Co-N
(707)-727-5711 CoNofficial@.com
BUSINESS PLAN LXFM 501 | BUSINESS CONCEPTS IN LUXURY AND FASHION | SPRING 2020 PROF. DEVINA LALLA BY ZIYI WANG
CONTENTS
I.
EXECUTIVE SUMMARY
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II.
COMPANY OVERVIEW
05
III.
SERVICES & PRICES
06
IV.
TARGET CUSTOMER
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V.
COMPETITIVE LANDSCAPE
10
VI.
PROMOTION PLAN
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VII.
OPERATIONAL MANAGEMENT
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VIII.
PERSONAL FINANCIAL STATEMENT
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IX.
BUDGET PLAN
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X.
FINANCIAL PLAN
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XI.
FINAL PROJECTION
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XII.
SOURCES
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XIII.
APPENDIX
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I. EXECUTIVE SUMMARY Since the spread of COVID-19, the Coronavirus has been devastating to smaller designers who are up and coming. Based on this issue, we will create an ecommerce mobile app -- Co-N, which means collaborate and connect with new brands. The app allows satisfactory startup designer brands to register our services, and they can post and sell their products through it. Our customers can choose their preferred styles to shop, which creates exposure for startup brands and a seamless user experience for customers to acquire new and innovative designs. The growth of brands will allow us to expand brand collaborations, stay on the cutting edge of app development, and prepare pop-up stores once COVID-19 has subsided.
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II. COMPANY OVERVIEW We collaborate. We connect. Co-N is an e-commerce mobile application that allows customers to buy amateur and upcoming designer's products. We provide our customers with fashion recommendations by analyzing surveys and using Algorithms and databases. We also offer customers an online forum so that they can share fashion ideas and get fashion consulting. Moreover, we will use augmented reality to recreate the in-person experience lost over time amid lockdown, as fashion’s adoption of AR widens. Therefore, we will launch an augmented store environment, akin to the virtual showroom, to promote our partner brands.
Headquarter: The headquarter of our company is based in Atlanta, GA.
The Legal Form of Ownership: Co-N is a Private Limited Liability Company, which allows us to exchange stocks with potential investors in a more controlled environment, as opposed to through an IPO.
Mission: Co-N is designed to provide amateur and upcoming designers opportunities to promote and sell their products. At the same time, offer consumers a personalized online shopping experience with various designer brands.
Goals: We aim to become the niche fashion e-commerce company that provides customers with transparent, convenient, and satisfying service globally.
Objectives: Secure partnership with current popular designer brands while expanding the customer base by increasing access to more partner brands. To achieve profitability after establishing the app in half a year.
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III. SERVICES & PRICES Application Examples Designed by Ziyi Wang
Aiming to build a bridge between partner brands and target customers within an online shopping environment, Co-N provides Recommendation Service, Online Forum & Fashion Consulting Service, and Virtual Showrooms Service.
Recommendation Service: After downloading Co-N, customers will complete a quiz about their personal information and fashion styles to sign up. It is divided into two steps. Step 1: Complete personal information, which includes age, gender, height, body shape, address, etc. Based on these data, we will provide more accurate size recommendations and use them as segmentation marketing. Step 2: Choose fashion style preferences. We will present various fashion looks, customers can click their preferred set. Through this step, the Algorithm will analyze and predict customers' preferences, then recommend products and designer brands that meet the aesthetics of customers.
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Online Forum & Fashion Consulting Service: Customers can post daily fashion styles, share and exchange fashion ideas on Co-N's online forum. In addition, we have fashion consulting services, customers can get personalized fashion advice from our professional fashion consulting team, which helps them decide a perfect look for important occasions.
Virtual Showroom Service: We will collaborate with BrandLab Fashion, a platform to recreate the brand 360-degree showroom using AR technology. Customers can feel the different atmospheres of every designer brand through the virtual showroom we designed for them.
Prices: 20% charges on each order that partner brands make through our platform. Every partner brand will be charged $20,000 registration annually to reside on our app, have virtual showrooms, join events our platform would hold, and fashion consulting service we would provide to customers. $10 monthly subscription for customers to access our services (including all the services).
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IV. TARGET CUSTOMER
18-35 (Gen Z and Millennials) All Genders Live in metropolitan cities Middle class – High class Have a passion for unique fashion Feel comfortable with the mobile phone shopping Support amateur designer brands Like sharing fashion ideas Occupations: Stylist, Magazine Editor, Artist, Influencer, Student.
