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Why Queen of Raw Credits the Trade War for Getting Brands to Source Deadstock

What happens to all of the yards and yards of unused, unloved fabric piling up at mills and in warehouses around the globe, a symbol of excess in a fashion industry saddled with an unsustainable reputation?

You sell it on Queen of Raw.

That wasn’t always the answer, of course, and that isn’t the default option for everyone—yet. Stephanie Benedetto, who leveraged more than 100 years of family history in the garment business to co-found the startup and now serves as its CEO, is on a mission to bring order to an overstock textile industry run piecemeal in the dark.

Benedetto describes Queen of Raw as a “very simple solution to a very complex problem,” and the commission-based digital marketplace for brands, retailers, mills, students, designers and other parties worldwide to buy and sell their unused fabric certainly seems to be addressing a need in an industry in which “jobbers historically pay pennies—not even pennies on [the] dollar, literal pennies—for unused textiles.”

Numerous business throughout the supply chain are sitting on “hundreds of thousands of yards of one SKU in mint condition on rolls, sometimes still sealed in the original factory or mill” that they’d otherwise would burn or dispatch to a landfill, Benedetto told Sourcing Journal in an interview at the Supply Chain, Innovation, Technology 2019 (SCIT19) conference in New York City last week. She pegs the global textile waste problem at $120 billion—dollars down the drain to one degree or another that stakeholders are eager to recoup. Each yard of fabric purchased through Queen of Raw prevents the consumption of 700 gallons of water, the website proclaims.

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“No one knows exactly how much gets sold to jobbers, or who they ultimately sell to, and that’s part of the problem,” Benedetto said. “One of our goals is absolutely to bring simplicity, standardization and transparency all in one place to an industry without sophisticated record-keeping and access. And do it in a digital space.

“With better data and analytics, everyone wins,” she added.

Analytics and data are playing much larger roles in all facets of the fashion supply chain, ushering in new knowledge helping brands, retailers, factories and designers make smart sourcing decisions and move at speeds that serve the customer without producing more than what can sell. As a startup, Queen of Raw is just starting to amass the quantities of data that can provide meaningful insights and uncover new opportunities.

Connecting buyers and sellers

Today, those working in supply chain capacities use the Queen of Raw app to manually upload pictures of, and information about their deadstock textiles—fabric type and quantity, for example—but the platform also integrates with supply chain inventory management systems that automatically pull in relevant product data. Proprietary tools match buyers with interested sellers across the globe, though the platform always tries to match local parties first. There’s a private side of the platform where enterprise-level companies can transact directly with peers instead of exposing their excess raw materials to just anyone. Buyers can find everything from silk, cotton, denim and leather to trims and hardware, scrap packs and materials bearing the designation “Made in America.”

Benedetto originally didn’t anticipate that “a lot of our sellers turn around and become buyers.” Doing so—buying deadstock in lieu of commissioning virgin materials—requires apparel companies to change their mindsets around seeing another’s trash as their treasure. Consumers’ heightened awareness around anything related to sustainability and environmental responsibility these days is further spurring apparel firms to do something about a problem with few viable solutions.

But legal ramifications tend to be the ultimate determinant when it comes to doing the right thing.

Laws on the books are changing across the globe, incentivizing companies to finally take action, Benedetto explained—and recoup as much of their fabric investments as possible. Companies that make and sell apparel are “incurring costs they didn’t even know and now exposed to liability,” she said, and by offloading deadstock on Queen of Raw, “they’re going to face real dollars now hitting their bottom and top lines.”

Blockchain as a broker of trust

Part of running a global marketplace is ensuring each side of a transaction is comfortable with the other. Queen of Raw didn’t launch with blockchain as a core component of its platform, but quickly realized how the technology could solve some persistent business challenges. In the beginning, Benedetto spent a lot of time jetting from one locale to another, meeting new users and confirming the authenticity of fabrics they wanted to sell on the platform. As the startup scaled, she knew there had to be a better way to close the “trust gap” between buyer and seller—and that’s where blockchain comes in.

Incorporating the blockchain element automates a critical part of the verification process and means that the “history and record for that digital product always exists,” Benedetto explained.

But it’s just one part of that process, she added. An in-house team researches sellers new to the platform based on where they’re coming from, what they’re trying to sell and who else on the platform is a connection. Take exotic animal skins, for example. Different territories have varying rules about where these materials are legal or not, so Queen of Raw had to build business rules governing where skins could be bought and sold. “That’s where we needed some additional protocol,” Benedetto said.

