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Example of Assignment Stage 1 1-1

Business Proposal

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Table of Contents

Executive Summary .............................................................................................................................. 3

Company description ............................................................................................................................. 4

Description of the idea ........................................................................................................................ 4

Market opportunity ................................................................................................................................ 5

Solution .................................................................................................................................................. 6

Product and services .............................................................................................................................. 7

Services ............................................................................................................................................... 7

The market potential .............................................................................................................................. 8

Sales and strategic marketing ......................................................................................................... 8

An initial project plan ...................................................................................................................... 10

Order fulfilment and logistics overview ......................................................................................... 13

Initial map of the Web-site .............................................................................................................. 13

Technology ....................................................................................................................................... 13

Initial map of the Web-site .............................................................................................................. 14

Customers (target market) .............................................................................................................. 14

Case studies ...................................................................................................................................... 14

Strategic Relationships ................................................................................................................... 15

Competition ...................................................................................................................................... 15

Management ........................................................................................................................................ 15

Financials ............................................................................................................................................ 17

Expenses for setting up the business in NZ dollars (1st year) ..................................................... 17

Projected Revenues, Expenses and Income before tax for 5 year term (NZ$) .............................. 18

Revenue in US dollars ..................................................................................................................... 19

Reference list ........................................................................................................................................ 20

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Executive Summary

The document is a business proposal of DRESS 2 IMPRESS Co. based in Auckland (NZ) that is

looking to launch on-line business in selling women’s clothes, shoes and apparel in New

Zealand. High-street brands are going to be imported from a wholesaler based in Kuala

Lumpur, Malaysia. Among them are MNG, NAF NAF and MOTIVI brands. The company is

also planning to make strategic partnership with local New Zealand fashion retailers and act

as on-line channel for them.

There are many opportunities and problems to be solved in NZ market at the moment,

particularly in women’s fashion industry. Due to a limited number of retail outlets and

brands, variety of styles currently available is extremely limited. Many companies charge

much higher price for low-quality items mainly by adding value with such features as the

brand name and design of the stores. We are going to solve this problem by bringing better

quality clothes, shoes and apparel at a wider variety of styles and relatively inexpensive

price. Most fashion retailers in New Zealand actively use their web-site for promotion but

do not sell over the Internet. Some of them put out-dated stock in DresSmart mall, where

the price is lower for only 25%. We are going to bring real sales into the country and create

on-line channel for those businesses interested in selling their clothes over the internet as a

part of their multi-channel policy.

The competition in on-line space in terms of companies selling women’s apparel is not fierce

so DRESS2IMPRESS Co. has an advantage of a pioneer in this area. The market potential is

big: in USA ad UK on-line retailing of clothing is already developed and now it is growing into

the countries like Australia and New Zealand. Females whom we are targeting are found to

be enthusiastic about on-line shopping and spend greater amount of money on it than

males. Our strategy will be leveraging the brand name and creating trust in us among

customers. Web site will help us to create data base to use as a source for building

company’s relationships with clients and achieve customers’ loyalty. Also a lot of exciting

features will be used to create unforgettable shopping experience for each client.

The cost of setting up the business was calculated and figures provided to keep it going for a

5-year term. Financial and marketing policies are described in the end of the proposal.

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Company description

DRESS 2 IMPRESS is a start-up company based in Auckland, New Zealand, that is looking to

establish on-line retailing business in selling women’s clothes, shoes and accessories of high

street brands like MNG, NAF NAF and MÖTIVI in New Zealand. The company currently

consists of two people with experience in sales and marketing and is looking for investors to

fund the idea that will turn fashion brands’ market in New Zealand upside-down by offering

completely new approach to retailing.