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BOLD UNIQUE STYLISH INNOVATIVE YOUNG
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V. COMPETITIVE LANDSCAPE
Boohoo: Boohoo, founded in 2006, is one of the world’s fastest-growing e-commerce sites. The booming retailer offers non-stop fashion with up to 100 new pieces hitting the site every day for 16-30 years old target customers. The majority of styles on offer are under $77, and some are even as low as $2. Besides, Boohoo is known for its bold designs and welcome commitment to diversity, stocking clothes up to size 24.
ASOS: ASOS, founded in 2000, is a British online fashion and cosmetic retailer. Aiming at young adults, ASOS is one of the best online destinations for the latest fashion trends and affordable streetwear styles. The store focuses on a cool Scandy aesthetic but also offers clothes from brands such as Nike, Mango, Top Shop, and Bershka.
Rue La La: Rue La La, founded in 2007, is a worldwide online members-only website that features limited-time promotions on brand name items, and now it has more than 6 million registered members. With a focus on young, affluent brand-conscious shoppers, Rue La La offers a combination of discounted designer pieces and high-end luxury products.
FarFetch: Farfetch is a pioneer in online luxury fashion founded in 2007. The British-Portuguese online luxury fashion retail platform always seeks to connect high-end fashion creators with curators and consumers worldwide, which is perfect for sourcing a special and unique addition to the wardrobe.
SSENSE: SSENSE, founded in 2003, is a worldwide multi-brand retailer for fashionistas. It focuses on a smaller and highly curated selection of apparel that mixes streetwear and high fashion with pieces from some of the industry’s most exclusive designers. While it’s a luxury retailer at heart, SSENSE has made a point of celebrating exciting new offerings from the worlds of art and music too, celebrating an interdisciplinary approach to fashion.
Net-a-Porter: Net-a-Porter, founded in 2000, has one of the largest inventory of luxury designer brands and offers a white glove delivery service. Customers can find a healthy mix of traditional luxury goods and more edgy styles. Net-a-Porter offers express shipping to more than 170 countries — including same-day delivery to cities like London and Hong Kong.
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COMPETITORS
Core Competencies: Compared to the other popular online e-commerce platforms, there isn’t an exact platform out at the moment that has been created for upcoming designers. The difference is that Co-N is especially for startup designer brands. Partner brands can sell their collections or even one-of-kind products they choose that are exclusive, which keeps Co-N innovative and young. Besides, as an American e-commerce platform, Co-N will start from the American market. Also, currently, due to the pandemic crisis, offline commerce and fashion designers are suffering. What's worse, many experts predict this situation is going to last longer than expected. Therefore, our business model ensures safety for designers and employees operating digital offices. Even after the pandemic is over, we will still operate the same. On the other side, we don't need warehouses since every order is shipped by the brand itself, which helps us save expenses. Also, we have a high-level technique and trained staff to conduct our business model.
Barriers: Due to our app is only for startup designers, so high marketing costs, consumer acceptance, and brand recognition are the barriers we will face. Therefore, we will invest a great portion into promotion for more exposure.
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VI. PROMOTION PLAN Since Co-N is a mobile service, our target customers are smartphone users, so most of our promotion plans would be done digitally on social media platforms like YouTube, Instagram, Pinterest, and Facebook, and through using influencers' endorsements to appeal to target customers. Also, we will be partnering up with the top fashion school to promote our platform to fashion design graduates. We want to be seen as an innovative, young, convenient fashion bridge to designer brands, so our visual for promotion graphics should be memorable, to the point, and easy to understand, to reiterate the simplicity and ease our app providers users.
Social Media: By using social media, we will advertise with paid promotional ads and daily uploads to our social media pages promoting the products to keep the customer aware and create high exposure for us.
Influencer Endorsement: We will look for suitable influencers who have niche target customers fit for us to endorse Co-N on various social media platforms, thereby attract target customers.
Fashion School Collaboration: We will collaborate with the top fashion schools like FIT, Parsons. Many outstanding designers graduate from school and create their brands every year, so it would be a good opportunity for us to promote our platform to fashion design graduates.
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con
con
WE COLLABORATE. WE CONNECT. MEET NEW.
con We collaborate, we connect, meet new designer brands here in our app -- Co-N.
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VII. OPERATIONAL MANAGEMENT Board: Ziyi Wang, Kaleb Kirk, Shirley Diaz, Autumn Washington, Hee Yeol Yang Each person on the board of directors will play a role in day-to-day management. Each of us brings a different expertise to the table.
