mil la by mail direct inc business plan
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Milla by Mail Direct, Inc. Business Plan
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Milla by Mail Direct, Inc. Business Plan
Milla by Mail Direct, Inc.
Business Plan Draft
Confidential
Inside:
Executive Summary
Business Description
Management and Employees
Operations and Suppliers
Marketing Plan
Philanthropy
Competition
Financing Request
Business Financial Statements
Financial Ratios
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Milla by Mail Direct, Inc. Business Plan
Break-Even Analysis
Growth and Exit Strategies
Appendix: Financial Assumptions
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Jamila Payne
2450 State Street
Philadelphia, PA
(215) 659-7544
John Christopher
250 East 11th Street
New York, NY 10009
April 20, 2006
Re: Financing Request
Dear John:
I am so glad Sarah introduced us when you were in Philadelphia and that you expressed an interest inseeing my business plan. We are currently seeking to raise an additional $50,000 in capital to expand ourmail-order business with a catalog campaign.
Milla by Mail Direct, Inc. (MBM) is a mail-order retailer founded with the purpose of providing a
shopping environment that is ideal for women on the go. Milla by Mail makes shopping easy and
convenient by offering a multimedia approach to purchasing, including catalog, Internet, and telephone.
Our mission is to become the destination fashion resource for style-conscious women by providing
quality merchandise, up-to-the-minute fashion information, and a shopping experience that peeks into the
customers lifestyle.
Our target customer is an active, affluent woman age 25 to 45. She is busy with her career, her
community, and her family. She wants her wardrobe to reflect her sense of style and compliment heractive lifestyle without the shopping process becoming a task. Our brand offers women image, distinct
styling in a broad range of brands and sizes, fashion and trend information, and a memorable shopping
experience through a multichannel platform designed to make her relationship with Milla by Mail easy
and convenient.
The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop.
Milla by Mails distinctive competencies are the merchandise, the personal expertise of the founder,
Jamila Payne, and the shopping experience that is offered to customers. Milla by Mail sets itself apart
from the competition by carrying a variety of merchandise that includes well-known brands, up-and-
coming designers, and our private-label brand Milladistributed exclusively via the website and, soon,
the catalog. MBM is very strategic about the items we carry. All items can be purchased as separates or
merchandised back to other items.
My business plan is attached. If you have any questions, please contact me at (215) 659-7544.
Sincerely,
Jamila Payne
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Milla by Mail Direct, Inc. Business Plan
Contents
1. Executive Summary
2. Business Description
3. Management and Employees
4. Operations and Suppliers
5. Marketing Plan
6. Philanthropy
7. Competition
8. Financing Request
9. Business Financial Statements
10. Financial Ratios
11. Break-Even Analysis
12. Growth and Exit Strategies
13. Appendix: Financial Assumptions
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Milla by Mail Direct, Inc. Business Plan
Executive Summary
Business Description
Realizing a void in clothing for contemporary women, Jamila Payne founded Milla by Mail, a specialty
mail-order retail business. Milla means I got it in Hindi, the Indian National Language. Milla by Mail is
dedicated to providing a quality fashion experience for the style-conscious consumer. The website
represents a combination of in-house design and manufactures lines fusing modern sophistication and
urban attitude. The company will grow by distributing catalogs in major metropolitan cities throughout
the United States, becoming an established resource for fashion information and lifestyle events.
On the MBM website the presentation of clothing is complimented by lifestyle images that represent the
Milla by Mail shopper. We take shopping online to a new level by developing marketing campaigns that
focus on the lifestyle of the customer. Milla by Mail becomes not just another place to shop. We reachinto our customers lives and make them a part of the experience.
The catalog and Internet will represent a lifestyle-shopping environment. Women can purchase
everything from work to weekend looks. The Milla by Mail clients, contemporary women ages 2545,
will find clothing for their lifestyle through our product line.
Business Contact Information
Milla by Mail Direct, Inc. (MBM)
The Laurence A. Baiada Center for Entrepreneurship in Technology
3225 Arch Street, Ground Floor
Philadelphia, PA 19104
Phone: (215) 659-7544
Fax: (215) 659-7203Website: www.millabymail.com
Email: [email protected]
Owner
Jamila Payne
2450 State StreetPhiladelphia, PA
Phone: (215) 659-7544
Social Security Number: XXX-XX-XXXX
Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years. She
has dressed celebrity artists and entertainers for everything from the stage to the red carpet.
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Jamila has been featured inIn Style, Entrepreneur Magazine, the San Jose Mercury News, as well as in
many other local and national newspapers. She has been honored by the Philadelphia Tribune as
One of Philadelphias most Influential under 40. Jamlia can be seen on shows such as the NBC
morning show 10! presenting the latest fashions or discussing lifestyle trends.
Jamila is high-energy, fun, delightful, and has a great sense of style. She is very humble about her success
as an entrepreneur and enjoys sharing her fashion knowledge with people through her traveling
fashion workshop Can You See My Style?
When Jamila saw the expecting Kelly Ripa wearing one of her own Mimi Maternity designs on
television, she knew she had a true talent for knowing what works. As her work responsibilities
became more time-consuming, however, Jamila didnt have the ability to visit all her favorite
boutiques. Shopping has always been special and exciting to me, she says. I really enjoy
developing my personal style.
Many of my coworkers and friends had the same problem. And I realized that busy women need
a place to shop that will do two things: It must represent the perfect compilation of all of theirfavorite stores, and shoppers need to have the ability to get there regardless of their schedule.
Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including
Anthropologie, Mimi Maternity, Fubu, and Nylon Magazine. Jamila graduated from
Drexel University as a Design and Merchandising Major, currently resides in Philadelphia, and
is working on a book entitled Shopping for the New Me scheduled to be released in the fall of 2004.
Professional Relationships
Accountant: Don DeMarco, JLB & Associates, (215) 674-5322
Banker: Sarah Breekman, Bank of America, (215) 674-5200 X 12
Insurance agent: Lionel Hardness, State Farm, (215) 892-2100
Attorney: Richard Gabel, Esq., DSLMH, (212) 259-3208
Board of Advisors
Alice Chamberlain: Co-chairman Step UP Womens Network. Alice and Jamila meet for lunch once a
month to discuss growing the business and involving it in philanthropy related to womens issues, such asdomestic violence, which is Step UPs primary mission.
Charles Payne: Jamilas grandfather, a retired Philadelphia investment banker who advises Jamila on
financing and operations.
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Steve Mariotti: founder of the National Foundation for Teaching Entrepreneurship, Inc., available by
phone to Jamila for consultations on networking, business organization, and reaching out to potential
investors.