Description of the idea

The idea is simple: The company is looking to sell women’s clothes, shoes and apparel of

high street quality brands such as MNG, NAF NAF, MÖTIVI etc. that are well-known all over

the world but are new to New Zealand market. We want to do it on-line to overcome costs

for rent, staff training and generally give more freedom to customers so they can use

Internet to do their shopping. Pure-play retailers like us have an advantage of low

overheads and streamline process. (Turban et al., 2004) We also want to bring the real

“sales” into the country, ones that up to 50-70% off the retail price for the last season stock

and to create on-line community of fashion-forward people to generate buzz on latest

trends and brands that are not luxury but still make ladies look good. The Web-site will

provide advice and information on fashion brands and styles that our customers might need

when choosing among items.

The product is going to be bought from a wholesaler Jerasia Capital Berhad Ltd. over the

Internet. The business model will look as follows

The wholesaler we are going to work with is a Malaysian-based company with head office in

Kuala Lumpur. Jerasia Capital Berhad Ltd. Operates in garment manufacturing and apparel

wholesaling of fashion brands including MNG (Mango), NAF NAF, Calvin Klein, MÖTIVI etc.

(details of the company can be found in the Appendix 1)

Wholesaler

Jerasia Capital

Berhad

Our company

Dress2Impress

Consumers

Target market

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The main aspect is building the company’s brand on the market. We are going to put

emphasise on creating credibility of the e-tailer (us) and leveraging our brand through well-

though customer relationship marketing. Brands that we are going to bring to NZ are well-

known among consumers and many people in NZ buy them through auction web-sites or on

the overseas trips both for personal use and sale through Trade Me (www.trademe.co.nz).

NZ brands are going to be represented as well. We are looking to make strategic alliances

with NZ fashion retailers; it is good opportunity for the fashion stores around New Zealand

as far as none of them sells on-line at the moment.

Market opportunity

Lack of variety in relatively inexpensive women’s clothes targeted at 18 – 30 females

in New Zealand. Most of the customers use the same limited number of stores to

buy clothes and one can easily recognize where the item was bought and at what

price. It often happens that females see each other wearing the same dress at the

parties, on the street etc., which is very frustrating.

Lack of quality for existing brands, only few can be worn more than a season. In

addition, low quality shoes are sold at high prices by adding value to the brand name

(which is only famous in NZ), positioning and store design.

Consumers do not have time to go shopping: a lot of women now work and study so

there is almost no time left for it. The same time dress code at work, for example,

requires certain things (skirts, tops, shoes) to be changed every season. Shops open

till 5 p.m. on a regular day, sometimes closed early on weekends, all of this makes

shopping inconvenient and one has to plan ahead where to go and what to buy.

Current fashion retailers use their web-sites to promote corporate information and

hardly use on-line space to sell their products. Those who sell on-line do not provide

any advice to the customers and simply bring physical store on-line. Web-sites are

not updated as often as they should taking into consideration that every new season

brings new trends.

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There’s hardly any real “sale” going on in New Zealand. Many retailers lower their

prices after 3-4 seasons left or leave items in stock till they are finally sold. Usual sale

price is 25% lower than retail one, seldom the stock is sold at 70% discount.

Solution

We are going to offer choice and variety to customers, at least one more store to

choose from is an added bomb! Every female wants to stand out from the crowd and

it is very difficult to do so with the limited number of fashion retailers in New

Zealand. We offer different styles and different brands so that a person can create

their own individual look. The number of every item will be limited, instead we will

emphasize on various styles to make things more individual for a consumer.

Many brands such as MNG, NAF NAF, MÖTIVI have great design, good quality,

affordable price and they are not represented in New Zealand. Besides, there is an

opportunity to sign up a contract over time with one of the manufacturers in

Malaysia or China to produce high quality clothes and shoes under our brand name.

Goods “Made in China” are no longer limited to cheap, low-end products, they are

goods of latest trends, good quality, heaps of styles and at the price people would

love to pay.

On-line retailer is available 24/7. Customers can take their time, stay at the web-site

as long as they want, use whatever free time they have to look for items they are

interested in or do their shopping. And nobody is going to bother them with add-

ons. Plus they can use their imagination in creating the look that will suit them best

or use various features on the Web-site thus indulging oneself into complete

shopping experience.