Staff: 30 employees in total Tech and product developers (10) Marketing team (7) PR (2) Customer service team (5) Financial team (2) Fashion Consulting Team (4)
Main Offices: Physical requirements: an office building in Atlanta, with a space large enough for 30-40 employees. Access to power, water, and other utilities. The office space must be in a metropolitan area with access to high internet speeds and strong connectivity. Parking spaces are required for 30-40 employees. Visitors need to make an appointment with us if they need to make a contract face to face in our office. Size: 5000 sq. ft Rent: $145,000/YR, $13,000/Mon
Inventory: We will hold no warehouse so our company will not be directly responsible for inventory. Inventory is managed separately by partner brands. In other words, the items available on the app will reflect what is available in the brand’s inventory. However, we will have the right to track partner brands’ inventory in the case of need.
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Customer Services: - Return and Refund Policies If customers are not happy with their purchase, we want to make it right with a free shipping return. Customers can return or exchange products for up to 15 days after purchase. The item must be returned using a trackable shipping method. All product packaging must be returned with the product. Any products returned without our original documentation will be rejected. Products that have been damaged, or otherwise altered after delivery won't be accepted for return. If products are delivered damaged, customers will receive new merchandise. Any delivery problems will be reported immediately to us. Customers can either choose to wait for a new delivery or a full refund. - Rating System Customers can rate and describe shopping experiences and products after receiving products. - Customer Service will Provide Help with General information Issues with ongoing and past orders Missing, damaged, or wrong products Return and refunds Account, payment options, and addresses Subscriptions Safety concerns Other issues Our customer service team is accessible through an online service system during our office hours. Also, customers can email us at any time, we will respond as soon as possible. - Business Hours: Customer services office hours: Monday – Sunday: 7:00am – 6:00pm (In addition to regular office hours, technology engineers will have an on-call rotation schedule to respond to emergencies.)
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Quality Control Plan: - Brands Control Designer brands need to submit brand portfolios and product pictures to us before the collaboration. For established designer brands, they need to send a previous sales report as well. In the final step, we will finalize a contract together online or in person. - Rating System Co-N partner brands must maintain a customer rating of at least 4 stars. Brands with a score lower than 4 may accept a re-evaluation and may lose access to our app and therefore be terminated if the rating doesn't improve after.
App Development: Co-N is all about connecting new and undiscovered designer brands for customers in search of fresh and unique products. We will develop and update our app by having our staff continuously looking for partners. To keep up with subscriptions, we will focus on updating customers on new designers added and new products added.
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VIII. PERSONAL FINANCIAL STATEMENT
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IX. BUDGET PLAN START-UP EXPENSES App Cost: Co-N provides a mobile marketplace that enables startup designer brands to sell their items on iOS and Android platforms. So developing an app for Co-N would require two separate applications: - For customers - to browse and order - For partner brands - to present their collections through our platform and deliver orders to customers To cover both platforms, Android and iOS, the cost to build two applications for Co-N, including backup servers, would cost the company about $171,450.
Collaboration Cost: As we want to collaborate with BrandLab Fashion, a platform to recreate brand showrooms using AR technology, the estimated price of BrandLab Fashion would be $1500/YR for one user. As we desire a customized plan of BrandLab Fashion for unlimited users in our platform to use virtual showrooms, so the cost of collaboration would be $675,000/YR.
Technology: According to AMR Research, the average SMB (small and medium-sized businesses) spends 6.4% of its annual revenue on IT expenses. Therefore, 6.4% of estimated revenue of the first year $31,776,771 = $2,033,714/YR.
Equipment & Utilities: According to the American Society of Association, the average trade association spends $74,000 on hardware and software every year. We plan to invest in computers, interior design, and other office furniture for 30 employees costing around $80,000/YR.
Marketing Plan (Launching-period): We plan the cost of branding Co-N is $30,000, which includes building brand Identity, market research, Logo design, visual style guide, editorial style guide, APP Guidance.
Contingencies: To make allowance for any surprise expenses, we have calculated 20% contingencies on our start-up cost, that is 20% of $3,889,813 = $777,963.
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ONGOING EXPENSES Salary - Application Developing Team: 5 employees for the Android system, $124,207/YR; 5 employees for the iOS system, $126,514/YR - Marketing Team: 4 * $100,197/YR + 3 * $52,109/YR = $557,115/YR - PR: 2 * $67,715/YR = $135,430/YR - Customers Service Team: 5 * $40,484/YR = $202,420/YR - Financial Department: 2 * $59,774/YR = $119,548/YR - Fashion Consulting Team: 4 * $58,000/YR = $232,000/YR Total $2,500,118/YR; $208,343/Mon
Rent & Deposit To accommodate the company’s estimated employees and business requirement, we plan to rent an approximately 5000 sq. ft space in Atlanta with a monthly rent and deposit of around $145,000/YR, $13,000/Mon.
