BUSINESS PLAN OF CLOTHIE:
AN INNOVATIVE PLATFORM TO SHOP FOR LOCAL FASHION
Santi Suaria
Project submitted as partial requirement for the conferral of
Master of Science in Business Administration
Supervisor:
Prof. Pedro Fontes Falcão, Prof. Auxiliar Convidado, ISCTE Business School, Departamento de
Marketing, Operações e Gestão Geral
October 2018
BUSINESS PLAN
OF CLOTHIE: AN INNOVATIVE PLATFORM TO SHOP FOR LOCAL FASHION
Santi Suaria
Business Plan of Clothie
I
Acknowledgments
I would like to express my gratitude to my supervisor, Professor Fontes Falcão, without whose
guidance it would have been impossible to achieve such a great result. Working with you has been a
true honor.
Joining ISCTE Business School has been one of the best choice of my life, not only for the
exponential growth I experienced, but also for all the amazing people I had the opportunity to meet
during these two years. I’m going to miss all this.
I dedicate this project to Pietro, Irene, Francesca, and Raffaella.
Business Plan of Clothie
II
Abstract
The objective of this master project is to develop a business plan for an innovative fashion service.
Over one-third of the global population own a smartphone. Statistics reveal that more than 90% of
the time spent by smartphone users on their devices, is consumed within Apps. Nevertheless, millions
of local stores around the world do not benefit from this opportunity.
Clothie wants to unlock the market for those fashion retailers that are struggling to stay in business,
by offering a tool capable of creating a potentially unlimited client base. Besides, its entertaining
approach to the fashion world is expected to generate unprecedented value for the ones eager to find
new apparel products.
Shaping its strategy around the concept of ‘Lean Startup’, the team will develop the platform in light
of the feedback received from the customers, creating authentic value while saving time and
resources. Joining the fast-growing Portuguese economy will facilitate the customer development
process, granting the opportunity to introduce Clothie to an increasing audience of tourists keen to
shop locally.
Thanks to its unique value curve, Clothie is able to stand out from the competition and create a ‘Blue
Ocean’ - becoming the first ever 'location-based fashion shopping app' to be released on the market.
The astonishing potentialities of the project are evidenced by the financial forecasts generated, which
outline the scalability of the business and the exceptional value Clothie can provide to its
shareholders.
Key Words: Business Plan, Fashion, Retail, Application
JEL Classification System:
M13 – New Firms; Startups
L26 - Entrepreneurship
Business Plan of Clothie
III
Resumo
O objetivo deste projeto de mestrado é desenvolver um plano de negócios para um serviço inovador
de moda.
Mais de um terço da população mundial possui um smartphone. As estatísticas revelam que mais de
90% do tempo gasto pelos utilizadores de smartphones nos seus dispositivos é gasto nos aplicativos.
No entanto, milhões de lojas locais em todo o mundo não beneficiam dessa oportunidade.
A Clothie quer desbloquear o mercado para os retalhistas de moda que estão a lutar para permanecer
no negócio, oferecendo uma ferramenta capaz de criar uma base de clientes potencialmente ilimitada.
Além disso, estima-se que a sua abordagem de entretenimento para o mundo da moda crie valor sem
precedentes para aqueles que desejam encontrar novos produtos diferenciados.
Moldando a sua estratégia em torno do conceito de "Lean Startup", a equipa desenvolverá a
plataforma à luz do feedback recebido dos clientes, criando valor autêntico enquanto poupa tempo e
recursos. Juntar-se à economia portuguesa em rápido crescimento facilitará o processo de
desenvolvimento do cliente, dando a oportunidade de apresentar a Clothie a um público cada vez
maior de turistas ávidos por fazer compras no país.
Graças à sua curva de valor única, a Clothie é capaz de se destacar da concorrência e criar um “Blue
Ocean” - tornando-se o primeiro aplicativo de compras de moda baseado em localização a ser lançado
no mercado. As surpreendentes potencialidades do projeto são evidenciadas pelas previsões
financeiras geradas, que descrevem a escalabilidade do negócio e o valor excepcional que a Clothie
pode proporcionar aos seus acionistas.
Palavras-chave: Plano de negócios; Moda; Varejo; Aplicação
Codificação JEL:
M13 – New Firms; Startups
L26 - Entrepreneurship
Business Plan of Clothie
IV
Index
1. Executive Summary ......................................................................................................................... 1
2. Problem Statement ........................................................................................................................... 3
3. Literature Review ............................................................................................................................. 4
3.1 Entrepreneurship ........................................................................................................................ 4
3.1.1 The Discovery Theory ......................................................................................................... 5
3.1.2 The Creation Theory ............................................................................................................ 5
3.1.3 The Lean Startup.................................................................................................................. 6
3.2 Innovation ................................................................................................................................... 7
3.2.1 History of Innovation ........................................................................................................... 8
3.2.2 Value Innovation & Blue Ocean........................................................................................ 10
3.2.3 The Strategy Canvas .......................................................................................................... 11
3.2.4 The Four Actions Framework ............................................................................................ 12
3.2.5 The Blue Sequence ............................................................................................................ 12
5. Framework and Methodology ........................................................................................................ 14
6. External Analysis – PESTLE ......................................................................................................... 15
6.1 The Political / Legal Structure.................................................................................................. 15
6.2 Economic Analysis ................................................................................................................... 16
6.3 Socio-Cultural Analysis ........................................................................................................... 17
6.4 Technological Development..................................................................................................... 18
6.5 Environmental Implications ..................................................................................................... 19
7. Porter’s Five Forces Analysis ........................................................................................................ 20
7.1 Competitive Rivalry ................................................................................................................. 20
7.2 Threat of Substitutes ................................................................................................................. 21
7.3 Threat of New Entrants ............................................................................................................ 22
Business Plan of Clothie
V
7.4 Power of Buyers ....................................................................................................................... 23
7.5 Power of Suppliers ................................................................................................................... 23
8. Internal Analysis – VRIO .............................................................................................................. 24
9. SWOT Analysis ............................................................................................................................. 26
9.1 Strengths of Clothie .................................................................................................................. 26
9.2 Weaknesses of Clothie ............................................................................................................. 27
9.3 Opportunities for Clothie.......................................................................................................... 27
9.4 Threats to Clothie ..................................................................................................................... 28
10. Goal Formulation ......................................................................................................................... 29
10.1 Matching Strengths to Opportunities ..................................................................................... 29
10.2. Minimize Weaknesses ........................................................................................................... 30
10.3 Avoid Threats ......................................................................................................................... 30
11. STP Model ................................................................................................................................... 32
11.1 Segmentation .......................................................................................................................... 32
11.2 Targeting ................................................................................................................................ 33
11.2.1 Buyer Persona .................................................................................................................. 34
11.3 Positioning .............................................................................................................................. 35
12. Strategy Definition ....................................................................................................................... 35
12.1 The Four Action Framework .................................................................................................. 35
12.2 The Strategy Canvas ............................................................................................................... 37
13. Marketing Mix ............................................................................................................................. 39
13.1 Product.................................................................................................................................... 39
13.1.1 Retailer User Interface: .................................................................................................... 39
13.1.2 Individual User Interface: ................................................................................................ 40
13.1.3 Review System ................................................................................................................ 42
13.2 Price ........................................................................................................................................ 42
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VI
13.2.1 Retailer User Price List .................................................................................................... 42
13.2.2 Individual User Price List ................................................................................................ 44
13.3 Distribution ............................................................................................................................. 44
13.4 Promotion ............................................................................................................................... 45
13.4.1 Online Promotion ............................................................................................................ 45
13.4.2 Offline Promotion ............................................................................................................ 46
14. Project Planning & Implementation ............................................................................................. 47
15. Economic and Financial Analysis of the investment ................................................................... 50
15.1 Start-up Capital....................................................................................................................... 50
15.2 Sales Forecasts ....................................................................................................................... 50
15.3 Investments and Expenses ...................................................................................................... 54
15.4 Projected Income Statement ................................................................................................... 56
15.5 Projected Cashflow Statement................................................................................................ 57
15.6 Evaluation of the Project ........................................................................................................ 58
15.6.1 Net Present Value (NPV) ................................................................................................ 58
15.6.2 Return on Equity (ROE) .................................................................................................. 58
15.6.3 Compound Annual Growth Rate (CAGR) ...................................................................... 59
15.7 Optimistic and Pessimistic Scenarios ..................................................................................... 59
15.7.1 Pessimistic Scenario ........................................................................................................ 59
15.7.1 Optimistic Scenario ......................................................................................................... 60
16. Conclusions .................................................................................................................................. 61
17. Bibliography................................................................................................................................. 62
Business Plan of Clothie
VII
Index of Tables
Table 1: Discovery Theory vs Creation Theory ................................................................................... 6
Table 2: Clothie's Substitutes Analysis .............................................................................................. 22
Table 3: Clothie's Segmentation ....................................................................................................... 32
Table 4: Clothie’s Market Target ...................................................................................................... 33
Table 5: Retailer User Price List ....................................................................................................... 43
Table 6: Individual User Price List ................................................................................................... 44
Table 7 - Implementation Plan ........................................................................................................... 47
Table 8 - Project Planning .................................................................................................................. 49
Table 9: Sales Forecast 2019: Retailer Users Subscription Plan ....................................................... 51
Table 10: Sales Forecast 2019: Individual Users Operations ........................................................... 52
Table 11: Total Sales Forecast 2019 .................................................................................................. 52
Table 12: Five-Year Sales Forecast: Retailer Users Subscription Plan ............................................. 52
Table 13: Five-Year Sales Forecast: Individual Users Operations .................................................... 53
Table 14: Total Five-Year Sales Forecast .......................................................................................... 54
Table 15: Expenses Forecast 2019 - Payroll ...................................................................................... 54
Table 16: Expenses Forecast 2019 - Other Expenses ........................................................................ 55
Table 17: Five-Year Expenses Forecast - Payroll .............................................................................. 55
Table 18 - Five-Year Expenses Forecast: Other Expenses ................................................................ 55
Table 19: Total Five-Year Expenses Forecast ................................................................................... 56
Table 20: Five-Year Projected Income Statement ............................................................................. 56
Table 21: Five-Year Projected Cashflow Statement .......................................................................... 57
Table 22: Net Present Value (NPV) ................................................................................................... 58
Table 23: Return on Equity (ROE) .................................................................................................... 58
Table 24: Compounded Annual Growth Rate (CAGR) ..................................................................... 59
Business Plan of Clothie
VIII
Table 25: Pessimistic Scenario - Net Present Value (NPV) .............................................................. 60
Table 26: Optimistic Scenario - Net Present Value (NPV) ............................................................... 60
Index of Figures
Figure 1: The BML Loop ..................................................................................................................... 7
Figure 2: Relevance of Innovation in a Company's Agenda ............................................................... 8
Figure 3 - Example of Strategy Canvas on CEP Industry.................................................................. 11
Figure 4 - The Four Actions Framework ........................................................................................... 12
Figure 5: Time spent by U.S. Consumers on their Mobile Phones .................................................... 19
Figure 6: Porter's Five Forces applied to Clothie ............................................................................... 24
Figure 7: VRIO Framework ............................................................................................................... 25
Figure 8: SWOT Analysis .................................................................................................................. 28
Figure 9 : Clothie's Buyer Personas ................................................................................................... 34
Figure 10: The Four Action Framework applied to Clothie .............................................................. 36
Figure 11: Strategy Canvas of the Online Fashion Industry .............................................................. 38
Figure 12: Clothie Logo ..................................................................................................................... 39
Figure 13: Clothie’s App interface..................................................................................................... 45
Figure 14: Example of Promotional Flyer ......................................................................................... 45
Business Plan of Clothie
IX
Glossary
5G - Five Generations
AI – Artificial Intelligence
CAGR - Compound Annual Growth Rate
CEO - Chief Executive Officer
CTO - Chief Technical Officer
DACH - Germany, Austria, and Switzerland
EBIT - Earnings Before Interests and Taxes
EFSF - European Financial Stability Facility
EFSM - European Financial Stability Mechanism
ERP – Enterprise Resource Planning
HQ - High Quality
IMF - International Monetary Fund
IRC – Imposto Sobre o Rendimento de Pessoas Coletivas
IVA – Imposto Sobre o Valor Acrescentado
MVP – Minimum Viable Product
NPV – Net Present Value
P2P – Peer To Peer
QREN – Quadro de Referência Estratégica Nacional
R&D – Research and Development
ROE – Return on Equity
SEO – Search Engine Optimization
SME – Small and Medium-sized Enterprises
VAT – Value Added Tax
VC – Venture Capital
Business Plan of Clothie
1
1. Executive Summary
Clothie is an innovative service that aims to create a lifeline for local fashion retailers by facilitating
the digitization of their business. Retailers are considered the cornerstone of the entire fashion
industry since, being directly connected to the final customers, their success benefits the sector as a
whole (including local manufacturers, wholesalers, and distributors).
