business plan for a basic ecommerce · executive summary on this project we are introducing to you...
TRANSCRIPT
BUSINESS PLAN FOR A BASIC ECOMMERCE SK8 2 YOUR FATE
Jacobo Romero Roig UNIVERSITAT POLITÈCNICA DE VALÈNCIA
ESCOLA POLITÈCNICA SUPERIOR D’ALCOI
GRAU EN ADMINISTRACIÓ I DIRECCIÓ D’EMPRESES
Contenido EXECUTIVE SUMMARY .................................................................................................................. 2
BASIC DATA ABOUT THE COMPANY .............................................................................................. 3
PRODUCT DESCRIPTION ................................................................................................................ 3
MARKET AND COMPETITORS ANALYSIS ........................................................................................ 4
TABLA RESUMEN PEST .............................................................................................................. 4
DEFINITION OF THE TARGET AUDIENCE .................................................................................... 5
5 FORCES OF PORTER MODEL ................................................................................................... 5
ANALYSIS OF MARKET ATTRACTIVENESS .................................................................................. 5
MAIN COMPETITORS ................................................................................................................. 7
WEB DEVELOPMENT PLAN ............................................................................................................ 8
MARKETING AND SALES ................................................................................................................ 8
OBJECTIVES ................................................................................................................................ 9
STRATEGIES ............................................................................................................................... 9
SPECIAL FEATURES IN DIGITAL MARKET ................................................................................. 10
ORGANIZATION AND MANAGEMENT (HUMAN RESOURCES) .................................................... 10
LOCATION AND PREMISES ...................................................................................................... 10
EQUIPMENT ............................................................................................................................. 10
INVENTORY .............................................................................................................................. 11
SUPPLIERS ................................................................................................................................ 11
PERSONNEL AND HUMAN RESOURCES ................................................................................... 11
FINANCIAL PROJECTIONS AND FUNDING REQUEST .................................................................... 12
EXECUTIVE SUMMARY
On this project we are introducing to you a business plan for a basic ecommerce. It is a
fictional ecommerce called Sk8 2 your fate and is a new brand of clothed based on the urban
style of 80s and 90s, focused on young people. We outsource the production and end the last
part of the process, and finally sell it to the final customer delivering it from our warehouse,
since we don’t sell on stores.
We are now going to prove the viability of this business idea. For that, first we will talk about
the basic data of the company. Then, we will descript the product. Later, we will talk about the
market and the competitors, defining the target audience, using the 5 forces of Porter model,
the analyzing of market attractiveness and the main competitors. Also, we will introduce the
web development plan. In marketing and sales we develop the objectives, strategies and
special features of digital market. Now we talk about organization and management, including
location and premises, equipment, inventory, suppliers, personnel and human resources, and
finally, financial projections.
Probably the most serious threat for the company is the independence way of Catalunya, that
can affect their sales. Through 5 Forces of Porter we can see the threats and opportunities of
the more immediate context of the company. From the PEST Analysis we obtain threats and
opportunities from the outer context.
Knowing threats and opportunities we have to know strengths and weaknesses, at an intern
level. Then, we can set objectives and strategies to achieve those objectives. We will organize
the resources in order to achieve these objectives and finally we organize and manage those
strategies and resources to get the best of it, making financial projections.
For the end of this long list, we assume that our incomes are higher than our expenses, so it is
viable to apply it (we have to take in account that the majority of data are invented, so maybe
in some aspects it should seem incredible).
BASIC DATA ABOUT THE COMPANY
“Sk8 2 your fate” is a producer and seller of shorts and other clothes from Gandia. We are a
crew of 6 people with a very simple purpose: to commercialize 80s and 90s style clothes, with
their alternative image, to bring back those great days to everybody. We will create clothes
like the ones Knuckles (The Offspring), Mark Hoppus (Blink-182), Dave Brownsound (Sum 41)
or other 80s-90s American punk-rock stars used to dress.
It is a company with three partners, to be able to face the first expenses in an easier way. Our
mission: to bring back the great days from 80s and 90s urban alternative cultures to everybody
through clothes. Some short-term strategies are the establishment of a good position and
image of the brand in the customer’s mind and or to achieve the profitability of the company.
A long-term strategy could be to be known all around Europe in a period of 4 years. Our
products will be marketed to young people, between 15 and 30 years old, who like 80s and 90s
urban style clothes and all the lifestyle associated to it.
