example of assignment stage 1 1-1 business proposal of assignment stage 1 1-1 ... revenue in us...
TRANSCRIPT
1
Example of Assignment Stage 1 1-1
Business Proposal
2
Table of Contents
Executive Summary .............................................................................................................................. 3
Company description ............................................................................................................................. 4
Description of the idea ........................................................................................................................ 4
Market opportunity ................................................................................................................................ 5
Solution .................................................................................................................................................. 6
Product and services .............................................................................................................................. 7
Services ............................................................................................................................................... 7
The market potential .............................................................................................................................. 8
Sales and strategic marketing ......................................................................................................... 8
An initial project plan ...................................................................................................................... 10
Order fulfilment and logistics overview ......................................................................................... 13
Initial map of the Web-site .............................................................................................................. 13
Technology ....................................................................................................................................... 13
Initial map of the Web-site .............................................................................................................. 14
Customers (target market) .............................................................................................................. 14
Case studies ...................................................................................................................................... 14
Strategic Relationships ................................................................................................................... 15
Competition ...................................................................................................................................... 15
Management ........................................................................................................................................ 15
Financials ............................................................................................................................................ 17
Expenses for setting up the business in NZ dollars (1st year) ..................................................... 17
Projected Revenues, Expenses and Income before tax for 5 year term (NZ$) .............................. 18
Revenue in US dollars ..................................................................................................................... 19
Reference list ........................................................................................................................................ 20
3
Executive Summary
The document is a business proposal of DRESS 2 IMPRESS Co. based in Auckland (NZ) that is
looking to launch on-line business in selling women’s clothes, shoes and apparel in New
Zealand. High-street brands are going to be imported from a wholesaler based in Kuala
Lumpur, Malaysia. Among them are MNG, NAF NAF and MOTIVI brands. The company is
also planning to make strategic partnership with local New Zealand fashion retailers and act
as on-line channel for them.
There are many opportunities and problems to be solved in NZ market at the moment,
particularly in women’s fashion industry. Due to a limited number of retail outlets and
brands, variety of styles currently available is extremely limited. Many companies charge
much higher price for low-quality items mainly by adding value with such features as the
brand name and design of the stores. We are going to solve this problem by bringing better
quality clothes, shoes and apparel at a wider variety of styles and relatively inexpensive
price. Most fashion retailers in New Zealand actively use their web-site for promotion but
do not sell over the Internet. Some of them put out-dated stock in DresSmart mall, where
the price is lower for only 25%. We are going to bring real sales into the country and create
on-line channel for those businesses interested in selling their clothes over the internet as a
part of their multi-channel policy.
The competition in on-line space in terms of companies selling women’s apparel is not fierce
so DRESS2IMPRESS Co. has an advantage of a pioneer in this area. The market potential is
big: in USA ad UK on-line retailing of clothing is already developed and now it is growing into
the countries like Australia and New Zealand. Females whom we are targeting are found to
be enthusiastic about on-line shopping and spend greater amount of money on it than
males. Our strategy will be leveraging the brand name and creating trust in us among
customers. Web site will help us to create data base to use as a source for building
company’s relationships with clients and achieve customers’ loyalty. Also a lot of exciting
features will be used to create unforgettable shopping experience for each client.
The cost of setting up the business was calculated and figures provided to keep it going for a
5-year term. Financial and marketing policies are described in the end of the proposal.
4
Company description
DRESS 2 IMPRESS is a start-up company based in Auckland, New Zealand, that is looking to
establish on-line retailing business in selling women’s clothes, shoes and accessories of high
street brands like MNG, NAF NAF and MÖTIVI in New Zealand. The company currently
consists of two people with experience in sales and marketing and is looking for investors to
fund the idea that will turn fashion brands’ market in New Zealand upside-down by offering
completely new approach to retailing.