Legal Status: Milla by Mail Direct, Inc. is a Sub-S Corporation incorporated in Delaware.
Purpose:Milla by Mail is a mail-order retailer founded with the purpose of providing a shoppingenvironment that is ideal for women on the go.
Mission: The company mission is to become the destination fashion resource for style-conscious women
by providing quality merchandise, up-to-the-minute fashion information, and a shopping experience that
peeks into the customers lifestyle.
Status: Milla by Mail is an ongoing business that plans to expand to become the go-to destination for
style-conscious women by providing quality merchandise and up-to-the-minute fashion information.
Business Type: Non-store retail. The corporate office operates MondayFriday 9:00am to 5:30pm.
Products/Services: Milla by Mail makes shopping easy and convenient by offering a multimedia
approach to purchasing, including catalog, Internet, and telephone. The company brings the elements of
boutique shopping to a larger arena. Our goal is to promote the proliferation of individual style by
providing an atmosphere where customers can be creative in their shopping experience and develop their
own look. We dont tell our customers how they should look; we just present some great choices, and
they take it from there.
Reasoning: Milla by Mail sells womens apparel and accessories. The company targets women ages 25
45 young professionals and college women. These individuals spend or influence the spending of $200
billion per year.
Womens roles have shifted in society; not only are they mothers and wives, but they are also moving up
the corporate ladder. This shift brings about increased responsibilities and decreased time. Although
women do not have the time they once had, they are still expected to dress the part of their new executive
role. Women still want access to quality merchandise and fashion information but need to be able to
obtain that access quickly and from the convenience of their homes and offices.
Goals
The company plans to achieve the following short- term goals:
Add 34 team members (March)
MBM will add team members for the following positions: Marketing/Pr (part-time), Sales/Customer
Service (part-time), and Affiliate Marketing Coordinator (Contractor).
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Develop the advisory board (March)
The MBM advisory board will provide real-time feedback to the company about its product line and
services. The group will consist of the 3 professionals currently involved plus 3 more with professional
experience in a variety of industries.
Launch look book (August)
The Milla by Mail look book is the companys take on the traditional catalog. The book will feature some
special items that are not available on the web. It will also introduce Millathe Companys private-
label brand.
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Expand private-label brand Milla (August)
The Company plans to broaden the assortment by manufacturing more garments under the Milla label.
Products manufactured under the private-label brand have the highest profit margin.
Grow membership base to 10,000 (December)MBM will grow the membership base by hosting various contests on the web. The increased membership
base will give the company the opportunity to sell advertising space in the e-mails that go out to
members.
Industry Trends/Outlook
Non-store retailing is a retail channel that has experienced double-digit growth for close to a decade. The
channel consists of catalogs, online retailing, and TV home shopping.Retail Forwardprojects that non-
store retailing will grow at an average annual compound rate of 7.9 percent over the next five years. The
e-commerce subset of this channel will grow at an average annual compound rate of 26.5% in the same
time period.
E-commerce will grow at a still-powerful 26 percent compounded annual growth rate (CAGR) over the
next five years. Barring unforeseen events, e-commerce will grow to $217.8 billion, representing 8
percent of total retail sales by 2007. By 2007, another 26.4 million U.S. households will join the 36.5
million households already shopping onlinefor a total of nearly 63 million or two-thirds of all U.S.
households. Online shopping still makes up a fraction of all retail sales at 4.5 percent; its the fastest
growing category, according to theNational Retail Federation.
Cataloging
In the United States, 7,000 major retail catalog producers are responsible for the average American
Familys receipt of approximately 75 catalogs per year. With so much growth, many retailers are
beginning to publish catalogs and many catalog operations have decided to open retail outlets. Nationally,mail-order sales account for 4 percent of the total retail dollars spent.
Catalog sales growth has been outpacing that of the overall industry thanks in large part to the natural
synergy between catalog and Internet operations. The mail-order industry has matured, creating a highly
competitive environment. Three out of ten start-up catalogs survive after five years. The phenomenal
acceptance and growth of the Internet as a complementary channel of marketing for cataloging has
opened new vistas for traditional paper catalogs and retailing. The Internet is rejuvenating the catalog
industry. New non-traditional mail-order buyers are shopping on the web and, in many cases, have been
driven to the Internet by a printed catalog. The two media are interconnected. The paper catalog is
unlikely to be replaced by electronic commerce in the next decade because the two channels are quite
complementary. Together they will promote growth in direct selling while enhancing the creditability andauthority of each marketing channel.
Customers expect to shop when and where they want. And, if you have a multichannel buyer shopping in
the store, catalog, and online, retailers have a better customer, as she typically buy more and more often.
A few years ago it was predicted that the catalog would become extinct, mainly because the Internet was
emerging. However, according to theDirect Marketing Association, Americans are expected to spend
nearly $133 billion shopping through catalogs in 2004, up from $126 billion spent last year.
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Catalog shoppers are generally more upscale than non-catalog shoppers and are willing to pay higher
price points to get what they want. Catalog shoppers might be won over because they indicated that they
had no preference when asked to name a first-choice department store. Those who shop the catalogs
also tend to be familiar with the regular use of modern technology. They are also more likely to own apet. Catalog shoppers lead more active lives. They like to read more, preferring the editorial, lifestyle, and
business/finance pages of the newspaper. Catalogers like to eat in full-service restaurants and go to
movies, concerts, and live theater performances.
Online shoppers greatest concerns about shopping, in order of importance, are convenience, security,
customer service, and price. A study performed byBruskinGoldring has determined that 52 percent of
women who shop online prefer to do it after 5pm, while 20 percent shop after 8pm. Another finding pegs
women as seekers, who begin with a to-do-list, find products and services quickly, and log off. Saving
time is the major reason women are turning away from the mall and to the Internet, according to Andrea
Claster, president ofClaster and Co. Consulting Company.
Online retail sales continue to grow along with the size of the Internet population. While it appears to be afunction of economic weakness, the drop in spending per customer is occurring because e-commerce
shoppers are starting to look more like the average overall consumer.
One of the more apparent trends in recent years has been the marketing focus of the apparel companies on
the Generation Y and Generation X demographic. It comprises 75 million individuals, or 25 percent of
the U.S. population, and spends (or influences the spending of) approximately $200 billion a year.
These individuals have been instrumental in changing the rules of corporate and casual dress, demanding
stylish clothing that can transition from the office to evening looks. Apparel, and related fashion items,
account for a significant portion of adults discretionary spending, according to a study conducted by
Harris Interactive, a market research firm in Rochester, New York. The study found that, on average,young women ages 1834 spend 75 percent of their earnings from work on clothing and related
accessories.
