 per cent of businesses feel the need for a 10-minute delivery window.

Website sales: Despite the growing popularity of the D2C model, only 28.5 per cent of businesses sell their products through their own website. Among those, the majority (57.8 per cent) reported challenges in managing multiple deliveries during sales promotion events. Meanwhile, 71.5 per cent of MSMEs rely on external channels for their sales instead of their own website.

Support for logistics: MSMEs are seeking support to improve their logistics in order to better meet customer demands and provide enhanced service. According to the survey, 56 per cent of businesses seek more reliable same-day delivery services to enhance their logistics and delivery operations, 29 per cent aim to reduce logistics costs, and 15 per cent highlight the need for improved technology to track and manage deliveries.

Use of sustainable packaging: Marking a significant shift towards sustainable packaging, 70 per cent of businesses in the sector are using sustainable packaging materials, while 30 per cent have not.

Cost of sustainable fashion: Sustainable fashion products are typically more expensive for several reasons. According to 47 per cent of MSMEs, high raw material costs are a major factor, while 19 per cent attribute the high costs to processing expenses. Only 6.5 per cent believe the cost increase is due to the limited production of sustainable products, 5 per cent mention limited sourcing options, and 20.5 per cent think that a combination of these factors contributes to the higher cost.

Future of sustainable fashion: Looking ahead, 59.5 per cent of respondents expect the cost of manufacturing sustainable fashion products to decrease, while 40.5 per cent do not foresee this happening soon.

Alina Kisina, CEO, Borzosaid, “The perspective of MSMEs in the apparel and textile industry highlights the substantial efforts companies are making to keep pace with the ever-evolving demands of consumers. Since Indian MSMEs in this sector tend to be smaller and more fragmented compared to those in other countries, price alone isn’t the primary driver of competitiveness. Instead, factors such as improving logistics efficiency, cost management, and a focus on sustainability are critical to staying ahead. The findings reflect the pressing need for more streamlined processes, pointing to challenges like high delivery costs and the growing pressure of fast-fashion demands as key drivers of change in the industry. It is essential for businesses in the sector to adapt quickly to these evolving needs to ensure long-term success and competitiveness.”

In India, Borzo has a fleet of over 50,000 delivery partners who serve the Enterprise hyperlocal and SME segment.

About Borzo

Borzo is a global delivery service that enables intra-city delivery for businesses. Deliveries range from on-demand and hyperlocal and can be performed via any route, any transport, at any weight or size, for a competitive price. Their algorithms optimise numerous parallel deliveries taking into account the geographical routes, packages’ contents, couriers, and many others to ensure the feasibility of the same-day delivery. The services are available in various countries in Asia, Latin America, and Europe and are used by over 500 thousand active couriers and over 2 million customers ranging from individuals to enterprises with the main focus on hyperlocal and SMEs.