Those retailers who do not sell on-line can be presented at our web-site. Some of the

big brand names are sold in DresSmart, NZ’s biggest discount store. DresSmart uses

its web-site for self-promotion only and do not use on-line space as another retailing

channel. Our Web-site can become DresSmart on-line retailing channel.

The web-site is going to include Sales section. In this part we are going to lower the

price significantly for out-dated stock, around 50-70% off. The out-dated stock will

not only include our brands but also those companies that want to get rid of their

“old stock”.

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Product and services

Brands we are looking to introduce into NZ market:

MNG (Mango) is a Spanish high-street clothing manufacturer and retailer with a net profit of

EUR 64.8 million for 2003 and 7% annual growth rate. It has 704 sales outlets in 72

countries, 60% of which are franchises.

NAF NAF is a French brand, one of the biggest in Europe. In 2004 13 million items were sold in more

than 60 countries.

MÖTIVI is an Italian brand that has 500 stores worldwide and offer a range of fashion lines for

females including Formal MOTIVI (clothes for work), MÖTIVI Trendy (stylish clothes of latest fashion

trends) and MÖTIVI Soft (casual clothes that is good to wear everyday).

Strong brands MNG, NAF NAF and MÖTIVI will be represented together with brands sold

off-line in NZ market such as Maxx, Supre, Cue and also DresSmart’s brands available on

sale.

Services

Customization of order and navigation

Return policy

Secure payment

Shipping in 1-2 days by using post and courier service

Advice & support

Community interaction

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The market potential

It is estimated that there are 500 million people using Internet worldwide. (Siddiqui et al.,

2003) Data available for September 2007 says that in New Zealand there are around

1,505,100 Internet users with 81.3% being residential subscribers and this number is

increasing annually with 2.8% growth rate. (www.stats.govt.nz)

Research found that female on-line shoppers are in the majority and they have greater

spending power and enthusiasm for the shopping experience. In UK and USA on-line fashion

retailers are already in the mainstream: in UK clothing is one of the biggest category of on-

line shopping and accounts for 28% of all on-line purchases made. (Siddiqui et al., 2003)

Together with cost savings Internet offers access to wider audience, it is available 24/7 and

provides retailer with opportunities to customize the message for a particular client. Many

high street fashion retailers have on-line presence as they have already realized all the

benefits Internet can bring. However, many of them do not fully understand the purpose of

e-tailing and create on-line channels due to peer pressure without clear understanding of

customers’ needs. Research showed that customers when surfing on-line fashion shops are

not merely interested in buying products, they want to get great advice, see latest trends

and get a unique shopping experience after all. In this case there are huge opportunities for

our company give customers what they want. (Siddiqui et al., 2003)

With customization of orders and positioning to experience personal approach, on-line sales

of apparel are to grow enormously in the nearest future. (Turban, 2004)

Sales and strategic marketing

Our main goal is to convert consumers into e-tailing clothing category. Other goals include

attracting customers with variety and quality of the product offered and getting more

customers by engaging existing fashion retailers in our business.

Short-term objectives include:

1. To get 70-80% awareness of our Web-site among our target market within a first

year on the market.

2. To sell most ( ¾) of the initial stock for the first year in the market.

3. To gain net profit of 20-30% in the period of first 3 years.

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Our marketing strategy will be based on strong customer relationships, leveraging the brand

name and customization of shopping experience on-line.

We are going to create unique shopping experience for the shoppers. Interactivity, web-

page design, easy navigation, search function, security guarantees, clear return policies are

the features we are going to pitch on. The drawback of pure play e-tailing is that those on-

line shops that have main off-line channels usually get their clients through off-line stores.

To overcome this drawback we are going to concentrate on integration of our on-line

channel with various off-line retailers so that the customers can have more trust for the

Web-site and associate it with existing brick-and-mortar brands. (Siddiqui et al., 2003)

In our promotion strategy we are going to concentrate on the use of new interactive media

that offers greater benefits in terms of company-customer relationships.