Marketing Plan (ongoing) We estimate the budget of marketing activities would be $16,250/Mon on average, which includes promotional films, promotional ads, social media, magazine articles, and influencers.
Supplies Since businesses with 40 employees spent $45 to $53 per employee monthly, we estimate Co-N with 30 employees needs supplies fee of $14,400/YR, $1,200/Mon.
Legal & Insurance For business insurance, count on spending as much as 20 to 30 percent of gross sales as a general rule of thumb, which includes primary business coverages and employee health and life insurance benefits. Therefore, 25% based on our estimated revenue of the first year $31,776,771 = $7,944,193/YR, which is $662,016/Mon. Additionally, as a 30 employees’ company, we plan to invest $90/Mon to legal protection. Thus, we will spend $7,945,272/YR, $662,106/Mon on Legal & Insurance.
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BUDGET SUMMARY BUDGET Start-up Expenses App Cost Collaboration Cost Technology Equipment & Utilities Launching-period Marketing Plan Contingencies
$171,450 $675,000 $2,033,714 $80,000 $30,000 $777,963
Ongoing Expenses
Salary
$145,000
On-going Marketing Plan
$195,000
Supplies Legal & Insurance
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$2,500,118
Rent & Deposit
$14,400 $7,945,272
Co-N, as an online selling platform that provide a straight-to-consumer selling service for startup designer brands, has no physical assets to manage, every order made through Co-N will directly turn to the partner brand. Therefore, we would not need to fund capital for the warehouse. The major investment of Co-N is for the virtual showrooms, and software development & technology expenses.
CAPITALIZATION EXPENSES IN THE FIRST MONTH
Contingencies 16.7%
App Cost 3.7% Salary 4.5%
Collaboration Cost 14.5%
Marketing Plan 1%
Legal & Insurance 14.2%
Equipment & Utilities 1.7%
(Include Supplies and Rent & Deposit)
Technology 43.6%
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X. FINANCIAL PLAN Co-N aims to provide a platform for startup designer brands to promote their brands, also provide a customized recommendation system for customers to browse and order. Through Co-N’s business plan, we decide to earn revenue in three ways: 20% charges on each order that partner brands make through our platform. Every partner brand will be charged $20,000 registration annually to reside on our app, have virtual showrooms, join events our platform would hold, and fashion consulting service we would provide to customers. $10 monthly subscription for customers to access our services (including all the services). For example, For TheOnlyJane.com, a new website selling jumpsuits for $485 each, we have calculated their average monthly sales is $110,000. After launching our app to the public, we gauge to contribute 2.5% of their monthly sales in the first month. 2.5% of $110,000 = $2750 20% commission Co-N earns 20% of $2750 = $550 After comparing and analyzing many startup designer brands’ current price range and monthly sales, we estimate the average number of pieces sold currently is 1000 per month of every new designer brand, and the average price per piece is $110, so the average monthly sales are around $110,000. As the example above, we can get around $550/Mon from every partner brand in the first month.
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XI. FINAL PROJECTION CONTRIBUTION RATE PROJECTION We plan to increase our contribution to the sales of our partner brands monthly. We estimate about 30% growth rate contribution in the first quarter (Oct to Jan) based on 2.5% contribution in the first month, since launching quarter will drive the most attention from customers; and it followed by holiday seasons, which will also stimulate the increase of sales. After the spending spree, customers may weaken their desire of shopping, so the second quarter (Jan to March) can be the slowest growth in sales. However, Feb to March would be fashion weeks, so we will push our marketing through various activities to drag more interest from customers, so we hope to retain about 10% growth rate contribution. As the weather getting warmer, most people will change garments for the new season, which will make our growth considerably increase, therefore, we expect about 25% growth rate contribution during the third quarter (May to July).