The platform also ensures that payment isn’t released to a seller until the buyer receives and is satisfied with the purchase.

There are plenty of marketplaces out there where people can offload and acquire fabrics, though Benedetto is cognizant of many of the issues hounding competitive sites.

“Our goal is obviously to avoid the issues that we know Amazon and Alibaba have: a lack of transparency, traceability, visibility, trustworthiness,” she noted. “We don’t physically warehouse the goods, we don’t inspect the goods. So we needed to make sure we had those steps in place to curate our inventory for quality and trustworthiness.”

Other developments in fashion are advancing the goal of reducing textile waste, and Benedetto described on-demand manufacturing as “huge for us.” Queen of Raw has partnerships with companies like Nineteenth Amendment, which has produced capsules for Macy’s and “Project Runway,” and “we’re big supporters of Suuchi and others in the movement,” Benedetto said. “I do believe that that’s part of the future.”

Individual designers are particularly keen on sourcing local materials, and tools built into the platform “geolocate what’s around them in deadstock,” Benedetto explained. “Contrary to popular belief, there is a ton of inventory, raw material fabrics, sitting in the United States alone.”

But if there’s nothing local that meets their needs, design creatives tend to see what else is out there across the globe and opt to have a close match shipped using eco-minded approaches like low-emission transportation and recycled packaging.

In one transaction, someone can purchase multiple fabrics from multiple global sellers and Queen of Raw calculates the total cost including shipping, taxes and any applicable duties before routing each component of the order to the applicable vendor.

Splitting hairs on sustainability

Benedetto rues much of the mud-slinging endemic to the topic of sustainability in apparel. Some people have questioned why Queen of Raw works with “the quote unquote hot messes” like fast-fashion brands, even including some of their executives on its advisory board. But the reason for doing so is simple. “A small impact and a small percent of changing their way of doing things has a massive impact on the world,” she explained, “and opens up a massive amount of inventory for you. Why wouldn’t you want that?”

She worries that companies hesitant to take any steps into sustainability for fear of being attacked will “feel stuck in the mud and not do anything”—and that’s not a viable option, either.

There might be good reasons to examine both sides of the deadstock issue, however. “Mills are overproducing knowing there is a market for [excess textiles],” said Melanie DiSalvo, who describes the concept of deadstock as “greenwashing.” She spent seven years in Asia in product development, production and supply chain management for brands including Ralph Lauren, Abercrombie & Fitch, AG Jeans, Walmart and Macy’s before founding the Virtue+Vice website to reveal “how the fashion industry really works, and what is being done to create a more sustainability and ethical future.”

“We shouldn’t be burning textiles or garments or getting rid of them in any way but these markets are making it too easy to overproduce, have the benefits of economies of scale and then get rid of [these fabrics],” she explained.

DiSalvo also questions the role of true deadstock in large apparel value chains. “True deadstock has damage,” she explained, though those defects can range from minor to significant. “You don’t know the damages when you buy it [oftentimes] and that can lead to quality problems, which leads to garments lasting for less time, which leads to them ending up in the landfill.”

But like Benedetto, DiSalvo agrees that a “lack of transparency” obfuscates the deadstock issue even further. “There’s really no way of knowing if this actually was something a brand rejected or a mill produced too much of because they knew they would be able to sell it off,” she added.

Why the trade war is good for business

Circumstances are all but forcing some apparel firms to pursue deadstock as a viable—and desirable—alternative to the chaos splintering supply chains, largely as a direct result of Trump’s tariff-centered trade war with China plus rescinded duty threats targeting Mexico. Knowing where these unwanted fabrics are stored, exactly how much they cost and that they’re available at a discount relative to first-run materials is a certainty that many apparel businesses welcome these days, Benedetto explained.

And forget about forecasting and planning a year into the future. Many fashion enterprises “don’t know next month what their costs are going to be for stuff from China,” she said, adding that inbound interest has jumped “exponentially” in recent months as the trade impasse stretches on interminably. “And that’s hard to plan for.”

If apparel businesses are looking for quick wins on the smarter sourcing front, Queen of Raw could be a strategic partner that creates an instant revenue stream.

“At the end of the day, since we’re able to show these large brands and retailers and factories and mills real money immediately selling on our platform, it’s something quick and easy that you can do today. I always want people to realize there’s a ton more we can always do, but start somewhere,” Benedetto concluded. “And this is an obvious way that has massive impact.”