Description of the idea
The idea is simple: The company is looking to sell women’s clothes, shoes and apparel of
high street quality brands such as MNG, NAF NAF, MÖTIVI etc. that are well-known all over
the world but are new to New Zealand market. We want to do it on-line to overcome costs
for rent, staff training and generally give more freedom to customers so they can use
Internet to do their shopping. Pure-play retailers like us have an advantage of low
overheads and streamline process. (Turban et al., 2004) We also want to bring the real
“sales” into the country, ones that up to 50-70% off the retail price for the last season stock
and to create on-line community of fashion-forward people to generate buzz on latest
trends and brands that are not luxury but still make ladies look good. The Web-site will
provide advice and information on fashion brands and styles that our customers might need
when choosing among items.
The product is going to be bought from a wholesaler Jerasia Capital Berhad Ltd. over the
Internet. The business model will look as follows
The wholesaler we are going to work with is a Malaysian-based company with head office in
Kuala Lumpur. Jerasia Capital Berhad Ltd. Operates in garment manufacturing and apparel
wholesaling of fashion brands including MNG (Mango), NAF NAF, Calvin Klein, MÖTIVI etc.
(details of the company can be found in the Appendix 1)
Wholesaler
Jerasia Capital
Berhad
Our company
Dress2Impress
Consumers
Target market
5
The main aspect is building the company’s brand on the market. We are going to put
emphasise on creating credibility of the e-tailer (us) and leveraging our brand through well-
though customer relationship marketing. Brands that we are going to bring to NZ are well-
known among consumers and many people in NZ buy them through auction web-sites or on
the overseas trips both for personal use and sale through Trade Me (www.trademe.co.nz).
NZ brands are going to be represented as well. We are looking to make strategic alliances
with NZ fashion retailers; it is good opportunity for the fashion stores around New Zealand
as far as none of them sells on-line at the moment.
Market opportunity
Lack of variety in relatively inexpensive women’s clothes targeted at 18 – 30 females
in New Zealand. Most of the customers use the same limited number of stores to
buy clothes and one can easily recognize where the item was bought and at what
price. It often happens that females see each other wearing the same dress at the
parties, on the street etc., which is very frustrating.
Lack of quality for existing brands, only few can be worn more than a season. In
addition, low quality shoes are sold at high prices by adding value to the brand name
(which is only famous in NZ), positioning and store design.
Consumers do not have time to go shopping: a lot of women now work and study so
there is almost no time left for it. The same time dress code at work, for example,
requires certain things (skirts, tops, shoes) to be changed every season. Shops open
till 5 p.m. on a regular day, sometimes closed early on weekends, all of this makes
shopping inconvenient and one has to plan ahead where to go and what to buy.
Current fashion retailers use their web-sites to promote corporate information and
hardly use on-line space to sell their products. Those who sell on-line do not provide
any advice to the customers and simply bring physical store on-line. Web-sites are
not updated as often as they should taking into consideration that every new season
brings new trends.
6
There’s hardly any real “sale” going on in New Zealand. Many retailers lower their
prices after 3-4 seasons left or leave items in stock till they are finally sold. Usual sale
price is 25% lower than retail one, seldom the stock is sold at 70% discount.
Solution
We are going to offer choice and variety to customers, at least one more store to
choose from is an added bomb! Every female wants to stand out from the crowd and
it is very difficult to do so with the limited number of fashion retailers in New
Zealand. We offer different styles and different brands so that a person can create
their own individual look. The number of every item will be limited, instead we will
emphasize on various styles to make things more individual for a consumer.
Many brands such as MNG, NAF NAF, MÖTIVI have great design, good quality,
affordable price and they are not represented in New Zealand. Besides, there is an
opportunity to sign up a contract over time with one of the manufacturers in
Malaysia or China to produce high quality clothes and shoes under our brand name.
Goods “Made in China” are no longer limited to cheap, low-end products, they are
goods of latest trends, good quality, heaps of styles and at the price people would
love to pay.
On-line retailer is available 24/7. Customers can take their time, stay at the web-site
as long as they want, use whatever free time they have to look for items they are
interested in or do their shopping. And nobody is going to bother them with add-
ons. Plus they can use their imagination in creating the look that will suit them best
or use various features on the Web-site thus indulging oneself into complete
shopping experience.