CONTRIBUTION RATE
With many customers who are familiar with our app, more and more people subscribe, we believe the growth rate will maintain steady growth at about 15% afterward (Aug & Sept). We aim to about 20% sales by Sept next year. 20
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0
Oct
Nov
Dec
QUARTER 1
Jan
Feb
Mar
QUARTER 3
Apr
May
June
QUARTER 2
July
Aug
Sept
QUARTER 4
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PARTNER BRANDS PROJECTION
THE NUMBER OF PARTNER BRANDS
We will collaborate with around 100 upcoming designer brands in the first month when we launch the app. With about 20% growth rate per month of new partner brands, we aim to get around 750 brands to reside on our app by Sept next year. 750
500
250
0
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
SUBSCRIPTION PROJECTION
SUBSCRIBERS
Our anticipation of the first month subscription is around 100,000 people due to the promotion, with about 20% growth rate per month of new consumers, we aim to get around 1,000,000 people in total by Sept next year. 750,000
500,000
250,000
0
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Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
($)
MONTHLY SALES REVENUE PROJECTION 4,000,000
3,000,000
2,000,000
1,000,000
0
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
Aug
Sept
($)
MONTHLY REGISTRATION FEE PROJECTION 2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
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($)
MONTHLY SUBSCRIPTION FEE PROJECTION 1,250,000
1,000,000
750,000
500,000
250,000
0
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
July
Aug
Sept
($)
MONTHLY INCOME PROJECTION 7,500,000
5,000,000
2,500,000
0
Oct
Nov
Dec
Jan
Feb
SALES REVENUE
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Mar
Apr
May
REGISTRATION FEE
June
SUBSCRIPTION FEE
STATEMENT OF CASH FLOWS (ONE-YEAR)
($)
PROFIT & LOSS PROJECTION 6,000,000
4,000,000
2,000,000
0
-2,000,000
Oct
Nov
Dec
Jan
Feb
Mar
Apr
May
June
July
Aug
Sept
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XII. SOURCES
https://thinkmobiles.com/blog/how-much-cost-make-app/ https://www.indeed.com/salaries/mobile-application-developer-Salaries https://www.careerexplorer.com/careers/marketing-manager/salary/ https://www.payscale.com/research/US/Job=Public_Relations_(PR)_Manager/Salary https://www.salary.com/research/salary/benchmark/customer-service-representative-ii-salary/atlanta-ga https://www.glassdoor.com/Salaries/atlanta-financial-analyst-salary-SRCH_IL.0,7_IM52_KO8,25.htm https://work.chron.com/much-money-fashion-consultants-make-21816.html https://medium.com/imeshup/the-best-online-3d-collaboration-resources-b01125006e4a https://sketchfab.com https://0-wwd-com.library.scad.edu/business-news/business-features/technology-future-fashionshowrooms-is-digital-and-immersive-1203634446/ https://www.brandlabfashion.com/brands/ https://networkalliance.com/understanding-technology-costs/ https://smallbusiness.chron.com/average-cost-per-month-office-supplies-12771.html https://www.loopnet.com/Listing/3200-Windy-Hill-Rd-SE-Atlanta-GA/6421924/ https://www.thehartford.com/business-insurance/how-much-business-insurance-cost https://www.legalshield.com/business-plan/get-legal-help-now? ciq=qa&ciq_g_26_variation=variation1&ciq_g_22_variation=control&utm_source=google&utm_medium=cp c&utm_campaign=G_LS_US_SMB_Search_NonBrand&utm_term=%2Bbusiness%20%2Blegal%20%2Bcosts&gclid=CjwKCAjw8J32BRBCEiwApQEKgbPAAtfr2UqihBlKwn96zTa6voxeS5-MktV5Rb2WKuK7yhBFZRV9xoC3t8QAvD_BwE https://wittykittydigital.com/blog/branding-cost-for-small-businesses/ https://www.ft.com/content/83584a20-831d-11ea-b6e9-a94cffd1d9bf https://www.forbes.com/sites/oliviaperez/2019/01/04/the-emerging-fashion-brands-to-watch-in2019/#194464f3293d https://www.marieclaire.com/fashion/g30470721/new-fashion-brands-2020/ https://sakspotts.com/collections/collection-12 https://theentireworld.com/women https://www.thelinebyk.com/collections/all https://www.statista.com/statistics/695947/top-iphone-shopping-apps-in-the-us-by-number-of-downloads/ https://web.cbaofga.com/associate/Bank-Consulting/Mauldin-Jenkins828https://wallethub.com/profile/marques-holloway-16552995ihttps://clutch.co/profile/lyfeaccountinghttp://www.lynchlawgroup.com/?refPageViewId=598b531f027e07c2
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XIII. APPENDIX
Co-N
(707)-727-5711 CoNofficial@.com LXFM 501 | BUSINESS CONCEPTS IN LUXURY AND FASHION | SPRING 2020 | PROF. DEVINA LALLA | BY ZIYI WANG