Interactivity is what makes business different. Our company is going to benefit from the use

of personalized emails and SMS to handle such things as new arrivals, shipping,

delivery/return notices. A phone line will be used as a channel for communicating with

customers: they will be able to call us easily in case if they have any questions. We also want

to engage our customers in communication and we offer some options such as “Find

yourself” picture (discussed in Initial project plan below) on the Web-site that will help to

increase traffic and communication with our customers. Besides, feedback will be

encouraged. We are now considering whether we want to give our customers an option

where they can leave an opinion for a particular item on sale so that the rest of the visitors

can see it.

Web-page is regarded by customers as “the face of the company” and will be completed

with high priority giving the distinctive image to the brand. We would like the web-side to

be designed in light, minimalistic manner but with distinctive features and very fresh look so

that customers enjoy navigating it.

Promotion is also going to include:

- Placing ads in fashion-forward magazines in section where new trends are discussed

and readers are offered advice on where to buy clothes, shoes & accessories.

- Use of billboards in the city part of Auckland during the first year and other cities

from second year.

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- Use of advertising on means of transportation, mainly buses that go central routes

- Generating word-of-mouth through communities that are connected to our target

market interests

The activities are going to be separated over the period of 5 years. In the begging we will go

with billboards and word-of mouth only. Later on, the advertising on buses and in fashion

magazines will be added.

Customization of order:

Customer’s shopping history will be saved and applied next time customer signs in

Availability of stock updated regularly, new arrivals are highlighted and hot offers are

always on the front page

Offers and incentives will be targeted at particular customer’s taste retrieved from

the shopping history

Fashion advice (dress codes, recent trends, figure match) is provided in “Create your

look” option and Trends category.

Organizing community: customers will have an opportunity to drop links to their blogs and

add us as a “friend” on MySpace and Facebook; feedback will be encouraged (possibly

feedback at particular item).

An initial project plan

The Web-site will be divided into 3 basic sections CLOTHES, SHOES/BAGS and ACCESSORIES.

Each section represents items according to the style. Customers are pretty familiar with this

format so there will not be any difficulties in learning process. The interface will be easy to

navigate but will not lose its stylish component. Our policy will be simple as well: high

security of the payment, clear return policies, personalization and great company-customer

relationships.

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Sketch of the Web-site (an initial PowerPoint sketch, not a final version)

www.dress2impress.co.nz

Dress 2 Impress Shoes & Bags Accessories

HOT OFFERS!

CELEBRITY

LOOK

SELL & BUY

TRENDS

COMMUNITY

CONTAC US

PERSONALIZE YOUR SEARCH

ADVICE

ADLOG IN

Sale!!!

Features:

3D format of items’ pictures, customers will be able to “twist and turn” the item and

look at it at different angles.

Fashion videos relative to the styles we will have on the Web-site.

Advice for the perfect match, suggestions of various items that can go with the

chosen pieces of clothes or those pieces that customer is currently looking at; dress

codes summaries for different occasions and items attached to them as “appropriate

ones”.

Celebrities’ looks and the ability to buy similar items from our stock. Also we are

planning to include Shop Orientation section which will say where and when

customers can buy similar item in a physical store

Community section: blogs, feedback, “Find your picture” feature

Shop-orientation in Auckland: We take a picture of a celebrity wearing particular style and

put items that look close to it and also point out where people can buy those items. (“You

can buy similar skinny jeans in Supre at Queen street for $90 this weekend!”)

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Bellow is project of a feature offered to see how it is going to look in general

www.dress2impress.co.nz

Where can you find jeans just like that?

Skinny jeans at SUPRE 99$

Location: Auckland city

“Find yourself” pictures: In order to stimulate traffic, once in a while (every one-two

weeks), after a party weekend or any social occasion we put a picture of a any chosen girl

that we think look stylish in her outfit and we make a prize for her (“$100 Maxx voucher”) so

that people would go to the web-site to see the picture and get a prize. It is a product

exposure for the company that sponsor the whole thing and also stimulates consumer

interest in a web-site. In the beginning we might put more than one picture so that a lot of

people will be determined to get to the web-site. We might start word-of-mouth campaign

by using this function.