Unlike big firms, most local retailers do not have specialized teams who bring traffic to their physical
store or manage their online presence. Many retailers have already tried to join the digital shift by
creating a company website, but this process has often turned out to be costly and ineffective, since
administrating an e-commerce requires specific expertise in the field.
Clothie allows fashion retailers with little/no technical expertise to enhance their marketing and sales
performances, by promoting apparel products to a potentially unlimited client base.
Being an Active Clothie Retailer will:
- Generate new customers by stimulating online/offline traffic.
- Show on a daily basis their new arrivals to the already existing client base.
- Build an online presence and expand brand awareness.
- Boost sales and marketing performances.
- Decrease sales returns (common in e-commerce) by incentivizing in-store shopping.
On top of that, Clothie represents a new and entertaining way to shop for fashion. Its Individual Users
will have the possibility to scroll through a list of pictures (like they do on Instagram), find fashion
products nearby, and then decide to purchase (or book) them, directly through the App.
As proclaimed in its logo, Clothie is: “Fashion made Fun”.
Vision Statement: To be the leader of the online fashion-shopping market.
Mission Statement: To help local fashion retailers to gain market share at the expense of the big
players, by enhancing their online presence, marketing, and sales performances.
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1. Sumário Executivo
A Clothie presta um serviço inovador que visa criar uma linha de moda para os retalhistas de moda
locais, facilitando a digitalização de seus negócios. Os retalhistas são considerados a pedra angular
de toda a indústria da moda, uma vez que, estando diretamente conectados aos clientes finais, o seu
sucesso beneficia o setor como um todo (incluindo fabricantes locais, atacadistas e distribuidores).
Ao contrário das grandes empresas, a maioria dos retalhistas locais não possui equipes especializadas
que trazem tráfego para sua loja física ou gerem a sua presença online. Muitos retalhistas já tentaram
aderir à mudança digital através da criação de um site da empresa, mas esse processo muitas vezes se
mostrou oneroso e ineficiente, já que a administração de um comércio eletrónico requer
conhecimentos específicos na área.
A Clothie permite que os retalhistas de moda com pouco ou nenhum conhecimento técnico
aprimorem os seus desempenhos de marketing e vendas, promovendo produtos de vestuário para uma
base de clientes potencialmente ilimitada.
Ser um retalhista ativo da Clothie irá:
- Gerar novos clientes estimulando o tráfego on-line/off-line.
- Mostrar diariamente as novas chegadas à base de clientes já existente.
- Crie uma presença on-line e ampliar o reconhecimento da marca.
- Impulsionar os desempenhos de vendas e marketing.
- Diminuir os retornos de vendas (comuns no e-commerce), incentivando as compras nas lojas.
Além disso, a Clothie representa uma maneira nova e divertida de comprar moda. Os seus utilizadores
individuais terão a possibilidade de percorrer uma lista de fotos (como fazem no Instagram), encontrar
produtos de moda nas proximidades e decidir comprá-los (ou reservá-los) diretamente por meio do
aplicativo.
Como proclamado no seu logo, Clothie é: “Fashion made Fun”.
Declaração de visão: Ser o líder do mercado on-line de compras de moda.
Declaração de Missão: Ajudar os retalhistas de moda locais a ganhar quota de mercado às custas dos
grandes players, aperfeiçoando a sua presença online, marketing e vendas.
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2. Problem Statement
The economic and financial crisis faced by European countries over the last twenty years, has
augmented the already existing social-economic imbalances perceived within their borders (Andor,
2014). Southern European countries like Portugal, Italy, Spain, and Greece had to cope with the
inevitable decline of their economies, while DACH and northern European countries have been able
to promptly react and maintain a condition of financial stability (McRae, 2017).
This project does not want to address the reasons why some countries have performed better than
others; vice-versa it aims to offer a solution to the SME that are struggling to stay in business and,
specifically, in the fashion industry. The 80’s and 90’s have been an outstanding period in terms of
results for fashion producers, wholesalers, and retailers. At the time, customers were more inclined
to buy from local stores rather than giant chains, which helped in stimulating a constant and
proportionate growth in prosperity within the sector.
Those days are gone, now customers from all over the world buy most of their garment from the
giants of the industry, Inditex and Primark on the first line, or from convenient e-commerce like Asos
or Amazon. The advanced supply chain strategies adopted by these corporations, allow them to offer
the newest trends at reasonable prices; the quality of the products is also rising, and their strong online
presence gives them a sustained competitive advantage, cutting off local retailers.
In addition, EU liberal policies related to customs tariffs and import taxation has led low-cost
producers like China, Bangladesh, and India to increase their exportation to our continent, to the
detriment of European entrepreneurs. What to do then? The answer is given by one of the world's
foremost expert in the field of product innovation management, Robert G. Cooper (2001: 4) – “Either
innovate or die”.
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3. Literature Review
The Literature Review will cover two main themes considered relevant for the development of this
business plan: Entrepreneurship and Innovation. The two topics are strictly connected, but will be
analyzed singularly, discussing the most relevant theories formulated throughout the years, and the
importance they reflect on the business world nowadays.
3.1 Entrepreneurship
Over the last decade, the term ‘start-up’ has become part of our collective vocabulary. However, there
is still confusion around its real meaning, the phenomenon that it represents, and the different
dynamics that rule it.
In general, the term ‘start-up’ describes a newly established company looking for a compelling and
scalable business model to adopt. Thus, the life cycle of a start-up ends when the business model
successfully overcome the ‘testing phase’ with the consequent effective evolution to ‘company’.
However, the same term can also define a new company which has already found an efficient business
model, but that is still working on early organizational processes such as hiring personnel, acquiring
assets, and selecting the suppliers to start working with (Blank & Dorf, 2012).
Entrepreneurship is not always linked with academical qualifications: there are thousands of cases
where the founder of a company, the entrepreneur, has started his/her business journey without
holding any management-related degree. Entrepreneurship is, therefore, a phenomenon based on
constant action and discovery, both considered significant inputs to stimulate the competition,
essential aspect of the economic growth of any industry.
Quoting Michael Porter (1990: 75), entrepreneurship is “at the heart of national advantage”, and
governmental institutions need to thoughtfully consider this aspect when formulating economic
policies. Entrepreneurial activities bring new discoveries and foster the proverbial ‘opportunity
exploitation’ process - which describes the combination of activities conducted to gain financial
returns from the exploration of potential opportunities.
Many people think that opportunities exist in a determined time and environment and that those more
curious, informed, and committed are the first to discover them. However, part of the literature does
Business Plan of Clothie
5
not agree with this perception; management scientists like Ardichvili (2003) believe that opportunities
are created, not found. Thus, there is a dualism of opposite schools of thought, the Discovery Theory,
and the Creation Theory.
3.1.1 The Discovery Theory
Both Discovery Theory and Creation Theory assume that the entrepreneur’s outcome is to build – by
discovering or creating – new opportunities (Shane & Venkatamaran, 2000). The two theories
perceive that opportunities come into being because of the existence of imperfections in a determined
market, but do not share the same view on the origins of those defects. In the Discovery Theory,
imperfections can be represented by external factors caused by technological changes (Kirzner,
1973), as well as political, demographic, and social changes (Shane, 2003).
Aiming to explain why entrepreneurs, unlike other people, are able to find new opportunities, the
Discovery Theory argues that the former have significantly different abilities from the latter, which
allow them to spot chances and take advantage of the events; Kirzner (1973) describes these
differences using the term ‘alertness’.
In fact, in most cases, entrepreneurs have an excellent capability to either recognize opportunities or
to capitalize on their broader access to information - which consequently leads them to discover new
occasions. Passion for a determined industry, previous experiences in the sector, and an established
social networking make those valuable information more accessible, providing a factor of advantage
to the entrepreneur.
To conclude, the Discovery Theory emphasizes the vision that opportunities exist as real and
objective phenomena; they just wait to be discovered and used independently of the perceptions and
actions of entrepreneurs (McKelvey, 1999).
3.1.2 The Creation Theory
Following the Creation Theory, opportunities are neither objective phenomena nor they are created
by external factors (markets, technology, social changes) – instead, they are actively created by
visionary entrepreneurs looking for new innovative ideas. Precursors of the Creation Theory sustain
that entrepreneurs should not seek for anything, they just need to act and observe the behavior of
markets and consumers. Opportunities exist as consequences of entrepreneurs’ effort to create them,
Business Plan of Clothie
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and only for that (Weick, 1979). However, when entrepreneurs take action, they need to interact with
the market, the only judge able to sentence the veracity of their perceptions.
The market is also a social structure formed by intuitions, ideas, and perceptions of other individuals.
If, as it very often happens, the entrepreneurs’ convictions are proven wrong by the market, they are
forced to develop new assumptions (taking advantage of the experience gained by failing) that can
match what the market asks in that precise moment (Choi, 1993).
Therefore, the Creation Theory emphasizes the importance of the information, and the relevance of
the knowledge gained by the process of creating opportunities.