Technology
Several online retailers have sparked e-commerce growth by making online shopping easy. Future
success hinges on similar improvements. MBM will regularly implement new technology features that
will enhance the customer shopping experience. Upcoming features include:
adding an account management function that will allow customers to manage their purchase
history
a gift registry and a real-time customer service feature that would allow customers to click a
button called customer service which will launch a new window where the customer could type in
questions and a customer service rep would respond.
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Management and Employees
Milla by Mail Direct, Inc.
Sole proprietorship (non-store retail)
Management
Owner: Jamila Payne will manage the Milla by Mail operations and handle day-to-day operations. Systemmaintenance and printing will be outsourced. The owners salary will be minimal in the early stagesof the business to allow for the business to grow and sustain cash flow.
Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years.
She has dressed celebrity artists and entertainers for everything from the stage to the red carpet.Jamila has been featured inIn Style, Entrepreneur Magazine, the San Jose Mercury News, as well
as many other local and national newspapers. She has been honored by the Philadelphia Tribune
as One of Philadelphias Most Influential under 40. Jamila can sometimes be seen on shows,
such as theNBC morning show 10!, presenting the latest fashions or discussing lifestyle trends.
Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including
Anthropologie, Mimi Maternity, Fubu, andNylon Magazine. Jamila graduated from
Drexel University as a Design and Merchandising Major. She currently resides in Philadelphia and is
working on a book entitled Shopping for the New Me, scheduled to release in the fall of 2004.
The order management and accounting systems produce all the reports that management needs to run the
business, including but not limited to:
inventory reports
merchandise sold
source frequency
fulfillment ratio
sales reports
Employees
Milla by Mail plans to hire two part-time employees in March/April. We will also bring in three interns
for additional support staff.As business increases, staff will be added to the corporate management team.
The staff will include, but not limited to, business managers, merchants, customer service, and
administrative professionals. The company plans to use four primary methods of recruiting employees:
(1) scouting other retailers
(2) receiving referrals from retail skills centers
(3) recruiting from colleges
(4) advertising and posting on the Milla by Mail website
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The company will seek out employees who have retail experience or who are pursuing fashion design,
Merchandising, or retail careers. Prospective employees will fill out an application and undergo two
interviews and a telephone service test. This will give management the opportunity to accurately evaluate
customer interaction, selling ability, and natural service skills. Once hired, all employees will attend
training classes, as will the managers. Topics to be covered include position expectations, companyhistory, mission, operations, customer service, and sales.
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Milla by Mails employment philosophy is to hire ordinary people to do extraordinary things.
The company believes that with proper training the Milla by Mail employee will have the ability to
exceed performance expectations. Salaries will reflect fair market value. Some of the available positions
will include:
Sales/Customer Service
Setup Corporate Affiliate programs
Coordinate out-of-office reps
Develop package inserts and special offers
Create new promotions
Develop contests
Sales analysis
Packing and shipping orders
Customer followup and returns
Marketing/PR Assistant
Put together press kits
Develop releases and announcements
Event planning
Promotion execution
Relationship-building with press
Pitching stories and ideas to TV shows and magazines
Assistant Buyer
Competitive shopping
Inventory projections
Open to buy
Attend trade shows and market weeksProduct development
Trend analysis
Assist with managing Get the Look program
Web product updates
Photo shoot production
Recaps and analysis
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Operations and Suppliers
Product
Clothing for the Milla by Mail catalog and millabymail.com website will be purchased from showrooms
primarily in New York, Los Angeles, and London. The Milla by Mail merchants first job is to develop
and source great product. The Milla by Mail Internet and catalog concept-development process is a highly
proactive process that requires tenacious observation and tracking of the competition, active attendance at
trade shows, aggressive vendor pursuit, talking with and soliciting ideas from customers, and
brainstorming.
The Milla by Mail catalog will launch as a 21-page book with 23 items per page; approximately 44 to 66
items will be selected. The web-site and the catalog will work off of a concept or theme each season.
Once items have been selected, data on each product needs to be collected on a specification sheet that isincluded in the product folder. A product folder contains everything pertinent to the product: vendor tear
sheets and information, terms, product photographs, samples, and so forth. The specification sheet known
as the Product Information form is submitted to each vendor at the time the purchase order is issued,
along with the vendor manual. Ultimately, the folder is handed over to the production team, where it
becomes the copywriters source for sell copy. The art director will also review the information to place
products in the page layouts.
The information in the product folder and specification sheet will be entered in a simple, off-line
merchandising database. Maintaining a product vendor database makes it easier to gather all the products
from one vendor in order to negotiate the entire purchase, or to see quickly how many products are in
acertain category or at a certain price point. An organized database also makes it easier to track open
purchase orders and to transmit payment information to the accounting department.
Creating the Product Forecast and Buy Plan
Once the marketing group estimates how many catalogs will be printed and mailed, the merchandisers
and inventory planner can create a buy plan that forecasts how many of each item are planned to be sold
in the catalog and online. Pricing will be finalized at this time so that margin or costs of goods sold can be
determined and checked against the financial benchmarks. Milla by Mail will maintain its markup
between 50 and 60 points. After seeing the creative layouts, preferably with copy and photography in
place, the buy plan will be reviewed again.
The Internet buy plan will be determined based on the sales projections. Once management has
established the yearly sales goal for millabymail.com, the merchant and planner project how muchinventory is needed to make the sales goals. Millabymail.com had a $98.00 average order value (AOV) in
year one. Because a great photograph or full-page presentation will always influence sales, the buy plan
sometimes needs a final adjustment before purchase orders are issued to make sure larger orders are
placed for products given a generous presentation.
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Milla by Mail plans to mail 500 catalogs, have an order response rate of 40 percent, and receive 200
orders with an average of 2 line items per order, or 400 items ordered. The AOV is expected to be
$100.00 with a 1 percent cancellation rate and 2 percent return rate.
Placing Purchase OrdersOnce products have been selected, vendors investigated, and the catalogs forecast and buy plan
developed, purchase orders are placed. This happens in sufficient time so that the product will arrive in
the warehouse one to two weeks before the catalog mail date. This will allow time for the inventory
control analyst to receive, inspect, perform quality checks, apply bar codes or item numbers, and place
goods in stock. All orders are in writing and confirmed.
Receipt of Product and Quality Control
The merchandise is pre-retailed1so that the retail prices can be marked onto the price tags when it is
received. The Milla inventory control analyst verifies
(1) the shipment was ordered
(2) the completeness of the shipment
(3) the actual contents of the shipment match the description on the purchase order
(4) the rate charges are comparable to the total weight rate schedule
(5) goods are not damaged
Accounting receives verification of this completed process before invoices are paid.