Those retailers who do not sell on-line can be presented at our web-site. Some of the
big brand names are sold in DresSmart, NZ’s biggest discount store. DresSmart uses
its web-site for self-promotion only and do not use on-line space as another retailing
channel. Our Web-site can become DresSmart on-line retailing channel.
The web-site is going to include Sales section. In this part we are going to lower the
price significantly for out-dated stock, around 50-70% off. The out-dated stock will
not only include our brands but also those companies that want to get rid of their
“old stock”.
7
Product and services
Brands we are looking to introduce into NZ market:
MNG (Mango) is a Spanish high-street clothing manufacturer and retailer with a net profit of
EUR 64.8 million for 2003 and 7% annual growth rate. It has 704 sales outlets in 72
countries, 60% of which are franchises.
NAF NAF is a French brand, one of the biggest in Europe. In 2004 13 million items were sold in more
than 60 countries.
MÖTIVI is an Italian brand that has 500 stores worldwide and offer a range of fashion lines for
females including Formal MOTIVI (clothes for work), MÖTIVI Trendy (stylish clothes of latest fashion
trends) and MÖTIVI Soft (casual clothes that is good to wear everyday).
Strong brands MNG, NAF NAF and MÖTIVI will be represented together with brands sold
off-line in NZ market such as Maxx, Supre, Cue and also DresSmart’s brands available on
sale.
Services
Customization of order and navigation
Return policy
Secure payment
Shipping in 1-2 days by using post and courier service
Advice & support
Community interaction
8
The market potential
It is estimated that there are 500 million people using Internet worldwide. (Siddiqui et al.,
2003) Data available for September 2007 says that in New Zealand there are around
1,505,100 Internet users with 81.3% being residential subscribers and this number is
increasing annually with 2.8% growth rate. (www.stats.govt.nz)
Research found that female on-line shoppers are in the majority and they have greater
spending power and enthusiasm for the shopping experience. In UK and USA on-line fashion
retailers are already in the mainstream: in UK clothing is one of the biggest category of on-
line shopping and accounts for 28% of all on-line purchases made. (Siddiqui et al., 2003)
Together with cost savings Internet offers access to wider audience, it is available 24/7 and
provides retailer with opportunities to customize the message for a particular client. Many
high street fashion retailers have on-line presence as they have already realized all the
benefits Internet can bring. However, many of them do not fully understand the purpose of
e-tailing and create on-line channels due to peer pressure without clear understanding of
customers’ needs. Research showed that customers when surfing on-line fashion shops are
not merely interested in buying products, they want to get great advice, see latest trends
and get a unique shopping experience after all. In this case there are huge opportunities for
our company give customers what they want. (Siddiqui et al., 2003)
With customization of orders and positioning to experience personal approach, on-line sales
of apparel are to grow enormously in the nearest future. (Turban, 2004)
Sales and strategic marketing
Our main goal is to convert consumers into e-tailing clothing category. Other goals include
attracting customers with variety and quality of the product offered and getting more
customers by engaging existing fashion retailers in our business.
Short-term objectives include:
1. To get 70-80% awareness of our Web-site among our target market within a first
year on the market.
2. To sell most ( ¾) of the initial stock for the first year in the market.
3. To gain net profit of 20-30% in the period of first 3 years.
9
Our marketing strategy will be based on strong customer relationships, leveraging the brand
name and customization of shopping experience on-line.
We are going to create unique shopping experience for the shoppers. Interactivity, web-
page design, easy navigation, search function, security guarantees, clear return policies are
the features we are going to pitch on. The drawback of pure play e-tailing is that those on-
line shops that have main off-line channels usually get their clients through off-line stores.
To overcome this drawback we are going to concentrate on integration of our on-line
channel with various off-line retailers so that the customers can have more trust for the
Web-site and associate it with existing brick-and-mortar brands. (Siddiqui et al., 2003)
In our promotion strategy we are going to concentrate on the use of new interactive media
that offers greater benefits in terms of company-customer relationships.