Table 1: Discovery Theory vs Creation Theory
Discovery Theory
Creation Theory
Core Arguments
Opportunities are real and
objective phenomena
Opportunities are created by
entrepreneurs
Nature of Opportunities
Opportunities exist
independently of
entrepreneurs
Opportunities exist depending
on entrepreneurs’ action
Entrepreneur Roles
Passive: Discovery &
Exploitation
Active: Enacting & Creating
Opportunities
Source: the author, 2018
3.1.3 The Lean Startup
Several modern entrepreneurial doctrines have recalled the Creation Theory and, in particular, the
interpretation presented by Choi. Eric Ries has been one of the earliest precursors of this new
conception, developing the notion of ‘Lean Startup’ successively taken up by numerous business
authors. Startups are exploratory by nature, considering their initial lack of clear vision, customers
base, and defined business model.
In his research, Ries (2011) analyzed the staggering number of recent start-up failures and identified
a common characteristic: all of them were successfully executing a failing plan. In substance, they
were spending time and money developing products nobody needed.
Business Plan of Clothie
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Ries (2011) underlines the action of researching for a concrete problem to solve, rather than finding
solutions for undetermined issues, introducing the ‘Build-Measure-Learn’ loop. The first goal of the
BML loop is to build a Minimum Viable Product (MVP) - the easiest possible version of the product
that allows to test the entrepreneur’s initial hypotheses on an audience of early-adopters. Next, data
is gathered by measuring how the customers perceive and use the product. Finally, the results provide
fundamental information to the team, ready (if necessary) to produce new ideas that better match the
customers’ expectations.
Source: the author, 2018
3.2 Innovation
The term ‘innovation’ has been defined in various ways by business and social experts. Peter Drucker
(1985: 18) has outlined it as “the specific tool of entrepreneurs, the means by which they exploit
change as an opportunity for a different business or service”. For David Albury (2005: 51)
“Innovation is the creation and implementation of new processes, products, services and methods of
delivery which result in significant improvements in outcomes, efficiency, effectiveness or quality”;
while James Hartley (2006: 35) considers it as “the successful development, implementation and use
of new or structurally improved products, processes, services or organizational forms”. Innovation
represents a vital key for the survival of any organization. However, completing a compelling
innovation process is extremely difficult. A long list of top companies, in the past considered
Figure 1: The BML Loop
Figure 2: Relevance of Innovation in a Company's AgendaFigure 3: The BML Loop
Figure 4: Relevance of Innovation in a Company's Agenda
Figure 5 - Example of Strategy Canvas on CEP IndustryFigure 6: Relevance of
Innovation in a Company's AgendaFigure 7: The BML Loop
Figure 8: Relevance of Innovation in a Company's AgendaFigure 9: The BML Loop
Figure 10: Relevance of Innovation in a Company's Agenda
Figure 11 - Example of Strategy Canvas on CEP IndustryFigure 12: Relevance of
Innovation in a Company's Agenda
Figure 13 - Example of Strategy Canvas on CEP Industry
Figure 14 - The Four Actions FrameworkFigure 15 - Example of Strategy Canvas on
CEP IndustryFigure 16: Relevance of Innovation in a Company's Agenda
Figure 17 - Example of Strategy Canvas on CEP IndustryFigure 18: Relevance of
Innovation in a Company's AgendaFigure 19: The BML Loop
Figure 20: Relevance of Innovation in a Company's AgendaFigure 21: The BML
Loop
Figure 22: Relevance of Innovation in a Company's Agenda
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8
revolutionary leaders in their own markets, had struggled when it came to facing a major
technological change (Hamel & Prahalad, 1994; Utterback, 1994; Christensen, 1998).
A concrete example is the dot-com boom and bust of the early 2000s. Some firms like Amazon and
Google saw their share prices surging - but for many others there was no way to recover from the
wave of disruptive innovation faced. Apart from the crash regarding speculation on overvalued
internet start-ups, even large and established players were stricken. For example, the
telecommunication giant British Telecom lost 60% of its market value, while others, like The Marconi
Company, eventually went under (Tidd, Bessant, & Pavitt, 2005).
Today more than ever the importance given to innovation continues to rise, the Boston Consulting
Group’s 10th annual ‘Global Innovation Survey’ (Fig. 2) has clearly shown this aspect. The survey
addressed employees and executives’ opinions over a ten-year period, with 79% of respondents who
ranked innovation within the top-three priorities at their company in 2015, substantial rise compared
to the 66% of ten years before.
Source: BCG Global Innovation Survey, 2015
3.2.1 History of Innovation
Over the last two decades, many patterns have been formulated with the intention to describe the
different historical steps of innovation models. The British sociologist R. Rothwell (1992) with his
Five Generations (5G) of Innovation Model, provides a wide time-based overview of the evolution
Figure 2: Relevance of Innovation in a Company's Agenda
Figure 28 - Example of Strategy Canvas on CEP IndustryFigure 29: Relevance
of Innovation in a Company's Agenda
Figure 30 - Example of Strategy Canvas on CEP Industry
Figure 31 - The Four Actions FrameworkFigure 32 - Example of Strategy
Canvas on CEP IndustryFigure 33: Relevance of Innovation in a Company's
Agenda
Figure 34 - Example of Strategy Canvas on CEP IndustryFigure 35: Relevance
of Innovation in a Company's Agenda
Figure 36 - Example of Strategy Canvas on CEP Industry
Figure 37 - The Four Actions FrameworkFigure 38 - Example of Strategy
Canvas on CEP Industry
Figure 39 - The Four Actions Framework
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of innovation management in the western world. He divided the period between the 1950’s and the
1990’s in 5 generations, each of them with different social-economical characteristics that directly
interfere with the development of innovative processes.
The 5G are Technology Push, Market Pull, Coupling of R&D and Marketing, Integrated Business
Processes, and System Integration & Networking.
- Technology Push (the 1950s - Mid 1960s): It is still a period of post-war recovery,
characterized by a fast-economic growth. The astonishingly high demand brought Companies
to implement a ‘tech push’ giving more relevance to R&D - with the consequent technological
renovation of already existing sectors and the creation of new technology-led industries.
- Market Pull (the Mid 1960s – Early 1970s): A period of general prosperity characterized by
the market shares battle. Companies start to understand their need to ‘pull’ - trying to figure
out the market needs, and growing strategic emphasis on marketing, more than R&D.
- Coupling of R&D and Marketing (the Mid 1970s – Early 1980s): This is a period of high
inflation and demand saturation. Marketing and R&D become both parts of a structured
innovation process trying to correct the exceeding the supply/demand ratio. Companies start
exploring more the accountancy and financial areas, with the aim of minimizing costs of
production.
- Integrated Business Processes (the Early 1980s – 1990): Following a period of economic
recovery, we assist to the strengthening of a global approach. Strategic alliances and
acquisitions, together with an internationalization in both ownership and production make
possible to lower the prices and to increase the quality of the final products.
- System Integration & Networking (the 1990s): Finally, the fifth and last generation, the one
marked by a high rate of tech development that helped companies to speed up the product
cycle by automatizing processes through ERP and manufacturing information systems. Thus,
central importance is given to the speed of development, but not only: quality and product
diversity reach higher standards, while environmental issues start evolving into strategic
concerns (Rothwell, 1992).
Rothwell covered this topic until the last ten years of the ‘900: what about the new century? Many
other sociologists have defined the 6
th
generation of innovation as the “Technology Innovation”. This
generation is based on modeling, simulation, virtual reality, AI, analysis of data and any other
Business Plan of Clothie
10
development that has characterized modern technological advancements (Nicolov & Badulescu,
2012).
3.2.2 Value Innovation & Blue Ocean
Many think that having a good team, an innovative idea and a strong motivation will undoubtedly
lead them to succeed - the truth is that 90% of start-ups fail, despite their ‘game-changing’ approaches
(Patel, 2015). A business can be innovative, but at the same time can bring little or no value to the
market, turning out to be futile. This is why it is necessary to explore a notion unfamiliar to the most,
the concept of ‘value innovation’.
Value innovation occurs only when a company aligns innovation with utility, price, and cost
positions. Value innovation places the same emphasis on both aspects, value and innovation. Value
without innovation focuses on value creation, a mere improvement on the current offer that does not
grant to stand out in a crowded market. On the other hand, innovation without value focuses on
technology, generating futuristic projects that lack utility – resulting in customers disinterest. On this
regard, Gerard Tellis and Peter Golder (2006) draw a surprising picture of what they call ‘the
pioneering issue’. Their twelve-year study observed that less than 10% of market pioneers turned out
to be the winners in the new market discovered.
Consider now the CD-i, an innovative interactive multimedia CD player launched by Philips in 1991.
It was a video machine, game player, music system, teaching tool: all in one. It was promoted as ‘the
imagination machine’ because of its multifunction. The problem was that the player was everything
but intuitive; the user interface was so disordered that people could not understand how to use it,
despite reading the instruction manual. Moreover, even if the most tech-savvy could manage to use
the console, it lacked attractive software titles. In theory, CD-i could do nearly anything, but in reality,
could do almost nothing.
Philips failed to deliver value to its final users, and this occurred because they were obsessed by the
novelty of their product and driven by the excitement to be the first exploring a new market. Value
innovation is a different way of thinking and operating, which leads to the creation of a ‘blue ocean’
and a distinction from the competition. Based on a study of 150 strategic moves, over a hundred-
year period, and across thirty industries, the Blue Ocean Strategy is a relatively new market strategy
Business Plan of Clothie
11
formulated by W. Chan Kim and Renée Mauborgne which intends to help businesses approaching
the market in an efficient way.
Blue Ocean Strategy is not about being the pioneers of a market; it is about becoming the first to get
it right by linking innovation to value (Kim & Mauborgne, 2015). The authors affirm that battling
competitors brings businesses to join a ‘red ocean’ composed by similar companies sharing the same
little portion of the market. Instead, the secret of success is in finding untapped new markets where a
business can potentiate its growth. Several valuable tools that can help any entrepreneur to discover
markets opportunities will be analyzed throughout the next sections.
3.2.3 The Strategy Canvas
Designing a ‘strategy canvas’ is an essential step towards the creation of a Blue Ocean Strategy. The
strategy canvas is both a diagnostic tool and an action framework useful to capture a snapshot of the
current market competition. Kim & Mauborgne (2015) empathize how, by having a graphic overview
of the current market aspects, it comes definitely easier to define:
- The strategic profile of an industry, by representing the current and future factors that
influence the competition.
- The strategic profile of current and potential competitors, and the factors they focus on to
pursue their strategy.
- The company’s own value curve, how the company will disclose a Blue Ocean and what will
make it different from the others.
Source: Deloitte, 2011
Figure 3 - Example of Strategy Canvas on CEP Industry
Figure 54 - The Four Actions FrameworkFigure 55 - Example of
Strategy Canvas on CEP Industry
Figure 56 - The Four Actions Framework
Figure 57: Time spent by U.S. Consumers on their Mobile
PhonesFigure 58 - The Four Actions FrameworkFigure 59 - Example
of Strategy Canvas on CEP Industry
Figure 60 - The Four Actions FrameworkFigure 61 - Example of
Strategy Canvas on CEP Industry
Figure 62 - The Four Actions Framework
Business Plan of Clothie
12
3.2.4 The Four Actions Framework
The Four Action Framework is useful to break the conventional trade-off between low cost and
differentiation, creating a new Value Curve. It is based on four main questions any entrepreneur
should ask themselves, which are:
- What are the factors taken for granted in the industry and that should be eliminated?