Rebuying
Once merchandise has started selling, the re-buying or control buying will take place. Item product
forecasts are revised, and products are repurchased throughout the cycle or life span. The catalogs
forecasting report, in conjunction with a response curve by week, will help to track seasonality within the
catalogs selling season. Millabymail.com merchandise is reordered based on the response to the goods.
Its ideal to have a quick turnover on merchandise by maintaining minimum stock and allowing for a
minimum amount of back=ordered items. Items that have a back order log will be removed and re-postedon the site once a new in-house date has been confirmed with the vendor.
Disposing of Excess Inventory
The final phase in inventory management is disposing of poor-selling merchandise. During the selling
season, up-selling and in-the-box shipment package insert sales have been most effective. The Internet
sale page has also been an effective method of liquidating overstocked or poor-selling merchandise. Milla
by Mail direct also plans to hold private sale events in local markets for customers. Advisory board
members will also be given the opportunity to purchase sale merchandise.
Merchandise Post Analysis
After order activity runs its course, the catalog and online campaign will be analyzed, including reportson returns, cancellations, and excess inventory. The Milla by Mail order management system also
provides real-time reporting on Internet sales and inventory data.
1 The buying process of deciding the selling price of merchandise before it is purchased and recording that price on
the stores copy of the purchase order
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Facilities
Office SpaceMilla by Mail is currently headquartered in the Laurence A. Baiada Center for entrepreneurship in
technology. There is no cost associated with using the space, which is reflected in the cash flowstatement.
We are projecting that this space will be available until May of 2007. Milla by Mail will then relocate to a
new office space in the city of Philadelphia.
Warehousing
An efficient warehousing function will ensure that orders are picked, packed, and shipped promptly. Extra
workers will be hired during peak seasons to ensure order turnaround. Total fulfillment operating cost
should fall between 15 and 18 percent of net sales.
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Product/Distribution Channel
The Business Model
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Completely
Satisfied Customer
Invitation to Return
Circulation to Customers
and Prospects
Customer Places Order
Acknowledgement
of Order
Order Processing &
Fulfillment
Cycleof
Service
Shipment Notification
Shipment Tracking
Order Receipt
Returns & Exchanges
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Step 1: Customer Places an Order
Customers can place orders online, over the phone, by fax, by mail, or at an event. Phone orders are taken
down on an order form, and then keyed directly into the order management system and sent for
processing. When an order is mailed into the home office, it is batched into a group and keyed in the
system. Internet orders are downloaded electronically into the order management system, and all pendingorders are printed for processing on a daily basis (MondayFriday). Online shoppers also have the option
of printing out the order form and faxing it in. All orders are verified for completeness and accuracy.
Name, mailing address, shipping address, phone number, credit card information, item number, and color
and size information will be checked. Once an online order has been placed, the customer receives an
auto response e-mail confirming her order summary.
Step 2: Order Processing
All pick tickets are hung for processing in the order in which they were received. Orders are packed and
shipped as merchandise becomes available. If an order is placed that contains three items, and all items
are in stock, then the order is shipped immediately. If one or more items are missing from an order, the
available item is packed and held until the additional items arrive. If the out-of-stock item has an expected
delay that exceeds the maximum shipping time (8 business days), the customer is sent a postcard that
makes them aware of the anticipated ship date. At each stage of the pick, pack process the order is
checked for completeness. Most orders will be shipped via the United States Postal Service (USPS), and
expedited shipments are sent via Airborne Express.
Inventory Management
MBM maintains low quantities of inventory so that we are able to ship to our customers immediately after
receiving the order. In most cases when there is no item in stock, MBM is able to obtain the merchandise
from the vendor within 57 business days, which still allows us to make our 8-business-day shipping
window. Going forward we are planning to take on more consigned merchandise. This will allow MBM
to change the assortment of product on the website without committing huge dollars to different vendors.
By decreasing the budget allocated for market buys, we will be able to increase our private labelassortment.
Step 3: Credit Card Billing and Banking
Credit cards are processed electronically using a third-party clearinghouse. Authorizations are submitted
prior to shipment, and deposits are made into the MBM company bank account. Orders paid by check or
money order are deposited in the bank and cleared before the order is shipped. In most cases, MBM does
not accept payments by check. Very large orders paid by a check ($100.00 or more) will be held until the
check is verified by the bank.
Step 4: Fulfillment & Shipping
Once an order is packed and verified for completeness, then it is prepared for shipment. Every packagemailed to a customer includes an order summary, a merchandise return and exchange form, and a
promotion or offer to return. When the order is prepared to ship, the customer ship-to information is
keyed into the MBM postage printing software. The software generates a tracking number for the
package, which is manually keyed into the web administration system. The system then generates an
automatic e-mail to the customer with the order detail and shipment tracking information.
Step 5: Order Receipt
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When the customer receives the order, one of three things can happen:
(1) The customer keeps the product
(2) The customer calls customer service with questions about the product.
(3) The customer returns part or all of the shipment, and the return is processed by the warehousing
function and re-entered into the system for a credit or refund to the customer.
It will take 24 hours or less to respond to any customer service inquiry via phone, mail, or e-mail. The
goal is to process all returns within 24 hours and to ship low cost orders (under $100) in one day and all
other orders in two days for credit card verified orders and check orders over $100 after check pre-
approval.
Step 6: Returns and Exchanges
Milla by Mail will be happy to exchange or give a credit or refund for the merchandise price of an item
within fourteen (14) days of the ship date. All returned items must be unworn and accompanied by proof
of purchase such as a receipt or packing slip. Sale items are for merchandise exchange or store credit
only. Once a return item is received, it is put in wait for processing. MBM guarantees a ten (10)-dayturnaround for processing returns and exchanges.
Returns
Customer returns tend to be a challenge in the mail order business. MBM is working to overcome this
barrier by developing tools that will help track, access, and correct the issues that cause returns. On the
MBM merchandise return and exchange form there is a section where customers select a reason for return
based on 12 choices that are listed. There will always be customers that change there minds or who orders
merchandise in sizes that may not fit but we really want to correct the issues of customers that return for
other reasons like dissatisfaction with the quality of the garment.
MBM is implementing a customer satisfaction survey that will be sent to every customer that returns
merchandise. This survey will include questions that speak to the reason for return, how we could haveprevented the return and how we can maintain their business. Customers that complete and return the
survey will receive a gift certificate to purchase.