Interactivity is what makes business different. Our company is going to benefit from the use
of personalized emails and SMS to handle such things as new arrivals, shipping,
delivery/return notices. A phone line will be used as a channel for communicating with
customers: they will be able to call us easily in case if they have any questions. We also want
to engage our customers in communication and we offer some options such as “Find
yourself” picture (discussed in Initial project plan below) on the Web-site that will help to
increase traffic and communication with our customers. Besides, feedback will be
encouraged. We are now considering whether we want to give our customers an option
where they can leave an opinion for a particular item on sale so that the rest of the visitors
can see it.
Web-page is regarded by customers as “the face of the company” and will be completed
with high priority giving the distinctive image to the brand. We would like the web-side to
be designed in light, minimalistic manner but with distinctive features and very fresh look so
that customers enjoy navigating it.
Promotion is also going to include:
- Placing ads in fashion-forward magazines in section where new trends are discussed
and readers are offered advice on where to buy clothes, shoes & accessories.
- Use of billboards in the city part of Auckland during the first year and other cities
from second year.
10
- Use of advertising on means of transportation, mainly buses that go central routes
- Generating word-of-mouth through communities that are connected to our target
market interests
The activities are going to be separated over the period of 5 years. In the begging we will go
with billboards and word-of mouth only. Later on, the advertising on buses and in fashion
magazines will be added.
Customization of order:
Customer’s shopping history will be saved and applied next time customer signs in
Availability of stock updated regularly, new arrivals are highlighted and hot offers are
always on the front page
Offers and incentives will be targeted at particular customer’s taste retrieved from
the shopping history
Fashion advice (dress codes, recent trends, figure match) is provided in “Create your
look” option and Trends category.
Organizing community: customers will have an opportunity to drop links to their blogs and
add us as a “friend” on MySpace and Facebook; feedback will be encouraged (possibly
feedback at particular item).
An initial project plan
The Web-site will be divided into 3 basic sections CLOTHES, SHOES/BAGS and ACCESSORIES.
Each section represents items according to the style. Customers are pretty familiar with this
format so there will not be any difficulties in learning process. The interface will be easy to
navigate but will not lose its stylish component. Our policy will be simple as well: high
security of the payment, clear return policies, personalization and great company-customer
relationships.
11
Sketch of the Web-site (an initial PowerPoint sketch, not a final version)
www.dress2impress.co.nz
Dress 2 Impress Shoes & Bags Accessories
HOT OFFERS!
CELEBRITY
LOOK
SELL & BUY
TRENDS
COMMUNITY
CONTAC US
PERSONALIZE YOUR SEARCH
ADVICE
ADLOG IN
Sale!!!
Features:
3D format of items’ pictures, customers will be able to “twist and turn” the item and
look at it at different angles.
Fashion videos relative to the styles we will have on the Web-site.
Advice for the perfect match, suggestions of various items that can go with the
chosen pieces of clothes or those pieces that customer is currently looking at; dress
codes summaries for different occasions and items attached to them as “appropriate
ones”.
Celebrities’ looks and the ability to buy similar items from our stock. Also we are
planning to include Shop Orientation section which will say where and when
customers can buy similar item in a physical store
Community section: blogs, feedback, “Find your picture” feature
Shop-orientation in Auckland: We take a picture of a celebrity wearing particular style and
put items that look close to it and also point out where people can buy those items. (“You
can buy similar skinny jeans in Supre at Queen street for $90 this weekend!”)
12
Bellow is project of a feature offered to see how it is going to look in general
www.dress2impress.co.nz
Where can you find jeans just like that?
Skinny jeans at SUPRE 99$
Location: Auckland city
“Find yourself” pictures: In order to stimulate traffic, once in a while (every one-two
weeks), after a party weekend or any social occasion we put a picture of a any chosen girl
that we think look stylish in her outfit and we make a prize for her (“$100 Maxx voucher”) so
that people would go to the web-site to see the picture and get a prize. It is a product
exposure for the company that sponsor the whole thing and also stimulates consumer
interest in a web-site. In the beginning we might put more than one picture so that a lot of
people will be determined to get to the web-site. We might start word-of-mouth campaign
by using this function.