- What are the factors that should be reduced well below the industry’s standard?
- What are the factors that should be raised well above the industry’s standard?
- What are the factors that the market lack of, and therefore should be created?
Source: the author, 2018
3.2.5 The Blue Sequence
Eventually, Kim & Mauborgne (2015) introduce the next challenge as the ‘blue sequence’ - a tool
that allows companies to build a viable business model and confirm that the blue ocean created can
bring positive results.
The sequence is composed of four elements: buyer utility, price, cost, and adoption.
Figure 4 - The Four Actions Framework
Figure 79: Time spent by U.S. Consumers on their Mobile PhonesFigure
80 - The Four Actions Framework
Figure 81: Time spent by U.S. Consumers on their Mobile Phones
Table 3: Clothie's Substitutes AnalysisFigure 82: Time spent by U.S.
Consumers on their Mobile PhonesFigure 83 - The Four Actions
Framework
Figure 84: Time spent by U.S. Consumers on their Mobile PhonesFigure
85 - The Four Actions Framework
Figure 86: Time spent by U.S. Consumers on their Mobile Phones
Table 4: Clothie's Substitutes AnalysisFigure 87: Time spent by U.S.
Consumers on their Mobile Phones
Table 5: Clothie's Substitutes Analysis
Business Plan of Clothie
13
- Buyer Utility: The product/service must provide a reason for the target people to buy it.
- Price: The product/service must have a price that allows the target people to buy it.
- Cost: The price offered to the public, other than being accessible, must let the company earn
a healthy profit margin.
- Adoption: Upfront analysis of adoption hurdles to avoid surprises during the development of
a business.
The first two elements together - Buyer Utility and Price - force a company to create a leap in the net
buyer value. The ‘strategic price’ does not have to be based on the cost, vice-versa the costs need to
be based on the strategic price determined. If the target cost cannot be met, the company needs to
change their plans or innovate their business model in order to reach the target cost. The combination
of great utility, strategic pricing, and target costing is the secret to create value innovation, giving
more to both customers and companies. All the three elements are essential: the absence of one would
cause the impossibility to reach a leap in value (Kim & Mauborgne, 2015).
Last but not least, the fourth and last element – adoption – indicates the need of being forward-looking
in order to address future problems of the company; anticipating the obstacles will surely guarantee
a smoother and faster path to victory.
Business Plan of Clothie
14
5. Framework and Methodology
The present business plan is structured along the following points:
- Macro Context Analysis: points out the different external constraints that may influence the
organization, by analyzing political, economic, social, technological and environmental
factors.
- Micro Context Analysis: analyzes the potential outcomes of a determined industry through
the Porter Five forces model.
- Competition Analysis: determines and analyzes the direct and indirect competitors of the
business.
- Internal Analysis: identifies the key aspects and strategic capability of the business following
the VRIO Framework.
- SWOT Analysis: determines the crucial aspects of the business environment, formulating the
company’s current strengths, weaknesses, opportunities, and threats.
- Goal Formulation: uses the results of the SWOT Analysis to identify effective strategies to
implement.
- STP Model: pinpoints the right customer for the specific product offered, using
Segmentation, Targeting and Positioning tools.
- Strategy Definition: draws the strategy to be pursued, using tools like the Four Action
Framework and the Strategy Canvas.
- Marketing Mix: describes in the specific the different aspects of the business, dividing its
strategy into four categories: product, price, promotion, and distribution.
- Implementation Plan: defines how the strategy will be executed during the first year of
operations.
- Economic and Financial Analysis: provides a forecast of the financial activities of the
business, analyzing the expected returns over a five-year period.
- Conclusions: analyzes the viability of the project and indicates if and why it represents a
concrete opportunity for investors.
Business Plan of Clothie
15
6. External Analysis – PESTLE
Political, economic, social, technological, legal, and environmental factors are equally considered by
executives, in order to examine the effects that external elements may have on the performances of
an organization. The PESTLE analysis allows to identify these external constraints, using them to
draw up a strategy based on the opportunities and threats discovered.
6.1 The Political / Legal Structure
The Direçao-Geral dos Impostos (Portuguese Tax Authority) is in charge of administrating the tax
system of the country. Whomever interested in starting a business in Portugal, needs to take in
consideration three main tax rates before deciding to settle down:
- Corporate Tax (IRC): Imposed on a company’s earned income. The Portugal corporate tax
follows a flat tax regime, with a fixed 21% tax rate.
- Municipal Tax (Derrama): Imposed on a company’s earned income (1,5%), with Lisbon
offering tax exemption to business with an annual turnover (net sales) of less than €150.000
(Autoridade Tributaria e Aduaneria, 2017).
- Value Added Tax (IVA): It is a broadly-based consumption tax assessed on the value added
to goods and services. The standard Portuguese VAT rate is currently 23%, with an
intermediate VAT of 13% and a reduced VAT of 6%.
Many are the government-backed ventures with the aim to facilitate the administrative procedures
and bureaucracy processes necessary to set up a start-up in Portugal. The most important, Empresa
na Hora, allows to create a company in the commercial form of single-person, quota or anonymous
types, in a fast and easy way.
If the members of the future company are private individuals, they will need to bring to the
administrative desk:
- Tax identification card
- Identification document (identity card or passport).
- Social security card (optional)
Business Plan of Clothie
16
In the case of legal persons/corporations it is necessary:
- Legal/corporate person tax identification or identity card;
- Current extract of the entry in the commercial registry;
- Minutes of the general meeting, granting powers of company incorporation.
The creation of a company at the Empresa na Hora takes around thirty minutes and has a cost of €360
(Empresa na Hora, 2018).
6.2 Economic Analysis
Over the last decades, Portugal has undoubtedly faced difficult moments, both from an economic and
financial perspective. The Great Recession hit Portugal in 2008 and brought the country to be
incapable of repaying its government debt without requiring the help of third parties. In 2011 the
Portuguese government signed a three-year Bailout Program, drawing a total of €78 billion from the
IMF, the EFSM and the EFSF. Portugal exited the Program in June 2014, starting a new uptrend that
has brought the whole economy to reflourish.
According to the Portuguese National Statistic Office, the Portuguese economy grew 2.7% in 2017,
achieving its most relevant growth rate since the new century began. Tourism has seen a steady
increase during recent years, recording a +21% from 2016 to 2017, accounted for more than €6
billion. GDP is growing as well, with an increment of 2.5% in 2017 and a projected growth of 2.2%
in 2018 (Nordeatrade, 2018).
The unemployment rate in Portugal has touched its lowest point since 2008, with a 7,4% recorded by
Eurostat in April 2018, after having reached a peak of 16.2% in 2013. Part of these outstanding results
also come from the development and spread of a new system of job creation, that allows people to re-
invent their working life, actively participating to the ‘Gig Economy’. The Collins Dictionary defines
the Gig Economy as an “economy in which there are few permanent employees and most jobs are
assigned to temporary or freelance workers”.
We are facing a strong return to P2P, and of course, the digitization of enterprises and the increasing
usage of IoT technologies are helping this process to gain traction. Remote working is becoming the
most common interpretation of new jobs, giving the employers a broader range of applicants to select
Business Plan of Clothie
17
from. Uber drivers, Deliveroo riders, Airbnb hosts are all part of the Gig Economy Ecosystem. Many
employees are not satisfied with 9-6 jobs, and yearn for becoming their own bosses: possibility now
more reasonable than ever, thanks to the numerous public and private initiatives that support and
incentive young entrepreneurs.
Another trend characterizing the recent economy is the opening of temporary/pop up stores. This new
phenomenon is expanding its boundaries and has now become a go-to marketing strategy for retailers
looking to expand their brand awareness, or for those who want to try out for a short period if their
ideas are worth a more significant investment.
Pop up stores, having a short life cycle, often organize multiple events in order to get popularity
outside their neighborhood. However, it is certainly challenging to create an audience in a few weeks,
thus they can be considered as suitable clients for a platform like Clothie.
6.3 Socio-Cultural Analysis
In 2016, the Web Summit Committee decided to move their hub from Dublin, where the event was
launched and developed since 2010, to a new European capital. The Web Summit is one of the most
important tech conferences in the world, attended by thousands of entrepreneurs willing to show their
talent, and investors looking for new ventures to undertake.
Even though the Irish capital is home to many international corporations and promising start-ups, it
had to concede the spotlight to a fast-growing entrepreneurial movement that has recently
characterized one of the most underrated European countries, Portugal. Lisbon has been chosen as
the official hub of the Web Summit for at least three years, recording the highest number of
participants (60.000 in its last edition) in its history; statistic that demonstrates how much importance
Portuguese people give to innovation and entrepreneurship (Camara Municipal de Lisboa, 2017).
There are different reasons why Lisbon is considered a great place to launch a start-up. First of all,
the Portuguese education system is a first-class level, producing every year hundreds of multi-lingual
young talents, ready to join new entrepreneurial realities. Moreover, the presence of high-quality
accelerators and incubators helps young entrepreneurs to develop their ideas, by monitoring and
mentoring the teams in order to find sustainable business strategies.
Business Plan of Clothie
18
Startup Lisboa, Fabrica de Startups or Beta-I are only few examples of the many realities that are
helping new companies and the whole country to re-grow, by giving chances to Portuguese and
international candidates to get advice on fundraising, international expansion strategies, and the legal
procedures to follow before and during their business activities.
6.4 Technological Development
Over the last decade, smartphone sales have faced a dramatic growth. In the first quarter of 2009, less
than 50 million devices were sold, nothing compared to the 383 million units accounted in the first
quarter of 2018 (Gartner, 2018). To date, the number of active smartphones is estimated to be around
1.9 billion, with over a third of the world population that own at least one device.
Only a decade ago, regular phones and palmtop were respectively used by ordinary and business
people. The QWERTY keyboard both devices shared, was not the best solution for individuals willing
to use their phone to navigate the internet, send e-mails and log into applications. The innovative
features introduced lately (especially with the first iPhone release) transformed mobile phones into
computers, supplanting the traditional idea of the phone as a mere telecommunication device.
This new revolution brought to the light new winners, like Apple and Samsung, that substituted
pioneers such as Motorola, Nokia, and Siemens. What happened in recent years though, is a gradual
shift in the centralities of the global economy.
While Apple and Samsung lead the international market of developed countries, new competitors like
Huawei, Lenovo, and Xiaomi (all of them headquartered in China) propose high-quality products at
discount prices. Their smartphones’ offer covers a vast range of products, with prices starting from
€100 up to €600 - which demonstrates how their influence is built not only around emerging markets,
but to challenge Apple and Samsung’s high-technological products.
Yahoo Flurry Analytics’ data illustrated in Figure 5 shows that U.S. smartphone holders spend 92%
of their phone use scrolling within Apps, while only 8% of the time is spent browsing the internet.