Step 7: Invitation to Return
Milla by Mail operates at a high service level. The clients are the number one priority. Our service
features will include:
(1) contacting the customer when new merchandise arrives
(2) reminding the clients of special occasions for which they may need gifts
(3) sending thank-you notes to customers that purchase
(4) following up with sales calls
(5) providing discounts to unsatisfied customers(6) providing an online suggestion box
(7) offering season preview and private sale events for preferred customers
The Milla customer service representative (CSR) is the most important element of service. Our number
one objective is service. If the company does what is right for the customer, the sales will follow. The
development of a loyal customer base will ultimately result in an increase in sales. Providing quality
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service will also help prevent losses from theft. The company would eventually like to offer a private-
label credit card2, which will be convenient for customers as well as increase catalog sales.
800 Customer Service Calls
The Milla by Mail customer expects phones to be picked up promptly. Eighty percent of all calls shouldbe answered within twenty seconds. Ninety percent of customer-service calls should be handled
completely while the customer is on the phone. MBM currently manages its call center in-house. We hold
training sessions and plan to mail sample garments to our telephone representatives so they are familiar
with the products.
Order Fill Rate
The initial fill rate determines how many orders can be filled from the first inventory orders placed before
triggering a reorder or backorder. Milla by Mail anticipates filling 90 to 95 percent of orders on the initial
order. The goal is to have a final fill rate of 95 to 98 percent.
Net Return RateWhile product returns are a cost of doing business, they need to be maintained at a reasonable level. The
mail-order industry standard is 15% to 30% of orders.
2A credit system that allows retailers to offer credit cards under their store name, but a bank operates and manages
the service
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Plans to Add Customer Service Functions to the Website
In the category of retailers with store-front sites, the sites usually frequently update the variety of
merchandise and have special user functions. MBM plans to expand our website to include features that
create more of a lifestyle community environment and allow customers to be involved in fashion, style,
and the Milla by Mail brand.
Customer Service
Milla by Mail is planning to expand the functionality of the website to include a real-time-response
customer-service feature. Customers will be able to click a button on the website, and a customer-service
question box will pop up, where they can type in their questions, and a representative will respond to their
questions right away.
Account Management
Customers will soon have the ability to manage their accounts online. Milla by Mail will track
information such as purchase history, contact information (with users having the ability to update the
data), order status, and a customer gift registry.
User Interaction
MBM plans to add two features to the website that will assist with creating a community environment.
First, we will send a monthly newsletter that will include trend information, Milla by Mail featured items,
and light advertisements from other companies. Second, MBM will implement a feature called Get the
Look. On the Get the Look page of the website users will receive instructions for sending in photos of
a designer or celebrity look that they would like MBM to recreate for them at an affordable price. MBM
will put the looks together for our clients and post them on the website. MBM will offer gift certificates to
the customers whose look is chosen.
Suppliers
Below is a short list of apparel vendors that MBM has met with and with whom we have placed orders.
All vendors receive The Vendor Shipping Manual, which outlines the details for shipping product.
Apparel Vendors:
Rebecca Taylor
HMB
BCBG
To the MAX!
Devan Apparel
Single
Anja Flint
Megan Noland
Derek Green
Corey Lynn Calter
Leroys Girl
Joes Jeans
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Inventory purchases will be negotiated with net-30-payment agreements. Some vendors may request that
the initial order is paid C.O.D. After year one all inventory will be purchased with a net-30-payment
agreement for the betterment of cash flow. The amount of inventory purchased varies from month to
month. A $5,000 purchase of inventory would be considered full stock for the web-site. Smallerpurchases will be made for inventory fill-in and to update the styles that are shown on-line. Inventory will
also be stocked according to peak seasons, i.e., April, August, September, and December
Call Center
Milla by Mail will also eventually outsource its call center to maintain the in-house (800) phone number.
During business hours customers can call in to place orders or receive customer service assistance. There
will be one to two people responsible for answering phones. As the call volume increases, Milla by Mail
will begin to outsource the call center. The third-party service will take customers orders and
electronically transfer the data to the Milla by Mail home office.
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Marketing Plan
Buyer Profile:
Milla by Mail Direct targets college students and professional women aged 2545. Our customer type
breaks into three groups:
Super Shopaholic
Sarah Rosenthal, 38
High-level executive or self-employed
Lawyer
Doesnt have time to hit the malls regularly; however, she is very fashion-conscious, wears designer suitswith fashionable blouses, attends happy hours or social events 23 times a month, reads all the latest
fashion magazines, and quite often makes purchases based on the editors recommendations.
Takes yoga
Single or newly wed
Income $70,000 +
Sexy, Stylish
Amy Bleaker, 26
Works in fashion or entertainment
Shops for rare items and discounted merchandise; will pay more for something different. Visits shoppers
havens (shopping districts). Goes to the mall only if looking for something particular, but will definitely
attend a sample sale. Daily dress is fashion forward but with some casual classics. Must have a few of thehottest trends in her wardrobe.
Exercises occasionally, depending on work schedule
Single, but actively dating
Income $35,000 +
Town Trendsetter
Song Han, 22
Student, Ivy League University
Shops for the item(s) that will make her the talk of the town and discount merchandise that looks
designer. Frequents the malls, websites, and sample sales.
Exercises regularlyActively dating or has a steady boyfriend
Income $18,000 + - summer jobs, student loans, and daddys credit card
Product: Stylish Apparel for Women 2545
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Our current assortment is a mix of well-known boutique brands like BCBG, French Connection, and
Rebecca Taylor, as well as up-and-coming designers and our own private label brand Milla. We are
currently building relationships with manufactures that have brands that are in high demand. Our goal is
to purchase some of these key brands (primarily denim, i.e., Seven Jeans) at a discount by offering to take
overstock or the prior seasons merchandise.
We believe that this type of partnership will be effective for both parties. MBM will be able to offer key
brands at a lower price point, so we can capture a good portion of the business. The manufacturer will
benefit because it can sell merchandise at a better per-dollar cost to MBM than the normal discount
outlets they use like TJ Maxx, Ross, and Daffys. The manufacturer will maintain the image of a high-end
brand by not having its merchandise marked down. This will work well with denim lines because the
styles only change slightly from season to season.
In fall 2004 customers will see an increase of Milla private-label merchandise in the collection. Its
important for the company to expand our house brand because the average profit margin is 60 to 70
percent of the total retail price versus 50 to 55 percent on market buys.
Benefits:Our customers get the convenience of shopping online, plus access to their favorite
clothing brands, at better prices than they would find at stores.
Differentiation:Our merchandise offerings are characterized by fun, feminine, and novel items
that can transition from work to casual wear. We use an energetic color palette in our assortment
and visual presentation. Our visuals always represent a fun, quirky, and energetic display of pop
colors and clean lines that distinguish our brands from the competition. The Milla by Mail brand
is about more than our assortment; its also about the lifestyle image we offer our customer and
the escape from her busy schedule that she can experience through our website, catalog, and
events.