“Create your look” option will allow consumers to combine different items and compare

them. Incentives on proposed look will be given automatically with every item a visitor may

choose.

“Sales” category will represent items which are on sale. In the beginning we plan to use

DresSmart stock to fill the section. Later on certain amount of items we will leave for the

next season sale so that customers will be motivated to come to the Web-site for bargain.

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Order fulfilment and logistics overview

We are going to pay close attention on the process of fulfilling the order and delivering it to

the customer. Return policy will apply in order to stimulate customer buying decision and

reduce cognitive dissonance. Over a period of time we are going to reach economies of

scale so that returns will not influence our profits significantly. Technically the process will

go through the following stages:

Initial map of the Web-site

(Based on Manukau Institute of Technology, 2008)

Technology

We have time and passion to participate in creation, design and developing of the Web-site.

For creating and supporting web-site dedicated web-hosting is going to be implemented

which means that full server will be reserved for us. This will give our company more

freedom for action as our strategic plans include enormous growth as well as hundreds of

visitors per day. Dedicated server is more reliable although a bit more expensive than

others. The hosting company will provide all necessary support, including security system.

The domain name www.dress2impress.com is currently for sale, and domain name

www.dress2impress.co.nz is available as well.

Among technical features will be ability to track customers’ behaviour on the Web-site and

their browsing to later show items of particular interest to them and provide certain

personalized services.

Making sure customer will pay

Contact with customer if needed

Checking for in-stock availability

Arranging shipments

Contact with customer for

delivery/return notice

Returns (if occurs)

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Initial map of the Web-site

Customers (target market)

Ladies 18-30, strapped for time and want to look good. Working females represent a

considerable percentage from NZ population: more than 25% of NZ’s 4,000,000 population

were employed females according to data on December, 2007 (Statistics NZ, 2007)

We are looking forward to launch clothes lines for all ages including kids and also separate

lines for men over time.

Case studies

www.mango.com (www.shopmango.com) (can be found in Appendix 2)

www.onlineshoes.com

HOMEPAGE

PRODUCT

CATEGORY

PAGE

PRODUCT

PAGE

TRENDS

ADVICE

SHOWS

COMMUNITY

PROMOTIONs

SALES

HOT OFFERS

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Strategic Relationships

All major shops targeting the same segment who are interested, including DresSmart. We

are going to convince them to participate in our business as it is a mutually beneficial

enterprise.

Competition

The brilliance of the situation is that there is no significant competition on-line in New

Zealand for this kind of web-site. The only big competitor to the web-site is TradeMe

(www.trademe.com) which is an auction and people can hardly check in advance if the item

on sale is really new or second-hand which is a completely different category.

Other competitors include web-sites:

www.shoeclinic.co.nz – sells only sport shoes

www.funkysoes.co.nz – the idea is quiet similar except that web-site sells only shoes. The

major drawback is that web-site promises a lot (all the brands and styles are of well-known

brands such as Diesel) but underdelivering spoils all experience. There are hardly any heels

in heels category and web-site looks “empty” without stock supporting the promise.

www.heels.co.nz – web-site that sells considerable amount of shoes and lingerie but makes

an impression as it is oriented towards club dancers’ niche; casual, everyday, work and

social occasion clothes, shoes and accessories are not present. Besides, styles are quiet old-

fashioned, “nobody wears it anymore” type.

Management

One of the most important assets that a company has is its people who are dedicated to

what they do. Although there only two people currently in the company, we are looking

forward to hiring new staff as committed as we are to our new on-line retailing business. At

the moment management consists of two young creative people with fresh thinking and

attitude towards business in New Zealand:

Ekaterina Bazanova, co-owner, marketing manager, Degree in Oriental Studies and

Graduate Diploma in Marketing , experience in sales.

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Brad Pitt, co-owner, marketing executive, 5 year experience in sales, currently working for a

TV company as a Marketing Executive; has 7-years experience in sales, TV production and

marketing.