Just by looking at this pie chart, it comes clear the importance for a company to build an interactive
and easy-to-use app to entertain its customers, as well as the need for any company to implement
social media in their business strategies.
Business Plan of Clothie
19
Source: Flurry Analytics, 2017
Companies can rapidly increment their brand awareness and expand their market horizon on
unlimited ways through the use of social media. Facebook, with its advertising platform, offers one
of the most powerful communication tools ever created.
By running ads, businesses can target different niches based on users’ nationality, language,
profession, habits, or interests; this allows companies to address their campaigns to established
audiences or, in case of early stage start-ups, to identify one or more new targets.
LinkedIn makes things easier, not only for recruiting the right personnel, but also to be more visible
to investors and possible partners. Although its monthly active users represent only 1/3 of the
Facebook ones, Instagram is growing exponentially thanks to its user-friendly interface and the rising
figures of ‘influencers’ (Solon, 2018). Finally, Twitter, YouTube, and Snapchat cannot be neglected
by any company targeting teenagers and young adults.
6.5 Environmental Implications
Respect for the environment and its sustainability are milestones for any organization that aims to
gain respect and trust from the surrounding social system. The number of businesses that are willing
to undertake this eco-friendly path is in constant expansion. Recyclable materials are now used to
produce any kind of product, from sneakers to phone cases, from local shops to corporations - anyone
Figure 5: Time spent by U.S. Consumers on their Mobile Phones
Table 9: Clothie's Substitutes AnalysisFigure 99: Time spent by
U.S. Consumers on their Mobile Phones
Table 10: Clothie's Substitutes Analysis
Figure 100: Porter's Five Forces applied to ClothieTable 11:
Clothie's Substitutes AnalysisFigure 101: Time spent by U.S.
Consumers on their Mobile Phones
Table 12: Clothie's Substitutes AnalysisFigure 102: Time spent by
U.S. Consumers on their Mobile Phones
Table 13: Clothie's Substitutes Analysis
Figure 103: Porter's Five Forces applied to ClothieTable 14:
Clothie's Substitutes Analysis
Figure 104: Porter's Five Forces applied to Clothie
Figure 105: VRIO FrameworkFigure 106: Porter's Five Forces
applied to ClothieTable 15: Clothie's Substitutes Analysis
Figure 107: Porter's Five Forces applied to ClothieTable 16:
Clothie's Substitutes AnalysisFigure 108: Time spent by U.S.
Consumers on their Mobile Phones
Business Plan of Clothie
20
wants to contribute to protecting the environment. In Clothie’s case, it comes difficult to find direct
environmental implications, but indirect effects can take an essential role in its customer development
process.
The consequences of climate change are a serious topic international organizations and governments
are currently trying to solve, and Clothie is open support this cause in any possible way. On the
positive side, in recent years climate change has shown a consistent impact on tourists’ travel
decisions. As a result, tourism flows are becoming more spread throughout the year, with an
increasing demand for the low seasons (Turismo de Portugal, 2014).
Tourists’ all year long arrivals can increase business opportunities for local stores, stimulating the
whole Portuguese economy.
7. Porter’s Five Forces Analysis
Porter's Five Forces Analysis identifies and analyzes five competitive forces that shape every sector,
helping to determine an industry's weaknesses and strengths. The Analysis, originally published in
Michael Porter's book "Competitive Strategy: Techniques for analyzing industries and competitors"
in 1980, creates an overview of the factors characterizing a selected industry by considering five
dimensions: power of buyers, power of suppliers, threat of new entries, threat of substitutes, and
competitive rivalry (Johnson, Scholes, & Whittington, 2008).
A three-value scale (low, medium, and high) will be used to define Clothie’s Five Forces.
7.1 Competitive Rivalry
The number of competitors and their ability to threaten the company is one of the most relevant
aspects to consider when writing a business plan. However, after specific and cautious researches, it
is possible to affirm that Clothie is the first Location-Based Fashion Shopping App in its genre. Thus,
it is not possible to focus a study on its ‘direct competitors’, intended as the strict definition of the
word. The competitive rivalry is then considered to be low.
Business Plan of Clothie
21
7.2 Threat of Substitutes
Great importance is given to Clothie’s substitutes. The concept of ‘threats of substitutes’ defines
competitive businesses that use alternative processes to offer similar product or services (Johnson,
Scholes, & Whittington, 2008). At present, hundreds of online services have targeted the fashion
market; in Table 2 are listed the four most significant substitutes Clothie has to compete with, in order
to increase its relevance – a description of the companies follows:
- Farfetch: e-commerce service which selects fashion boutiques from all over the world and
hosts them on its online platform. By browsing Farfetch, users can choose trendy products to
buy and receive directly at their doorstep. Once selected by Farfetch, the boutique will have
the possibility be listed on the platform for free, with fixed commissions applied to any sales
closed.
- Shopular: platform that allows retailers to show, to their nearby clients, real-time discount
code and promotions. It covers a broad range of industries, from food to fashion. At present,
the service is only available in the U.S.
- Asos: British e-commerce specialized in fashion and beauty. Asos sells over 850 brands, as
well as its own selection of apparel and accessories, targeting young adults. The service was
founded back in 2000 during the internet boom, and it is considered one of the pioneers of the
online fashion industry. The business model is simple, buy online and receive the package in
a couple of days.
- Retail Leaders like Zara, H&M, Armani, or Dutti keep leading a significant portion of the
market and have convincingly improved the in-store experience while digitalizing their
businesses. Users can purchase via their e-commerce, or book online and retire the selected
clothes from one of their branches. These firms are probably the toughest rival for Clothie,
having perfectionated their online and offline channels, and benefitting from their established
brand identities.
Given all of that, it is appropriate to evaluate the power of substitutes as high.
Business Plan of Clothie
22
Source: the author, 2018
7.3 Threat of New Entrants
The threat of new entrants represents the ease for a business to enter a specific industry (Johnson,
Scholes, & Whittington, 2008). Therefore, the more time and money it costs for a competitor to enter
the market, the more Clothie’s position would be strengthened. The absence of direct competitors
gives Clothie the opportunity to stand as a pioneer of its market, reason why it is dramatically
important to accelerate the process of expansions from the first months of operation.
As cited in the literature review, on average, less than 10% of Market Pioneers turn out to be the
winners in the new market discovered. This impressing statistic should be eye-opening to any
business that, like Clothie, starts its journey from a position of advantage.
Clothie is going to open a blue ocean, as will be demonstrated in the Strategy Definition section, and
it is assured that new competitors will join it very quickly, trying to steal market share. Entering this
industry can be considered easy, developing a platform in Instagram-style it is a fairly basic task for
a team of well-trained developers. To get in touch with fashion retailers and promote the platform
Clothie
Farfetch
Shopular
Asos
Retail Leaders
Free for Users
(Individuals)
✓
✓
✓
✓
✓
Accessible to
all Retailers
✓
✗
✗
✗
✗
Geo-location based
✓
✗
✓
✗
✗
User Friendly
✓
✓
✓
✓
✓
Presence in
Portuguese Market
✓
✓
✗
✓
✓
In-Store
Traffic Focus
✓
✗
✓
✗
✓
Table 2: Clothie's Substitutes Analysis
Figure 113: Porter's Five Forces applied to ClothieTable 21: Clothie's Substitutes Analysis
Figure 114: Porter's Five Forces applied to Clothie
Figure 115: VRIO FrameworkFigure 116: Porter's Five Forces applied to ClothieTable 22:
Clothie's Substitutes Analysis
Figure 117: Porter's Five Forces applied to ClothieTable 23: Clothie's Substitutes Analysis
Figure 118: Porter's Five Forces applied to Clothie
Figure 119: VRIO FrameworkFigure 120: Porter's Five Forces applied to Clothie
Figure 121: VRIO Framework
Figure 122: SWOT AnalysisFigure 123: VRIO FrameworkFigure 124: Porter's Five Forces
applied to Clothie
Figure 125: VRIO FrameworkFigure 126: Porter's Five Forces applied to ClothieTable 24:
Clothie's Substitutes Analysis
Figure 127: Porter's Five Forces applied to ClothieTable 25: Clothie's Substitutes Analysis
Figure 128: Porter's Five Forces applied to Clothie
Figure 129: VRIO FrameworkFigure 130: Porter's Five Forces applied to ClothieTable 26:
Clothie's Substitutes Analysis
Figure 131: Porter's Five Forces applied to ClothieTable 27: Clothie's Substitutes Analysis
Business Plan of Clothie
23
would not be difficult as well, especially if the competitors start doing business in different countries
or continents.
Therefore, Clothie’s business execution must proceed at a quick and constant pace, expanding its
borders first to Portugal and then to other European countries. American entrepreneurs cannot be
stopped from imitating Clothie, but European ones can be (at least) discouraged by accumulating as
much advantage as possible since the first day of work, and by offering an irreplaceable service. In
conclusion, considering the ease of entering the market, the threat of new entrants is evaluated to be
high.
7.4 Power of Buyers
In this case, the power of buyers represents the bargaining power of the retailers that will use the
platform. As seen in the External Analysis, there are many ways for a fashion business owner to
promote his/her activity. Technology is drastically helping entrepreneurs: if in the past advertising
campaigns were expansive and often ineffective, now with a smaller budget it is possible to obtain
optimal results.
It is all about offering the right product, at the right price, to the right audience; and learning from
customers’ feedback, shaping the service to their needs. To gain new customers, fashion retailers can
choose from a broad variety of strategies to implement and, if they do not see satisfactory results
utilizing Clothie, they will not think twice before switching to another platform. The power of buyers
is hence evaluated to be high.
7.5 Power of Suppliers
In Clothie’s case, the power of suppliers is not considered relevant. Suppliers may be the services
used to register the domain name, or to launch the App. Hiring a product development team with an
impeccable technical background will allow the company to build the platform without the
intervention of third parties; while the other half of Clothie’s team will take care of marketing and
administrative tasks.
In order to release the App, it is required to apply for a listing on one or more digital distribution
platforms (AppStore, Google Store, Microsoft Store); being approved to these stores is indispensable
Business Plan of Clothie
24
to start the business so, considering Apple, Google, and Microsoft as Clothie’s providers, the power
of suppliers could be evaluated high. However, these stores add thousands of Apps every day, so
there isn’t any plausible reason why a well-developed App from a legitimate and promising business
could be rejected. Thus, the power of suppliers is evaluated to be low.
Source: the author, 2018
8. Internal Analysis – VRIO
The Internal Analysis represents an eye-opening instrument for companies, since it permits to review
their existing strengths and weaknesses by focusing on their own resources and competencies. A
widely used and compelling technique to perform an Internal Analysis is the VRIO Framework,
which bases its existence on four main points, with their resulting questions:
- Value - Do the company offer a resource that adds value for customers?
- Rarity - How rare or limited is the resource?
- Imitability - Is it expensive to duplicate the organization’s resource or capability?