This industry is barely growing at a very little rhythm, as far as some years ago this urban style
almost disappeared and now is beginning to grow up some groups of people who like this
lifestyle. In the short term, this kind of clothes seem like they are not going to succeed, but we
will create a brand image that will revert this situation. On the long term, probably this kind of
clothes will become trendy for young people.
The most important strengths of the company are the orientations on different study fields of
each one to a multidisciplinary group, making it able to create and work at almost very
temperature in Earth.
PRODUCT DESCRIPTION
Our product consists in a diversity of clothes, mainly shorts, based on 80s-90s urban
alternative style. The product life is quite long, because it is not a product with a programmed
life or a determined number of uses. I don’t think it would need intellectual property, because
the clothes we produce don’t have any difference on the form or shape to the normal ones,
but only on the colors and patterns or draws. Prices for our clothes will be cheap: the price of
producing each piece plus a 15% more, so we will be the cheapest brand of this kind of clothes
in the market.
MARKET AND COMPETITORS ANALYSIS
The target audience is young people between 15 and 30 years old, who like the 80s and 90s
urban alternative lifestyle and their clothes.
To analyze the market attractiveness we will have to use the PEST analysis:
TABLA RESUMEN PEST THREATS OPPORTUNITIES
Polithic-legal factors -Catalan independence (Catalan company). -Adaptation of the products to each market uses.
-I.S. relatively low. -Spain into EU. -Helps and programmes in favor of PYMES and entrepreneurs -Incentivation of investing on I+D.
Economic factors -Low incomes generally. -The energy in Spain is very expensive.
-The majority of companies are PYMES, some of them with outstanding informatics programs. -Spain is into EU.
Social factors - Catalan indepence (Catalan company). -Spanish population is elder. -Trendy clothes designed by Young people of Gandia.
Technological factors -Poor investment on Spanish information systems (concerning associated ).
-Technologies and innovation poorly developed poco desarrollado (concerning competitors). -Little investment on information systems for Spanish companies (concerning competitors).
We can see there are more threats than opportunities. Political-legal factors have more
opportunities for our company, while the biggest amount of threats is located among social
and technological factors.
The estimated market size is around 4% of Spanish population. Around 1.880.000 people.
DEFINITION OF THE TARGET AUDIENCE
5 FORCES OF PORTER MODEL
THREATS OPPORTUNITIES
COMPETITORS IN
THE SECTOR
-Low knock-out barriers. -Low growing rhythm of the sector.
- Low knock-out barriers.
SUPPLIERS
-Vertical forward integration
could occur, it is needed a
little investment.
-Concentration mode mid-high.
CLIENTS
-Integración vertical hacia
detrás muy improbable.
-Very high concentration grade.
-Very high product differentiation.
Add value of fabrication in Spain and
protecting the environment.
POTENTIAL
COMPETITORS
-Barreras de entrada bajas.
-Non-existent sector reprisals.
SUBSTITUTIVE
PRODUCTS
-Substitutive product: normal
traditional socks.
-They can not go obsolet, but
in time they break and you
need to buy new ones.
-Cheaper prices.
-Low change cost, it requires of a
little investment.
ANALYSIS OF MARKET ATTRACTIVENESS
To be able to analyze market attractiveness, we will use the threats and opportunities
detected previously in PEST Analysis and some strengths and weaknesses from 5 Forces of
Porter Model.
THREATS OPPORTUNITIES
- Towards vertical growing is possible.
- High attractiveness of the sector.
- Low entrance barriers.
- Substitute product: normal socks.
- Catalan independentism.
- The majority of the clothes from 80s
are popular only among Young
people.
- Ageing population.
- Low growing rythm of the sector.
- Concentration suppliers’ grade mid-
high.
- High differentiation of the product.
- Backwards vertical growing: almost
imposible.
- No probabilities of reprisal on the
sector.
- Low prices leader.
- Low cost associated with switchin.
- Spain pertains to EU.
- Economic and fiscal dates to PYMES
and entrepreneurs.
WEAKNESSES STRENGTHS
-Product focused to young men in eaged
countries.
-Little company with no capacity for big
promotion expenses.
-To produce in Spain is more expensive than
in other countries as f.e. Eastern Europe
ones.
-Being a little company doesn’t allow them to
expense or invest a big lot of money.
-Market scale fairly big.
-Effective promotion with no cost, with
people that promotes the brand.
-To buy online or through shops is cheap and
effective.
-They produce on demanded product to save
costs.