Price
Selling price per unit: $98.00 (average)
Cost of goods sold: $45.00 (average)
Gross profit (contribution margin) per unit: $53.00
Place
Milla by Mail is currently headquartered in the Laurence A. Baiada Center for Entrepreneurship in
Technology in Philadelphia. This business incubator provides the company with free office space, as well
as computers and other equipment and mentoring. We are projecting that this space will be available until
May of 2007.
Promotion
Launching Milla by Mail
Our launch marketing strategy was to test the market and build a customer base by launching online
(millabymail.com) in the spring of 2005 and then launch a printed catalog in the fall of 2006.
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First, we built a mailing list by advertising the launch of the website on postcards at the Alpha Kappa
Alpha sorority, Inc. (a national service organization) regional conference and had attendees sign-up on the
MBM splash page to be notified of the official launch. Since the launch, MBM has reached new
customers through our Trunk Show tour, an event where MBM showcases a fashion show at different
venues in different cities, including Dylans Candy in New York; after the show customers place orderson merchandise, which is later mailed to their homes. Utilizing this web-launching strategy, Milla by
Mail will grow almost twice as fast as its catalog competitors.
In fiscal year 2005, we have begun to focus our marketing efforts on partnerships with other companyies
that will generate leads. Through commission-based programs and revenue shares, we will be able to
market to prospects via other companies subscribers. MBM will build our affiliate program by setting up
representatives on campuses to promote the brand.
Advertising:The Circulation PlanA circulation plan is built for every mailing. MBM sends out monthly promotions to its existingmembership base. All e-mails that are circulated to the list are tracked and produce statics on conversion
rate, open rate, and bounce rate. The companys goal is to circulate information or promotions to as manymarket segments as possible per month. Once rented mailing lists are selected, a unique source code(numeric identifier) will be assigned to each list. The circulation plan will be used to forecast percentageresponse, average order value (AOV), and sales per look book anticipated from each list. The look bookwill be distributed twice in year one and will increase to three books in year two. Milla by Mail hasachieved 10,000 unique hits per month on millabymail.com by the end of 2003.
Purchasing Mailing Lists: The Millard Group
Purchasing mailing lists has been a successful strategy for building a customer base in the mail order
industry. Milla by Mail plans to use the Millard Group to purchase customer lists. The company is leader
in the direct response industry with over 25 years experience in list brokerage, list management,
alternative media, customized marketing services, and Internet services. The Millard group works with
blue chip clients who are the top catalog and magazine titles in the country, such as Lands End, L.L.Bean, Chadwicks of Boston, Newport News, and Brookstone.
Milla by Mail has chosen this company particularly because it representsLucky magazine. Filled with the
latest fashions, accessories, beauty products, and more,Lucky delivers todays hottest finds with on-the-
spot buying information from website addresses, to retail store locations, to catalog toll-free numbers. The
Lucky reader base is a perfect place to find potential Milla by Mail customers. We are anticipating a 2
percent or higher response from this list. The cost to purchase the list is $79$89 per thousand with a
5,000 minimum purchase quantity.
MBM employs the following strategies to maintain a relationship with our current members and
purchasers:
sending product-driven e-mails with special offers on a bi-weekly basis to encourage members to
purchase
launching an e-newsletter that offers up-to-the minute fashion information, tips, and trends
sending a birthday cards to members every month that has a special offer for them to treat
themselves to a birthday gift
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Partnerships
MBM will develop partnerships with websites like styleforfree.com and stylebakery.com, which are
fashion websites that give retailers the opportunity to showcase special offers, promotions, or
merchandise for a minimal fee. There is also an opportunity to develop relationships with other boutiques,
fashion information sites, or other industry sites for list exchanges.
Secondly, MBM will develop relationships with companies that our customers identify with and perceive
as valuable to their lifestyle. These companies include, but are not limited to, Maybeline, Lancme,
Sephora, and Hard Candy. The registered partners will provide products or information surrounding their
brand to MBM for customers in exchange for inserts in our packages every time an order ships.
PublicityBuilding a good relationship with the media has been essential to the growth of the company. Milla by
Mail has been featured in the following media:
NBCtelevision
Entrepreneurmagazine
In Style magazine
Lucky magazine
the San Jose Mercury News and other local publications.
We are developing our national public relations campaign. In November of 2005, Milla by Mail was
mentioned inIn Style magazine in the article 68 Fab Web Sites. From the 22-word mention, Milla by
Mail generated over 100 orders and 500 new members. National press has definitely been an effective
method of promotion, and we are planning to build more relationships in this arena.
Product Placement
We will notify stylists, costumers, and product-placement professional about Milla by Mail. Theseindividuals are constantly looking for new merchandise for their clients, who often appear on TV or in
magazines or other media. Loaning merchandise to such individuals in exchange for credit will help build
awareness about the company.
Philanthropy
Cause-Related Marketing
Milla by Mail plans to host or partner on events that will develop cause-related marketing. One campaignthat we have developed is called Pink Chocolate. This campaign will encourage customers to shop
Milla by Mail in support of Breast Cancer Awareness Month.
MBM will also partner with womens organizations, non-profit organizations, and other professional
organizations by having them participate in events, attend events, or participate in special programs. We
will offer group members special discounts to purchase from Milla by Mail.
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Competition
The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop.
Girlshop
Girlshop was started in 1998 by Laura Eisman; offers clothing and
accessories from up-and-coming fashion designerssome handmade,
some limited editions, and some exclusive to Girlshop. Within Girlshop,
each designer has a boutique where you can browse and read about each
item. Girlshop also has additional features, including messenger service for
local New York customers, tell a friend, trend alert e-mail, Top 10, as seen
in magazines, and a registry. In 2003, Girlshop introduced two additional
brands, Guyshop and Totshop.
Ravin StyleThe majority of the products are created by emerging designers. RavinStyle is centered on three characters: Ravin, Jackie and Lela. Eachcharacter has her style and distributes advice accordingly. The entire site ishand-picked by the girls, with commentary about trends, new ideas, andwhat flatters different body types. Features include stories about how towear the outfits, as seen in magazines, new items list, and a newsletter.
Anthropologie
Anthropologie began as a retailer in 1992 by Urban Outfitters, Inc. The
idea was to offer an experience full of uniqueness that would appeal to the
customer that was tired of the traditional retail operations. The first
Anthropologie store opened in Wayne, Pennsylvania on October 31, 1992.The company began an expansion program in 1994 and opened several
more stores across the country. The Anthropologie Catalog and website
was introduced in 1998. Anthropologies president is Glen Shenk.