Figure 6: Porter's Five Forces applied to Clothie
Figure 132: VRIO FrameworkFigure 133: Porter's Five Forces
applied to Clothie
Figure 134: VRIO Framework
Figure 135: SWOT AnalysisFigure 136: VRIO FrameworkFigure
137: Porter's Five Forces applied to Clothie
Figure 138: VRIO FrameworkFigure 139: Porter's Five Forces
applied to Clothie
Figure 140: VRIO Framework
Figure 141: SWOT AnalysisFigure 142: VRIO Framework
Figure 143: SWOT Analysis
Table 28: Clothie's SegmentationFigure 144: SWOT
AnalysisFigure 145: VRIO Framework
Figure 146: SWOT AnalysisFigure 147: VRIO FrameworkFigure
148: Porter's Five Forces applied to Clothie
Figure 149: VRIO FrameworkFigure 150: Porter's Five Forces
applied to Clothie
Figure 151: VRIO Framework
Figure 152: SWOT AnalysisFigure 153: VRIO FrameworkFigure
Business Plan of Clothie
25
- Organization - Does the company has organized management systems, processes, structures,
and culture to capitalize on resources and capabilities?
Based on the answers, a company will understand what are the internal resources it can count on, and
what (if any) is the competitive advantage it is creating.
Source: Peng, 2015
Clothie is valuable in two different ways, making shopping for fashion easy and entertaining, and
helping local retailers running their business. Clothie is rare, since it is the first and only Location-
Based Fashion Shopping App available on the market.
However, it is not inimitable. Nowadays develop an app and launch it on the market has become more
accessible and cheaper than ever, while the most challenging part is about executing the plan and
quickly gain market share despite the competition. Clothie’s team will be selected based on strict
rules in order to create an environment of excellence with people ready to work hard, and leverage
their skills to make an impact. Being in its early stages, Clothie still cannot count on organized
management systems, processes, structures, and capabilities, which take time to strengthen.
Overall, Clothie currently benefits from a Temporary Competitive Advantage that, only with time
and perseverance of its employees, can be transformed into a Sustained Competitive Advantage.
Figure 7: VRIO Framework
Figure 157: SWOT AnalysisFigure 158: VRIO Framework
Figure 159: SWOT Analysis
Table 29: Clothie's SegmentationFigure 160: SWOT AnalysisFigure 161: VRIO
Framework
Figure 162: SWOT AnalysisFigure 163: VRIO Framework
Figure 164: SWOT Analysis
Table 30: Clothie's SegmentationFigure 165: SWOT Analysis
Table 31: Clothie's Segmentation
Table 32: Clothie’s Market TargetTable 33: Clothie's SegmentationFigure 166:
SWOT Analysis
Table 34: Clothie's SegmentationFigure 167: SWOT AnalysisFigure 168: VRIO
Framework
Figure 169: SWOT AnalysisFigure 170: VRIO Framework
Figure 171: SWOT Analysis
Business Plan of Clothie
26
9. SWOT Analysis
The traditional SWOT Analysis identifies the crucial aspects of an organization’s business
environment and the strategic capability of the company (Johnson, Scholes, & Whittington, 2008).
The SWOT will be fundamental for the assessment of the Goal Formulation; these two steps of the
business plan are crucial for the development of its market strategy. Therefore, it is indispensable to
analyze the evolution of the mediate and immediate surrounding, detecting the threats and the
opportunities that affect the strategic decisions, as well as the strengths and weaknesses observed
within the Company (Thompson, 2007).
9.1 Strengths of Clothie
1. Clothie’s goal is to give back to local fashion retailers the importance they deserve; it is not only
a business, it is a way to re-distribute wealth to the ones that are sinking under the water of few
big firms and modern e-commerce services, promoting a differentiation of the current fashion
market trends. The genuine values and motivations that bring Clothie to undertake this mission
are an invaluable strength.
2. Clothie is going to be the pioneer of its market, being the first Location-Based Fashion Shopping
App ever developed, which is a substantial advantage against current and future competition.
3. Clothie makes shopping fun, easy and interacting. Users will have the possibility to scroll
through the list of pictures of the Clothie’s feed (like they do on Instagram), find the right
product, and then decide to purchase (or book) directly via the app or by visiting the store.
Retailers will have at their disposal a powerful but easy-to-use tool that allows their stores to
increase brand awareness, digitalize their business and, in case they already have an e-
commerce, to forget about annoying returns. There isn’t any other platform that offers these
advantages to fashion retailers.
4. Clothie is open to any fashion retailer who wants to join its community. Unlike other online
fashion services, the verification process to open an account is fast and easy. If Clothie’s security
policies are respected (i.e. the legitimacy of the applying store) the registration becomes
immediately effective. This creates an enormous number of stores that can start using the
platform.
Business Plan of Clothie
27
5. Clothie is built to be scalable. Once the App is created, the operations will take off in Lisbon
and Porto. Expanding the business to more European countries is a necessary condition to
achieve exponential growth, and the asset-light nature of its business model will make this
process faster and smoother.
9.2 Weaknesses of Clothie
1. Starting a business from zero is never easy. Even though Clothie’s team will be selected in
order to develop the product without (or with a few) external costs, it does need external
financial support in order to grow rapidly enough to outdo the competitors.
2. Clothie lacks brand awareness.
3. The team of Clothie is still incomplete. Finding professional and trustful partners can be
challenging and time-consuming.
9.3 Opportunities for Clothie
1. Lisbon is the new European entrepreneurial hub. The perfect spot to find partners, investors,
and organizations that can help Clothie’s ideas to take off.
2. Portugal is facing an incredible growth in the tourism sector and, as will be explained in the
next sections, tourists are considered one of the primary audiences to target.
3. Thousands of fashion retailers all over Europe do not have an e-commerce or do not use a
proper tool that enhances their virtual/physical traffic.
4. As history teaches, trends end; a wave of nonconformism with a tendency to shop from new
undiscovered stores instead of choosing one of the repetitive brands, might characterize the
near future - Clothie wants to foster this process.
5. Scrolling is the new passive art. Millions of people spend their free time scrolling pictures on
their smartphones, without even realizing it.
Business Plan of Clothie
28
9.4 Threats to Clothie
1. In order to promote their products, retailers need to take pictures and post them on Clothie’s
main feed. Images with low resolution, wrong contrast, or any other discrepancy, would
provide a lousy first-impression, causing disinterest among the Individual Users. Thus, the
user experience is strongly related to the retailers’ photo performances.
2. Enjoying a Blue Ocean is a temporary process. Soon after launching, competitors will try to
emulate Clothie’s unique features.
3. Stores might not trust the service, or prefer to keep their advertising strategies, instead of
switching to Clothie.
4. Retailer Users might spam the platform, posting too many pictures and making the user
experience disappointing.
5. Individual Users can book or buy a product through the App. If they book a product and do
not show up in the store to try it on, they might cause a potential loss to the store.
Source: the author, 2018
Figure 8: SWOT Analysis
Table 36: Clothie's SegmentationFigure 176: SWOT Analysis
Table 37: Clothie's Segmentation
Table 38: Clothie’s Market TargetTable 39: Clothie's SegmentationFigure 177: SWOT
Analysis
Table 40: Clothie's SegmentationFigure 178: SWOT Analysis
Table 41: Clothie's Segmentation
Table 42: Clothie’s Market TargetTable 43: Clothie's Segmentation
Business Plan of Clothie
29
10. Goal Formulation
Once that strengths, weaknesses, opportunities, and threats of Clothie are defined, it is time to analyze
the possible strategic moves that allow the service to take advantage of the current internal and
external conditions. Thus, through the Goal Formulation, strengths and opportunities (the positive
sides of the equation) will be matched, while weaknesses will be minimized, and threats avoided.
10.1 Matching Strengths to Opportunities
1. Clothie is going to be the pioneer of the location-based fashion market; to gain benefits from
this significant advantage it needs to be developed in an open-minded, international context
that guarantees acceptance and enthusiasm from day one. Headquartering Clothie in the
Portuguese capital means joining a fast-growing economy, facing one of its most dynamic
moments in the last decades.
2. The digitization of a business is an essential step towards the development of an efficient
market strategy. However, many fashion retailers still do not offer more than a website
reporting basic info. Facebook, Instagram, and other social media are easy to set up, but
transforming ‘likes’ into store traffic and sales is not simple. Many fashion e-commerce (i.e.
Asos and Farfetch), select a limited number of stores to include in their platform, leaving the
rest of the applicants empty-handed. Clothie fills this gap between accessibility, ease of use,
and sales-driven approach, giving a chance to any licit fashion retailer to benefit from its
smooth and incisive tool.
3. Although fashion giants, Inditex on top of them all, operate on innovative logistic systems
that allow their branches to exhibit every week new collections, wearing their piece of clothing
has become less and less special. Trends change and a return to non-conformism and
differentiation is likely to happen in the future. This is already true in specific situations such
as the case of an individual looking for a unique present to give to a friend, or a tourist eager
to buy a local gift as a memory of a journey. Clothie facilitates this process, and aims to
become the first solution for people willing to purchase something diverse.
4. People spend hours scrolling on their smartphones. They like to consult lists of pictures, and
then decide to zoom on a single post or keep scrolling; what if those images represent fashion
Business Plan of Clothie
30
products they can find around their current location? This is what Clothie offer to its
Individual Users.
10.2. Minimize Weaknesses
1. Forming a professional and dedicated team, as well as getting enough funds to do not lose the
momentum are tough but vital challenges to take on. Being a pioneer of a market and having
a revolutionary idea does not necessarily bring companies to succeed: investors invest in
people first of all. Clothie’s recruitment process must secure the company with talented and
motivated people; specialists who have the necessary skills to outperform their tasks, that
share Clothie’s vision, and that want to contribute to its mission. If these conditions are
satisfied, external funding will be a direct consequence of the efficient job of the team, more
than an investor-scouting campaign. As said, the city of Lisbon can only bring positivity to
this matter; Portuguese universities are among the best in Europe, forming young talents ready
to import value to new or established companies. At the same time, investors and VCs from
all over the world are focusing their attention on the Portuguese capital, giving the opportunity
to local entrepreneurs to show their capabilities.
2. The initial lack of brand awareness is the most shared issue among start-ups. Luckily enough,
being travelers the primary target of the business, Clothie will capitalize on the fast-growing
and record-breaking Portuguese tourism, that has seen an important increase during recent
years. Sponsoring the platform by building relationships with travel-blogger and tourism
agencies is the ideal strategy to expand Clothie’s audience.
10.3 Avoid Threats
1. Fashion retailers are the ones in charge of posting pictures on the platform. As a result, the
quality of the user experience is mostly determined by them. To contain the risk of a
disorganized and unpleasant result, Clothie will provide online and offline tutorials, in order
to facilitate the uploading process and maintain a smooth and linear App interface.
2. Future competitors will try to emulate Clothie’s business model. As mentioned in the Internal
Analysis, Clothie currently benefits from a temporary competitive advantage; thus, the best
way to avoid this threat, consists in developing the business at a fast rate, capitalizing on
Business Plan of Clothie
31
external investments. Many examples of successful geolocation-based startup (i.e. Zomato)
have launched their services with the intent to create a density of users within a restricted area.