“Create your look” option will allow consumers to combine different items and compare
them. Incentives on proposed look will be given automatically with every item a visitor may
choose.
“Sales” category will represent items which are on sale. In the beginning we plan to use
DresSmart stock to fill the section. Later on certain amount of items we will leave for the
next season sale so that customers will be motivated to come to the Web-site for bargain.
13
Order fulfilment and logistics overview
We are going to pay close attention on the process of fulfilling the order and delivering it to
the customer. Return policy will apply in order to stimulate customer buying decision and
reduce cognitive dissonance. Over a period of time we are going to reach economies of
scale so that returns will not influence our profits significantly. Technically the process will
go through the following stages:
Initial map of the Web-site
(Based on Manukau Institute of Technology, 2008)
Technology
We have time and passion to participate in creation, design and developing of the Web-site.
For creating and supporting web-site dedicated web-hosting is going to be implemented
which means that full server will be reserved for us. This will give our company more
freedom for action as our strategic plans include enormous growth as well as hundreds of
visitors per day. Dedicated server is more reliable although a bit more expensive than
others. The hosting company will provide all necessary support, including security system.
The domain name www.dress2impress.com is currently for sale, and domain name
www.dress2impress.co.nz is available as well.
Among technical features will be ability to track customers’ behaviour on the Web-site and
their browsing to later show items of particular interest to them and provide certain
personalized services.
Making sure customer will pay
Contact with customer if needed
Checking for in-stock availability
Arranging shipments
Contact with customer for
delivery/return notice
Returns (if occurs)
14
Initial map of the Web-site
Customers (target market)
Ladies 18-30, strapped for time and want to look good. Working females represent a
considerable percentage from NZ population: more than 25% of NZ’s 4,000,000 population
were employed females according to data on December, 2007 (Statistics NZ, 2007)
We are looking forward to launch clothes lines for all ages including kids and also separate
lines for men over time.
Case studies
www.mango.com (www.shopmango.com) (can be found in Appendix 2)
www.onlineshoes.com
HOMEPAGE
PRODUCT
CATEGORY
PAGE
PRODUCT
PAGE
TRENDS
ADVICE
SHOWS
COMMUNITY
PROMOTIONs
SALES
HOT OFFERS
15
Strategic Relationships
All major shops targeting the same segment who are interested, including DresSmart. We
are going to convince them to participate in our business as it is a mutually beneficial
enterprise.
Competition
The brilliance of the situation is that there is no significant competition on-line in New
Zealand for this kind of web-site. The only big competitor to the web-site is TradeMe
(www.trademe.com) which is an auction and people can hardly check in advance if the item
on sale is really new or second-hand which is a completely different category.
Other competitors include web-sites:
www.shoeclinic.co.nz – sells only sport shoes
www.funkysoes.co.nz – the idea is quiet similar except that web-site sells only shoes. The
major drawback is that web-site promises a lot (all the brands and styles are of well-known
brands such as Diesel) but underdelivering spoils all experience. There are hardly any heels
in heels category and web-site looks “empty” without stock supporting the promise.
www.heels.co.nz – web-site that sells considerable amount of shoes and lingerie but makes
an impression as it is oriented towards club dancers’ niche; casual, everyday, work and
social occasion clothes, shoes and accessories are not present. Besides, styles are quiet old-
fashioned, “nobody wears it anymore” type.
Management
One of the most important assets that a company has is its people who are dedicated to
what they do. Although there only two people currently in the company, we are looking
forward to hiring new staff as committed as we are to our new on-line retailing business. At
the moment management consists of two young creative people with fresh thinking and
attitude towards business in New Zealand:
Ekaterina Bazanova, co-owner, marketing manager, Degree in Oriental Studies and
Graduate Diploma in Marketing , experience in sales.
16
Brad Pitt, co-owner, marketing executive, 5 year experience in sales, currently working for a
TV company as a Marketing Executive; has 7-years experience in sales, TV production and
marketing.