-They don’t have their own shops, so they
save a lot of money.
-Differentiation strategy mixed with costs
leadership.
MAIN COMPETITORS
Main competitors will be all the clothes companies that sell or produce clothes from 80s-90s
style:
- Vans
- Element
- Emerica
- Fallen
- Volcom
- Famous Stars and Straps
- Fillow
- Dickies
- Etc.
All of them would compete completely, as we produce and sell all kind of clothes, even if our
most important production is about shorts. We can consider indirect competitors all the
producers of clothes of any kind.
To compete with them, looking at our strengths and opportunities we found before, you can
see our brand will be cheaper than our competitors, and a better and cheaper promotion
based on differentiation and famous people.
Factor Me Strength Weakness Competitor:
Volcom Competitor:
Fillow
Importance to
Customer
Products Very good
X Better Better 1
Price Very good
X Worse Worse 3
Quality Good X Equal Equal 2
Selection Good Worse Equal 4
Service Good Equal Worse 4
Reliability Good Equal Worse 3
Stability Good Equal Worse 5
Expertise Good X Better Better 3
Company Reputation
- X Better Better 2
Location Good X Better Better 4
Appearance Good X Equal Equal 2
Sales Method
Good Worse Worse 4
Credit Policies
Good Equal Equal 5
Advertising Very good
X Worse Worse 1
Image Very good
X Worse Equal 1
WEB DEVELOPMENT PLAN
We will create a domain: www.sk82yourfate.com, registering it on Realtime Register, and also
will contract a payment hosting for Windows, located in a Data Processing Center. Our web
page will be a dynamic one, with a catalog ran by a unique program that collects the product
data from a database.
On the development, the website architecture will have the following sections: home page,
contact, how to arrive, who we are?, gallery, products, Registration/Login, FAQ, shopping cart
and news. They will be presented as a menu, where you can go from any of them to any other
in every moment. Inside who we are? section there will be a pic and a little statement for each
one of the workers of the company, and if you click on the pic, it will appear more info about
him/her (social media, his/her work in the company, etc.). On a sidebar there will be some
banners with ads of products related to ours. The header has to present our logo and, on the
right, a search engine and the possibility to change the language (Catalan, Spanish, English,
Portuguese, French, Italian and Deutsch) and on the footer, the contact information, copyright,
etc.
The catalog of products will consist in photographs with brief descriptions and comments from
the users.
It will have links to our social media: Facebook, Instagram, Twitter and Youtube.
When you go into the shopping cart you will see the shipping costs, the delivery address, the
taxes, the return period, the availability of the product and the delivery time. The payment
options accepted: Paypal or debit/credit bank card (Visa, Mastercard).
The graphic design will contain several references to skate style and 80s-90s urban style
(photos and drawings).
All of that things, always trying our best to be friendly-user.
For the programming, we will use an existing CMS through, for example, Magento.
MARKETING AND SALES
PRODUCT: The product, different kinds of clothes, will be original, in order to differentiate the
brand. Accomplishing a standard of quality, but not of a very high quality, because otherwise
the prices would be much higher than what we want. All of the products will include a
variation of our logo, to improve brand image.
PRICE: We want to be price leaders, so the prices will be lower than our competitors. For a
standard, we will set it on the cost price + a 15%. To achieve this we will outsource the first
parts of the production.
PLACE: We will sell only through our webpage, delivering the products to the customer’s
house. At least for the beginning of the business. In this way, we save costs of maintenance of
physical stores.
PROMOTION: The big part of the promotion will be done by famous people and social media
influencers, who will get paid by us to wear our clothes and promote it. We will also sponsor
some sports teams and big music events. Our presence in social media has to be huge,
participating every day through Facebook and Instagram, and interacting with the users in
Twitter. Also, we will upload reviews and promotional videos to Youtube.
OBJECTIVES
The only objectives for the first year will be to allow differentiating the company products
from those of its competitors and being perceived as “unique” in the customer's mind, and, as
a consequence, to achieve being among the 3 best sellers in the market for this kind of clothes.
STRATEGIES
As commented before, pricing strategy will consist on being price leaders of the market.
Usually, this type of products are a little expensive, so we will reduce our prices in a quantity
enough for not being a problem for us.
Product strategy: the product has a quality into certain standards. We don’t want to be “the
bad product” of the list, but at the same time, we neither want to be the best quality ones in
the market.