Shop Bop
Shop Bop carries well-known designers. Features include wish list, whatsnew this week, and whats hot. The owners describe Shopbop.com as aplace where boutique edge meets department store selection. Its wherefashions taken seriously but without being over-the-top serious aboutfashion. Its where the seasons must-have products sit alongside the latestmust-know designers. Its where thousands of women come every month
for that one perfect item, for a complete seasons wardrobe, and foreverything in between. Shop Bops president is Bob Lamey.
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Features
Messenger service
Tell a friend
Registry
Membership
Trend alerts
As seen in ma s
Features
Shop by body type
New items list
Newsletter
As seen in mags
Features
Catalog
Brick & Mortar
Tell a friend
Wish list
Features
Tell a friend
Wish list
http://www.girlshop.com/shop/girls/registry/myregistry.asphttp://www.girlshop.com/shop/girls/registry/myregistry.asp -
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Milla by
Mail Girlshop Ravin Style Anthropologie Shop Bop
Returns 14 days 14 days 14 days anytime 21 daysCustomerService
phone/e-mail
phone/e-mail phone/e-mail phone/e-mail phone/e-mail
Distribution web web webweb/catalog/brick &
mortar web
Price Point Comparison
Milla byMail
Girlshop RavinStyle
Anthropologie Shop Bop
Jackets 68238 26518 117350 78218 88-599CareerPants
130 50180 78198
Skirts 49140 51319 40196 68298 49-360Dresses 5894 38455 80270 159298 36-448
Knit Tops 4065 46196 34-98 44-291CasualPants
7098 24248 80-297
Sweaters 180218 88311 88198 44.95-198 73-297Tops/Blouse
s46140 31288
Mill by Mails Competitive Advantage
Milla by Mail sets itself apart from the competition by carrying a variety of merchandise that includes
well-known brands, up-and-coming designers, and our private label brand Milladistributed
exclusively via the website and catalog. All items can be purchased as separates or merchandised back to
other items.
Milla by Mails distinctive competencies are:
the merchandise
the personal expertise of the company founder, Jamila Payne
the shopping experience that is offered to customers
Our buying philosophy is to bring together the best of whats available in fashion every season.Our
merchandise is separates-driven so that our customers can put together looks that represent their personal
style. Our merchandise transcends geographic looks. We attract women from as far west as Washington
and as far east as Spain. It is more important for us to provide a narrower selection of specialized items
than to provide a wide assortment. Many online retailers sell designer merchandise that is discounted.
MBM sells high-quality boutique merchandise that is from a combination of sources including well-
known designer brands, up-and-coming designers.
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Milla by Mail brings Jamila Paynes fashion experience to the customers by providing trend information,
tips, and fashion articles through a monthly newsletter. The MBM customer is looking not only for stylish
clothing and valuable fashion information but also for a memorable fashion experience.
We are creating a user environment on the website where customers can manage their own accounts and
share shopping experiences with other customers via our get the look feature. On the get the look
page customers can ask questions about their fashion problems, and their answers will be posted on the
site. There also will be a section on the page to post a photo of a customer in merchandise that they
purchased.
When a customer shops Milla by Mail, she embarks on a journey of self-discovery, and she leaves with a
different look every time. Milla by Mail creates a special place for customers by focusing on the lifestyle
of busy women. We complement the presentation of clothing with lifestyle images that represent the
Milla by Mail shopper.
MBM plans to use the following short-term (in progress) and long-term (future implementation) tactics to
acquire new customers:
Short-Term Tactics
Registering with search engines and directories
Milla by Mail will be registered with search engines so that if a potential customer is looking for the
website the search engine makes us easy to find. Although it is not in the marketing budget to pay the fees
associated with being at the top of a search list, we still feel that it is valuable to register (free) and be
included in the search database.
Sending monthly e-mails to MBMmembers
Customers who are registered with Milla by Mail (there are currently over 400 people registered asmembers) have opted into monthly e-mails. This marketing media will capture the attention of prospects
who have signed up but not yet purchased and drive them to the website. Customers will soon be able to
request a copy of the Milla by Mail catalog on the website. This will assist in building an in-house
database for the initial mailing.
Corporate sales
In the corporate program, partnerships with companies will allow their employees to receive discounts on
merchandise. The Milla by Mail team will send e-mails or postcards to inform employees about the
program. MBM will target companies new-hire employees. Milla by Mail will offer the employee the
opportunity to purchase a $300.00 gift certificate worth $370.00 or $500.00 gift certificate with a
purchase value of $600.00 called the Work Starter Kit.
Long-Term Tactics
Partnership events with magazines
Milla by Mail plans to have a sweepstakes contest with a magazine. Potential partners are currently being
investigated. These contests have proven to be successful for competitors such as girlshop.com and
bluefly.com. There is also an opportunity to do revenue-share programs with magazinesMBM will
receive free ad space in exchange for a percentage of the revenues that are generated from the ad. All ads
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will have a promotion code attached that readers will use at checkout. The promotion code will offer a
gift or special discount to encourage readers to use it. The promotion code will also allow MBM to track
the sales that are being generated due to the ads.
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Financing Request: Capital to Launch National Catalog
Amount Requested: $50,000
The most important factor in the launch of Milla by Mail was the ability to secure financing. The
startup capital was provided through the owners contribution of $3,000 and a $15,000 low-
interest loan from a family member. Start-up capital was used for:
design and development of the website
inventory
office supplies
travel expenses
professional fees
cash for operations
The primary source of revenue for the company has been sales from the website. The companyseeks $50,000 in capital to support the launch of a national catalog in fall 2006.
It is anticipated that sales from the catalog will exceed revenues from the website once the
catalog launches. Milla by Mail Direct had revenues of $20,000 in year one (MayDec) and is
projecting revenues of $100,000 in year two.
Revenue Model
Currently MBM revenue is driven primarily from online sales, the Trunk Show Tour events,
and in-office sales. We anticipate several new revenue opportunities for Milla by Mail. First, we
have decided to create a new event entitled The Fashion Trunk Show. The format of our
original trunk show events has been guests partaking in complimentary hors douevres and
cocktails for an hour, followed by a fashion show of MBM-only merchandise, and, after the
show, guests place orders on merchandise that is later shipped to them.
Going forward we will host three of the new events, which are on a larger scale. In the new
format we open up the merchandise presentation to 38 plus designers and a larger number of
guests. We will also change the event title from The Milla by Mail Trunk Show Tour to Milla
by Mail presents The Fashion Trunk Show. Revenue will come from tables rented by the
designers, a ticket price for the customers, and corporate sponsorships. Below is a chart that
illustrates the increased number of revenue streams created by the new event format.