17
Financials
Expenses for setting up the business in NZ dollars (1st year)
Setting up the web-site Web-site design $5,000 Total: $5,000
Web-site hosting
Set up
0
Total: $1,200
Monthly fee $100
Number of months 12
Amount to be paid $1200
Domain name Price N/A at the moment
World Pay system
Set up
$399
Total: $999
Monthly fee $50
Number of months 12
Amount to be paid $600
Product costs Average price for an item $40 Total: $123,040
Number of items 3000
Amount to be paid $120,000
Marketing and sales (promotion)
Billboard
Installation
$350
Total: 16,550
Rate per month $5,400
Number of months 3
Shipment costs 20 ft container rent $2500 Total: $5,000 Loading the container in Hong Kong $1500
Import & legal fees $1000
Total:
$ 153,049
18
Projected Revenues, Expenses and Income before tax for 5 year term
(NZ$)
1st year 2nd year 3rd year 4th year 5th year
Revenue
Product sales
160,000
480,000
800,000
800,000
800,000
Advertising
Income
21,600 21,600 21,600 21,600 21,600
Income from
strategic
contracts
27,600 27,600 27,600 27,600 27,600
Total Revenue 208,600 568,000 849,200 849,200 849,200
Expenses
Set up
5,399
0
0
0
0
Operating 11,800 15,800 15,800 15,800 15,800
Product 120,000 240,000 400,000 400,000 400,000
Marketing and sales
expenses
16,550 30,000 36,200 36,200 36,200
Total Expenses 153,049 281,800 404,000 404,000 404,000
Income before tax 54,851 282,200 397,200 397,200 397,200
Shipping will increase to 2 times per year from 2nd year
Expenses for marketing and sales activities will increase from 2nd year
Amount of product and expenses for it will increase from 2nd year
Operating costs will include shipping, operating web-site and other expenses and will
increase from 2nd year
Promotion will include billboards for 3 months for the starting year and from 2nd year
billboards for 3 months + advertising on buses package
19
Revenue in US dollars
Assumptions:
We expect to sell 2000 items for the first year, the rest (1000) with cost of
NZ$40,000 is going to be put on sale for next year and during 5 year term this
number will be rotated as “sales items”. “Sales items” are going to have lower 50%
retail prices, i.e. each item is going to be sold at initial wholesaler price.
Mark-up price is going to be 100%, thus an item that costs on average US$40 will
cost US$80 on the web-site.
We expect to make strategic alliances with at least 3 fashion retailers and provide
web-space for a monthly fee of NZ$1,000.
The contracts with fashion retailers are going to be signed for minimum of 3 months.
The additional income is going to be generated through advertising on the web-site
that will cost a company willing to advertise around NZ$600 per month (minimum
duration of the advertising contract is 3 months)
We are going to sign up 3 companies for advertising every month
We are going to charge customers $10 for delivery but the amount generated from
delivery charges will go towards shipping arrangements and creating economies of
scales in shipping costs.
Transactions by customers will not be charged, we are going to rely on mark-up price
as a major source of income.
The revenue generated will be invested in Web-site further functioning and
shareholders are expected to get their profit in 5 years term.
Revenues are calculated as follows
2000 items × NZ$80 = NZ$120,000
3 fashion retailers × 3 months (minimum) contracts for presenting their stock on the web-
site × NZ$ 1000 fee per month = NZ$9,000 per 3 months (min) ≈ NZ$27,000 per year
3 companies signed up for advertising contracts × 12 months × NZ$600 monthly fee =
NZ$21,600 per year
20
Reference list
Manukau Institute of Technology. Business School. (2008, Semester 1). 341.729: eMarketing for
managers [Coursebook]. Manukau City, New Zealand: Robert Davis
Turban, E., Lee, J.K., King, D., MKay, J., & Marshall, P. (2004). Electronic Commerce. USA: Prentice
Hall
Siddiqui, N., O’Malley, McColl, J.C.,& Birtwistle, G. (2003). Retailer and consumer perceptions of
online fashion retailers. Web design issues. Journal of fashion marketing and management, 7(4),
p.345-355
Statistics NZ. (2007) Information technology survey. Retrieved from http://www.stats.govt.nz