Clothie will follow the same approach, necessary to create a positive user experience since its
first release on the market.
3. Retailers might not trust Clothie in a first moment: frauds are daily occurrences, it is hard to
blame the skepticals. Offering a freemium service will allow them to start using the product
for free, and then decide to upgrade or not to one of the paid plan available.
4. Retailer Users might also post too many pictures over a short period of time, cutting off the
visibility of other users. On this regard, it has been decided to apply a maximum limit of
pictures per day, number that changes based on the subscription plan selected. Accurate
information about the plans available can be consulted in the Price section of the Marketing
Mix.
5. Last but not least, Individual Users might use the ‘book’ function and then neglect their
obligations. Using the ‘book’ function allows Individual Users to reserve a piece of clothing
they like, avoiding the chances of missing out – therefore creating scarcity. Once booked, the
retailer must keep the item available for the user, in order to let him/her visit the store, try the
garment on, and then decide whether to purchase it or not. Introducing a booking fee and a
limited booking time will prevent Individual Users to overbook products without concluding
purchases – situation that would cause an offense both Retailer and Individual Users.
Business Plan of Clothie
32
11. STP Model
The STP Model is a marketing process based on three different steps: segmentation, targeting, and
positioning. Companies segment their market to identify clusters of potential customers and
then target those customers for different marketing communications, which are designed
to position the company’s offering and brand in a unique place in the customers’ mind (White, 2014).
11.1 Segmentation
Clothie cannot be all things to all people. Market segmentation allows to divide potential clients into
groups of subjects with similar characteristics and needs. Clothie wants to offer its features to all
fashion retailers, regardless of their size, location, or designation. Thus, in this section, attention will
be focused on the most challenging group, the Individual Users.
The four major criteria to segment Clothie’s Individual Users are identified in demographic,
geographic, psychographics and socio-economic, through which five specific variables have been
defined: age, gender, region, lifestyle, and income level.
Source: the author, 2018
Criteria
Variable
Demographic
1. Age
2. Gender
Geographic
3. Region
Psychographic
4. Lifestyle
Socio-Economic
5. Income Level
Table 3: Clothie's Segmentation
Table 54: Clothie’s Market TargetTable 55: Clothie's Segmentation
Table 56: Clothie’s Market Target
Figure 184 : Clothie's Buyer PersonasTable 57: Clothie’s Market
TargetTable 58: Clothie's Segmentation
Table 59: Clothie’s Market TargetTable 60: Clothie's Segmentation
Business Plan of Clothie
33
11.2 Targeting
Based on the determined criteria, it is possible to shape Clothie’s market target. Demographic,
geographic, psychographic, and socio-economic variables are defined in Table 4.
Source: the author, 2018
- Age: The minimum required age to register an account on the main App stores (Google Play,
Apple Store, Windows Store) is 13. However, considering the nature of the business, a more
appropriate target is 18-45.
- Gender: Both male and female can be targeted, but there is proof of how women are more
inclined to purchase fashion products than man, as well as using social media to look for new
apparel trends (Thomas, 2018).
- Region: Clothie will be launched in Portugal, but the next objective is to reach the leading
western European countries. Thus, the initial targets will be Portuguese residents and the
international tourists that will visit the country – providing advertising in Portuguese and
English languages.
Criteria
Variable
Target
Demographic
1. Age
2. Gender
1. 18 – 45
2. Female / Male
Geographic
3. Region
3. Portugal + Global Visitors
Psychographic
4. Lifestyle
4. Frequent Traveler
5. Fashion Enthusiast
Socio-Economic
5. Income Level
6. Medium - High
Table 4: Clothie’s Market Target
Figure 191 : Clothie's Buyer PersonasTable 73: Clothie’s Market Target
Figure 192 : Clothie's Buyer Personas
Figure 193: The Four Action Framework applied to ClothieFigure 194 :
Clothie's Buyer PersonasTable 74: Clothie’s Market Target
Figure 195 : Clothie's Buyer PersonasTable 75: Clothie’s Market Target
Figure 196 : Clothie's Buyer Personas
Figure 197: The Four Action Framework applied to ClothieFigure 198 :
Clothie's Buyer Personas
Figure 199: The Four Action Framework applied to Clothie
Figure 200: Strategy Canvas of the Online Fashion IndustryFigure 201: The
Four Action Framework applied to ClothieFigure 202 : Clothie's Buyer
Personas
Figure 203: The Four Action Framework applied to ClothieFigure 204 :
Clothie's Buyer PersonasTable 76: Clothie’s Market Target
Business Plan of Clothie
34
- Lifestyle: The primary target is formed by fashion enthusiasts and frequent travelers. Fashion
enthusiasts are interested in buying trendy apparel items, and Clothie’s platform will facilitate
their search, presenting every day new purchase opportunities. Frequent travelers can use
Clothie to find local fashion shops during their trips, and purchase unique products for them
or their loved ones. A combination of the two, a frequent traveler passionate about fashion
represents the perfect target user.
- Income Level: Even though the worst is over, the economic crises which most European
countries have faced over the last years still have an important impact on customers’ behavior.
Because of this, it is advisable to focus the attention on the wealthiest part of the population,
who can afford to spend extra money in accessories and apparel - two of the product categories
most afflicted by the recent times of recession.
11.2.1 Buyer Persona
To better pinpoint Clothie’s market target, the next step is to give shape to two possible Buyer
Persona, the ideal users of the service. Let’s consider two potential profiles, Ana and Michael.
Source: the author, 2018
Figure 9: Clothie's Buyer Personas
Figure 210: The Four Action Framework applied to ClothieFigure 211 : Clothie's Buyer Personas
Figure 212: The Four Action Framework applied to Clothie
Figure 213: Strategy Canvas of the Online Fashion IndustryFigure 214: The Four Action Framework
applied to ClothieFigure 215 : Clothie's Buyer Personas
Figure 216: The Four Action Framework applied to ClothieFigure 217 : Clothie's Buyer Personas
Figure 218: The Four Action Framework applied to Clothie
Figure 219: Strategy Canvas of the Online Fashion IndustryFigure 220: The Four Action Framework
applied to Clothie
Figure 221: Strategy Canvas of the Online Fashion Industry
Business Plan of Clothie
35
Ana represents a ubiquitous figure of recent years, a woman in career that dedicates most of her free
time to the family. She would like to spend more time in shopping malls, but understands that it is
not the best way to make her family enjoying the weekend. Using Clothie, Ana can see, reserve, and
buy unique fashion products, taking advantage of any occasion, including her lunch break at work.
Michael visited dozens of countries, always incurring in the same problem: he cannot find unique
gifts for his parents and friends. Fashion retailers located in the main streets are always the same
ordinary brands available all over the world, and this leads him to frustration - he prefers to spend his
time visiting some monuments rather than looking for apparel stores. Using Clothie, Michael can find
the right presents in a matter of minutes, maybe on the sofa, after a long day spent visiting museums.
11.3 Positioning
The next step is to position Clothie in the market, by designing the company’s offering to create a
unique place in the mind of its customers (Kotler and Keller, 2012).
On this regard, Clothie wants to be considered an “Innovative service that, not only helps its users to
find unique fashion products around them, but support local retailers in gaining traction within their
sector, today more than ever ruled by a few giant corporations”.
12. Strategy Definition
12.1 The Four Action Framework
As described in the Literature Review, the Four Action Framework is helpful to create or to test a
compelling value curve, helping the business to stand out of the competition.
The first step consists in identifying the factors taken for granted by the industry - that should be
eliminated. As previously analyzed, Clothie’s competitors set up strict access limits, allowing only a
few selected retailers to benefit from their offer. Clothie eliminates these hurdles, placing all its
customers on the same level by setting up low entry barriers.
Secondly, it is necessary to recognize the factors that should be reduced well below the industry’s
standard. Clothie promotes in-store shopping, useful to avoid a common double issue of e-commerce
Business Plan of Clothie
36
fashion businesses: the dissatisfaction of the consumers when trying on their new clothes, and the
annoying returns (up to 40% of the total sales) that every year weight negatively on business
performances (Reagan, 2016).
Then, it is crucial to determine the factors that should be raised well above the industry’s standard.
Clothie brings Individual Users to have great fun while shopping for local fashion; this aspect
differentiates the platform from any other competitors. Fashion e-commerce websites often lower
their performances when switching from a desktop to a mobile device, due to the apparent differences
in screen sizes, making the products’ selection process slow and annoying. Clothie raises the mobile
entertainment, with a new and fun way of visualizing and purchasing products, inspired by the
Instagram feed.
Finally, the last step consists in identifying the factors the market lacks, and therefore should be
created. The geo-location feature is a focal point for Clothie: there are many successful start-ups that
based their strategy on the same feature (an example is Zomato, a bright and easy-to-use app that
allows users to check restaurants and bars around them), but none of them covered the fashion
industry – creating a gap Clothie will fill.
Source: the author, 2018
Figure 10: The Four Action Framework applied to Clothie
Figure 236: Strategy Canvas of the Online Fashion
IndustryFigure 237: The Four Action Framework applied to
Clothie
Figure 238: Strategy Canvas of the Online Fashion Industry
Figure 239: Figure 240: Strategy Canvas of the Online Fashion
IndustryFigure 241: The Four Action Framework applied to
Clothie
Figure 242: Strategy Canvas of the Online Fashion
IndustryFigure 243: The Four Action Framework applied to
Clothie
Figure 244: Strategy Canvas of the Online Fashion Industry
Figure 245: Figure 246: Strategy Canvas of the Online Fashion
Industry
Business Plan of Clothie
37
12.2 The Strategy Canvas
After having examined each factor related to Clothie and the whole fashion market, it is now the time
to design a Strategy Canvas to capture a snapshot of the current market’s competition, and to realize
if a Blue Ocean has actually been created.
The factors of competition to be considered in this specific Strategic Canvas are:
- Inventory Availability: How big is the Inventory? How likely is it to find on stock the
product visualized by the users on their smartphone screens? Local retailers’ stocks are
generally very limited, especially if considering small shops. Thus, Clothie does not guarantee
to its Individual Users a large number of pieces available for every single item – this can look
like a negative aspect, but actually creates scarcity and stimulates users to use the ‘book’ and
the ‘buy’ options illustrated in depth in the Marketing Mix.
- Product Selection: How selective is the platform in deciding what product to make available
for the Individual Users? Not selective, Retailer Users have 100% responsibility of choosing
the fashion products to post.
- Retailer Selection: How selective is the platform in deciding which retailers are going to use
the service? Clothie sets up low entry barriers; any licit fashion retailer can join the service.
- Product Presentation: What is the quality of the pictures describing the products? While
some competitors offer 360° view HQ pictures, Clothie’s product presentation is wholly
entrusted to the Retailer Users.
- Desktop Performances: How well the service performs on desktop devices? Clothie’s App
is designed to run on mobiles, to fully exploit its geo-location features. However, a desktop
version might be developed in a second moment.