Trunk Show ComparisonEvent Features(with ability to
generaterevenue)
MBM-OnlyTrunk Show
MBM FashionTrunk Show
Past PotentialRevenue
CurrentPotentialRevenue
FeaturedDesigners or
1 40+ 0 $8000
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BoutiquesGuest
Attendance50100 500800 $0$300 $6000
$9600Companies that
GiveSponsorship
13 510 Product/Food
Donation
$7500
15,000
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Secondly, MBM will introduce a newsletter and sell advertising space primarily to fashion and beauty
companies or vendors that would like access to the MBM membership base. The newsletter will
help with establishing the company as a resource for fashion information. Milla by Mail can send
the newsletter to its current membership base that has opted into monthly e-mails along with
attendees of the trunk show events. We are anticipating the launch of the newsletter in August2004.
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Business Financial Statements
Please see attached financial statements (Excel files):
Income statements
Cash flow statements
Balance sheet
Financial Ratios
Year 1 Year 2 Year 3
Debt Ratio .41 .05 .10
Debt-to-Equity Ratio .68 .06 .01
Return on Investment 135% 573% 943%
Return on Sales 119% 31% 35%
Quick Ratio 2.47 18.53 89.19
Current Ratio 2.47 18.53 89.19
Working Capital $22,000 $173,478 $390,315
Break-Even AnalysisAverage unit of sale = $98.00
Break-Even, Year 1: 1,040 units per year, 87 units per month
Year 1 Total Revenue = $20,398Average units sold in Year 1 = $20,398/$98 = 208 units
Year 1 Gross Profit = $5,338
Year 1 Gross Profit per Unit = $25.66
Break-Even, Year 2: $170,508 (fixed costs)/$69.58 (gross profit per unit) = 2,450 units per
year, 204 units per month
Year 2 Total Revenue = $326,482
Average units sold in Year 2 = 3,331
Year 2 Gross Profit = $231,782Year 2 Gross Profit per Unit = $69.58
Break-Even, Year 3: $142,408 (fixed costs)/$64.38 (gross profit per unit) = 2,211 units per
year, 184 units per month
Year 3 Total Revenue = $487,600
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Average units sold in Year 3 = 4,975
Year 3 Gross Profit = $320,300
Year 3 Gross Profit per Unit = $64.38
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Growth and Exit Strategies
(1) Expand marketing and catalog circulation internationally in spring 2004
(2) Open retail store in 2005
(3) Open four additional stores by 2008(4) Employee stock offering
(5) Sell to a national or international company
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Appendix: Financial Assumptions
Credit Card Processing
The expenses in this category are directly related to the costs associated with the monthly cost ofaccepting credit cards. This cost includes a lease purchase fee for the merchant license ($24.95 per month)
and a monthly statement fee ($10.00). Visa, MasterCard, and Discover all charge 2.3 percent discount
rate and $.30 per transaction to have the ability to accept funds from their cards. All credit cards require a
$25.00 monthly minimum in purchases. If the sum of a month of purchases is less than $25.00, the credit
card company will charge Milla by Mail $25.00. The $25.00 expense includes all the credit cards and is
not a per credit card fee. American Express will not be accepted.
Credit Card Calculation: The company expects 99 percent of the year one online orders to be purchased
via credit card. The other 1 percent of the orders will be mailed in with a money order.
Loan
The most important factor in the launch of Milla by Mail was the ability to secure financing. In year onethe company acquired $15,000 in debt to support the launch of the website and catalog. The catalog will
only print twice a year in year two.
Shipping and Handling Income
This is the income that is obtained from the customers to ship their orders. Every customer pays a
shipping and handling fee based on the total dollar amount of the order. Customers are required to pay an
extra shipping charge for expedited delivery.
Shipping and handling income is calculated based on the AOV x shipping price for the total order value x
the number of orders, i.e., Internet AOV in year one is $75.00 x shipping for a $75.00 order is $11.00 x
600 projected orders in year one = $6,600 in shipping and handling income. The cost of expedited
shipping is passed directly to the customer, so it is not included in the income calculation.
List Rental Income
This is income that is received in exchange for customers information. Customers must approve the
name rental before it is handed over to the broker.
Marketing
The expenses that are accounted for in this category are directly related to the costs associated with
promotions, publicity, or marketing campaigns. Milla by Mail does not plan to purchase any paid
advertisements. (please see marketing timeline for detailed information.)
Internet
The expenses that are accounted or in this category are directly related to the cost of maintaining the
website. That includes web, hosting, upgrades, domain name, web design, and development.
Fulfillment
This cost is directly related to any expenses that are incurred to get the customer her merchandise, i.e.,
shipping and mailing supplies. Fulfillment also includes the cost to ship the merchandise to the customer.
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It is expected that the cost to ship the garment will usually cost $2.00 less than the shipping charged to the
customer. The cost of expedited shipping is passed directly to the customer, so it is not included as an
expense.
TravelThe expenses that are accounted for in this category are directly related to the costs associated with
traveling to trade shows for market weeks or other business meetings and industry conferences.
These costs will include, but are not limited to, gas, tolls, airfare, cab fare, hotel, train, and car
rental.
Production
Production shoots for the website occur every other month. The assortment of merchandise on the website
will change every four to six weeks. There are months were no production activity occurs and those
months have been left blank.
Printing and Mailing
Milla by Mail is anticipating the initial catalog mailing in August of 2003. There will be 30,000 catalogs
mailed in year one. In years two and three circulation will increase and catalogs will be mailed three times
a year. Milla by Mail will obtain a bulk mail permit. The cost of mailing catalogs and postcard campaigns
are based on bulk mail rates.
Office Supplies
The expenses that are accounted for in this category are directly related to the costs associated with
administrative supplies needed for the office. These costs also include the purchase of business cards.
Professional Fees
Professional fees include the cost of industry subscriptions and consultations with legal and other
professionals. These fees also include licensing, public notice, and incorporation cost.
Insurance
The company insurance policy will protect the inventory in case of fire or other emergency.
Interest
The expenses that are accounted for in this category are directly related to the costs associated with the
interest that is paid on the $15,000 loan amount.
Taxes
Taxes are estimated as 20 percent of revenues.
PPE Purchases
The expenses that are accounted for in this category are directly related to the costs associated with
purchasing plant, property, or equipment that can potentially be depreciated. The cost of leasing
computers on a monthly basis is also included in this category. The lease per computer is projected at
$35.00 per month.
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Break Even
Our break-even point is the close with sales on 85 units per month (one item is a unit) for a total of 1010
units per year across channels. This is equivalent to 55 customers purchasing per month.