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Financials

Expenses for setting up the business in NZ dollars (1st year)

Setting up the web-site Web-site design $5,000 Total: $5,000

Web-site hosting

Set up

0

Total: $1,200

Monthly fee $100

Number of months 12

Amount to be paid $1200

Domain name Price N/A at the moment

World Pay system

Set up

$399

Total: $999

Monthly fee $50

Number of months 12

Amount to be paid $600

Product costs Average price for an item $40 Total: $123,040

Number of items 3000

Amount to be paid $120,000

Marketing and sales (promotion)

Billboard

Installation

$350

Total: 16,550

Rate per month $5,400

Number of months 3

Shipment costs 20 ft container rent $2500 Total: $5,000 Loading the container in Hong Kong $1500

Import & legal fees $1000

Total:

$ 153,049

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Projected Revenues, Expenses and Income before tax for 5 year term

(NZ$)

1st year 2nd year 3rd year 4th year 5th year

Revenue

Product sales

160,000

480,000

800,000

800,000

800,000

Advertising

Income

21,600 21,600 21,600 21,600 21,600

Income from

strategic

contracts

27,600 27,600 27,600 27,600 27,600

Total Revenue 208,600 568,000 849,200 849,200 849,200

Expenses

Set up

5,399

0

0

0

0

Operating 11,800 15,800 15,800 15,800 15,800

Product 120,000 240,000 400,000 400,000 400,000

Marketing and sales

expenses

16,550 30,000 36,200 36,200 36,200

Total Expenses 153,049 281,800 404,000 404,000 404,000

Income before tax 54,851 282,200 397,200 397,200 397,200

Shipping will increase to 2 times per year from 2nd year

Expenses for marketing and sales activities will increase from 2nd year

Amount of product and expenses for it will increase from 2nd year

Operating costs will include shipping, operating web-site and other expenses and will

increase from 2nd year

Promotion will include billboards for 3 months for the starting year and from 2nd year

billboards for 3 months + advertising on buses package

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Revenue in US dollars

Assumptions:

We expect to sell 2000 items for the first year, the rest (1000) with cost of

NZ$40,000 is going to be put on sale for next year and during 5 year term this

number will be rotated as “sales items”. “Sales items” are going to have lower 50%

retail prices, i.e. each item is going to be sold at initial wholesaler price.

Mark-up price is going to be 100%, thus an item that costs on average US$40 will

cost US$80 on the web-site.

We expect to make strategic alliances with at least 3 fashion retailers and provide

web-space for a monthly fee of NZ$1,000.

The contracts with fashion retailers are going to be signed for minimum of 3 months.

The additional income is going to be generated through advertising on the web-site

that will cost a company willing to advertise around NZ$600 per month (minimum

duration of the advertising contract is 3 months)

We are going to sign up 3 companies for advertising every month

We are going to charge customers $10 for delivery but the amount generated from

delivery charges will go towards shipping arrangements and creating economies of

scales in shipping costs.

Transactions by customers will not be charged, we are going to rely on mark-up price

as a major source of income.

The revenue generated will be invested in Web-site further functioning and

shareholders are expected to get their profit in 5 years term.

Revenues are calculated as follows

2000 items × NZ$80 = NZ$120,000

3 fashion retailers × 3 months (minimum) contracts for presenting their stock on the web-

site × NZ$ 1000 fee per month = NZ$9,000 per 3 months (min) ≈ NZ$27,000 per year

3 companies signed up for advertising contracts × 12 months × NZ$600 monthly fee =

NZ$21,600 per year

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Reference list

Manukau Institute of Technology. Business School. (2008, Semester 1). 341.729: eMarketing for

managers [Coursebook]. Manukau City, New Zealand: Robert Davis

Turban, E., Lee, J.K., King, D., MKay, J., & Marshall, P. (2004). Electronic Commerce. USA: Prentice

Hall

Siddiqui, N., O’Malley, McColl, J.C.,& Birtwistle, G. (2003). Retailer and consumer perceptions of

online fashion retailers. Web design issues. Journal of fashion marketing and management, 7(4),

p.345-355

Statistics NZ. (2007) Information technology survey. Retrieved from http://www.stats.govt.nz