Concerning the place strategy, we will have a little office in Gandia, our city, from where we
will control all the processes of the business. As it is an online business, we are not selling in
physical stores for the moment, but delivering at house. We will need a retail outlet, and we
would try to find it in Gandia or some little town around it (like Almoines, Real de Gandia or
Palma de Gandia).
Promotion strategy has been commented before: famous people and influencers will get paid
to wear our clothes and usually do reviews about them. We will also sponsor sports teams like
MotoGP Honda or Valencia C.F. and big music events, like Download Fest in Madrid. In
addition, our presence in social media has to be constant and consistent, using Twitter to
interact with users’ questions, and Facebook and Instagram to show up our products and to
tell what we are doing. In Youtube we can upload video reviews of products and promotional
videos for events.
SPECIAL FEATURES IN DIGITAL MARKET
We need some digital objectives to get to success in our ecommerce business. The first digital
objective, for our first year as a business, could be to achieve a good presence in search
engines, appearing among the 10 first results in Google when you look for our name. We
should try to increase time after time the number of visitors of our website, to put links to our
page from other webs of similar products, expand our geographical area constantly and to
realize a good maintenance of our website during all the year. For this, we will need to use
SEM or SEO, but probably to begin SEM is more interesting if we have enough money to pay it,
through ads in Google and a list of keywords.
ORGANIZATION AND MANAGEMENT (HUMAN RESOURCES)
LOCATION AND PREMISES
We will only need an office local and a warehouse. For the office we can use a family local out
of use in the center of Gandia. It may need some reforms but is quite well to begin to operate
there. Attaching to the warehouse, we should rent a little industrial plant and set some
shelves.
EQUIPMENT
We will need three computers (one for the accountant, another for an administrative in charge
of exports and imports, and another for the promotion manager), some shelves, three
desktops and three chairs to begin.
INVENTORY
We will keep the minimum storage possible. As we outsource the production, we only need to
do in Spain the adding of the logo patches. We will order to our suppliers the minimum
quantities according to client orders, to avoid storage in warehouse as far as possible, reducing
costs.
SUPPLIERS
We will look for our suppliers among the Spanish textile manufacturers, and maybe create a
new company in order to be our supplier.
PERSONNEL AND HUMAN RESOURCES
The business will be managed by the three associated founders, it is: Jose Monllor, Jaume
Jiménez and me, Jacobo Romero. Jose has experience in a manufacturer of shoes, similar to
this one, and Jaume has experience in a business dedicated to clothes sale. If any of us leave
the business for any reason, the other ones will buy his part, equally divided and will continue
with the business.
We will have 3 workers (apart of the 3 managers, that also work as the rest). The tasks of
everyone are not strictly fixed, because it may be changing attending to the priorities since we
get to know who works better in each position.
We should need a manager for the promotion area (social media, contact with influencers,
advertising, etc.), a manager of sales and purchases (in contact with suppliers and controlling
client orders), manager of “production” (in order to prepare orders to deliver) and a person in
charge for the warehouse. The other two persons will be rotating helping there when it is
necessary in each moment.
FINANCIAL PROJECTIONS AND FUNDING REQUEST
For the first year we think it won’t be required outer funding. The initial costs to engage the
business are not very high, so we the three managers can afford it by social capital
contribution. The quantity we will need approximately to engage the business is around
€15,000. That is, €5,000 each one.
- Start-up expenses: €3,000.
- Furniture: €1,000.
- Website: €3,000.
- Computers: €1,800.
- Domain registration: €50.
TOTAL START-UP EXPENSES: €8,850.
- Cost of products: €2,000.
- Transport: €1,000.
TOTAL COST OF SALES EXPENSES: €3,000.
- Sales manager: €12,000
- Promotion manager: €12,000
- Production manager: €12,000
- Person in charge of warehouse: €10,000
- Employees: €10,000
TOTAL STAFF EXPENSES (ANNUAL): €44,000
- Rental: €110,000
- Utilities (electricity, water…): €3,600
- Web hosting: €600
- Insurance: €800
- Software licenses: €1,200
TOTAL INDIRECT EXPENSES (ANNUAL): €117,600
- Search engine positioning: €600
- Facebook Campaign: €3,000
- Instagram Campaign: €2,000
TOTAL PROMOTION EXPENSES: €5,600
TOTAL EXPENSES: €179,050
EXPECTED PROFITS (1st YEAR): €300,000
RETURN ON INVESTMENT: +67.55%