- Mobile Performances: How well the service performs on mobile devices? Clothie’s App will
offer an outstanding interface for mobile devices, that permits to browse pictures and buy
products in a quick and straightforward way.
- User Entertainment: How much fun the Individual User experiences while using the service?
Scrolling the Instagram feed is one of the favorite pastimes of millennials. Clothie’s
experience will resemble the Instagram feed, but the pictures shown will represent apparel
products available in nearby stores.
- Ease of Use: How easy is to Buy/Sell product on the platform? Three clicks, that is all needed
to complete a transaction and buy/book an item.
Business Plan of Clothie
38
- Products Differentiation: How differentiate is the selection of products shown on the
platform/website? Clothie’s feed will show products posted by a potentially unlimited number
of Retailer Users, thus the range of products offered is strongly diversified.
- Geolocation Features: How real-time location features improve the quality of the User
Experience? The real-time position of the user drives Clothie’s algorithm to show determined
fashion products rather than others. Thus, this is a feature of central importance.
Once these factors have been analyzed, it is possible to draw the Strategic Canvas of the Online
Fashion Industry, represented in Figure 11. As noticeable, Clothie’s business model presents all the
requisites needed to create a Blue Ocean and differentiate its offer from the competition.
Source: the author, 2018
Figure 11: Strategy Canvas of the Online Fashion Industry
Figure 262: Figure 263: Strategy Canvas of the Online Fashion Industry
Figure 264: Clothie’s Logo
Figure 265: Example of Promotional FlyerFigure 266: Figure 267: Strategy Canvas of the Online Fashion
Industry
Figure 268: Figure 269: Strategy Canvas of the Online Fashion Industry
Figure 270: Clothie’s Logo
Figure 271: Example of Promotional FlyerFigure 272: Clothie’s Logo
Figure 273: Example of Promotional Flyer
Table 80 - Implementation PlanFigure 274: Example of Promotional FlyerFigure 275: Clothie’s Logo
Figure 276: Example of Promotional FlyerFigure 277: Figure 278: Strategy Canvas of the Online Fashion
Industry
Figure 279: Figure 280: Strategy Canvas of the Online Fashion Industry
0
2
4
6
8
10
Scoring
Factors of Competition
Clothie
Retail
Leaders
Asos
Farfetch
Business Plan of Clothie
39
13. Marketing Mix
13.1 Product
Clothie helps local retailers to enhance their online presence, as well as fashion enthusiasts to discover
always new products, brands, and stores. To best describe its features, it is crucial to separately
consider the two different interfaces of the App: the one dedicated to Retailer Users, and the one
dedicated to Individual Users.
Source: the author, 2018
13.1.1 Retailer User Interface:
- Registration: Any retailers can register their store for free, via Clothie’s website or its official
App. To complete the registration, the applicant needs to provide information that permits the
verification of its legitimacy.
- Plan Selection: Once the Retailer is accepted, it needs to decide whether to start using the
free version of the app or to subscribe for one of the different paid plans available, which
unblock multiple additional features. The different subscription options, together with their
prices, are described under the Price section of the Marketing Mix.
- Posting: Now that the store is registered, it will be able to post more or less daily pictures,
depending on which plan it has subscribed for. When posting, the retailer can add tags to its
pictures (i.e. gender, sizes available, type of item) that will make easier for Individual Users
to find their products.
Figure 12: Clothie’s Logo
Figure 287: Example of Promotional FlyerFigure 288: Clothie’s
Logo
Figure 289: Example of Promotional Flyer
Table 81 - Implementation PlanFigure 290: Example of
Promotional FlyerFigure 291: Clothie’s Logo
Figure 292: Example of Promotional FlyerFigure 293: Clothie’s
Logo
Figure 294: Example of Promotional Flyer
Table 82 - Implementation PlanFigure 295: Example of
Promotional Flyer
Table 83 - Implementation Plan
Table 84: Sales Forecast 2019: Retailer Users Subscription
PlanTable 85 - Implementation PlanFigure 296: Example of
Promotional Flyer
Table 86 - Implementation PlanFigure 297: Example of
Promotional FlyerFigure 298: Clothie’s Logo
Figure 299: Example of Promotional FlyerFigure 300: Clothie’s
Business Plan of Clothie
40
- Interacting: All Individual Users around the store will now be able to see the products on
their smartphone screen, and interact with them as described in the Individual User section
below.
13.1.2 Individual User Interface:
- Registration: Any individual can register a profile on the Clothie platform, for free, via
Clothie’s website or its official App. To complete the registration, the user only needs to
update their basic info (i.e. name, age, country, city).
- Range Selection: After that, the Individual User will select the maximum distance within how
he/she is interested in visualizing products: choosing for example 2 km, the feed will show
only products published by retailers located within 2 km from her/his current position.
- Filters: The Individual User can add filters to its researches, like gender (male/female/unisex),
size (i.e. S/M/L), item (i.e. t-shirt, dress, shoes). So, if the user is looking for something
specific, it will be even easier to find it.
- Like: The Individual User can also give a “like” to a product posted: this will provide valuable
information about the user’s preferences. Clothie’s algorithm will memorize the brand, the
shop and the type of item liked, and use these data to optimize the posts showed to that specific
user.
- Book Option: When interested in a product, the Individual User can decide to use the ‘book’
option. The book option allows to reserve a product for a fixed amount of time, under the
payment of a booking fee. By booking the product, an automatic message will be sent to the
Retailer User, indicating all the characteristics of the requested item (i.e. size, color). If the
product is still available, the retailer will accept the request, and the user will automatically
be billed with the booking fee. For detailed information about the booking fees, consult the
Price section in the Marketing Mix.
- Buy Option: The process is the same as the book option, so it is indispensable the retailer’s
confirmation to consider a purchase successfully concluded. In this case, the entire price will
be paid directly through Clothie App with any credit/debit card or voucher gift.
- Shipping: Some stores will offer free shipping, others may charge a fee, while others might
not offer the service at all; in this last case, the Individual User needs to visit the store and
collect the product personally.
Business Plan of Clothie
41
Source: the author, 2018
Figure 13 - Clothie’s App interface
Figure 306 - Clothie’s interface: Main Feed
Figure 307 - Clothie’s interface: Main Feed
Figure 308 - Clothie’s interface: Main Feed
Figure 309 - Clothie’s interface: Main Feed
Figure 310 - Clothie’s interface: Main Feed
Figure 311 - Clothie’s interface: Main Feed
Figure 312 - Clothie’s interface: Main Feed
Business Plan of Clothie
42
13.1.3 Review System
To promote fairness and respect among Clothie’s users, it has been decided the introduction of a
Review System. After any operations (buy/book) is completed, the Individual User will be able to
leave a review and rate (choosing from one to five stars) the retailer. The rating will be visible to all
Clothie’s users and will have a strong impact within the platform algorithm: retailers with poor scores
are going to have less visibility in the main feed, compared to the ones with good performances.
Actions that can produce bad reviews and poor rating against retailers are, for example:
- Low quality/price ratio.
- Not respecting the booking of an Individual User (i.e. by selling the product to someone else
while a booking operation was active).
- Long/delayed shipping time.
13.2 Price
13.2.1 Retailer User Price List
As already described, Clothie offers freemium access to its customers. Thus, retailers have the
possibility to join the platform for free, but they will need to subscribe to a plan in order to unlock
premium features. This decision allows Clothie to gain as many Retailer Users as possible, from the
very first day of operativity, and grow the number of paying users at a sustainable pace, together with
the development of the platform.
In order to formulate the price list, the initial idea was to create a survey, subsequently understanding
how much the retailers would have been happy to pay for the service. However, the survey process
has been intricate, since the only point of contact were (in most cases) sales assistants. The real target
of the survey were business owners - but their availability has been proven to be scarce. As a result,
since Clothie undertakes a freemium approach, it will be sufficient to analyze the future results and
users’ feedbacks (embracing the Lean Startup model) to understand if the proposed prices are
appropriate. This is a common approach operated by Start-ups, which often find difficult to predict
how the audience will react to their offer.
Business Plan of Clothie
43
Table 5: Retailer User Price List
Free
Basic
Regular
Premium
Daily Posts
1
2
5
10
Product Filters
✗
✓
✓
✓
In-App Chat
✗
✗
✓
✓
Buy – Book
Features
✗
✗
✓
✓
Show External
Website Link
✗
✗
✗
✓
Monthly Fee
Free
€9.99
€19.99
€29.99
Source: the author, 2018
Table 5 describes the different features unlocked by the four plans, and their corresponding monthly
fees. To make the chart as comprehensive as possible, the following description delineates each of
the listed features:
- Daily Posts: Number of daily pictures a Retailer User can post on the platform.
- Product Filters: Allows retailers to apply filters (such as size available and type of item) to
the posts, enhancing the visibility of their products.
- In-App chat: Allows Individual Users to send direct messages to the stores, in order to ask
for information about a product, or for any other necessity.
- Buy/Book Features: Allow an Individual User to book for a limited time, or to buy instantly
via the platform, the selected product.
- Show External Website Link: Allows an Individual User to visualize and access the official
website of a selected store, directly through the App.
Business Plan of Clothie
44
13.2.2 Individual User Price List
To describe the possible costs incurred by Individual Users, it is necessary to consider only three
factors: the cost of registration, the booking fees, and the buying fees.
Table 6: Individual User Price List
Source: the author, 2018
Description of table 6 follows:
- The registration is free, for all users, forever.
- The booking fees are necessary to discourage Individual Users to book a product and don’t
show up at the store, causing inconveniences to retailers. The fees have a fixed value of
€4/hour, and the maximum booking time is set to 3 hours.
- The Buying Fees are, together with the paid subscription plans and the booking fees, the
primary revenue stream for Clothie – with a fixed 10% commission for every transaction
completed through the platform.
13.3 Distribution
A smartphone and an internet connection, that’s all needed to start using the service. Clothie will be
available on Apple Store, Play Store and Windows App Store. Users can also register via their
desktop, by connecting to Clothie’s official website.
Registration
Free
Booking Fees
€4/hour for a maximum of 3 hours.
Buying Fees
10% Supplement on Purchase Price
Business Plan of Clothie
45
13.4 Promotion
Clothie’s main weakness, as described in the SWOT Analysis, is its lack of brand awareness. Thus,
intense investments in advertising represent one of the core moves to approach the market in the right
manner. Over the last decade, there’s been a firm shift from offline to online promotions, but
Clothie’s marketing strategy will comprehend both methods.
Source: the author, 2018
13.4.1 Online Promotion
Using social networks, webzines, innovation blogs, and media influencers is the most efficient way
to run successful online campaigns and build an active audience. Facebook and Instagram are two of
the most used social networks, registering a total of 3 billion active users worldwide (Statista, 2018).
Creating a page on these two social media is an essential step to enhance users’ trust and interest.
Facebook and Instagram advertisements can be both managed from a single application, called ‘FB
Figure 14: Example of Promotional Flyer
Table 88 - Implementation PlanFigure 313: Example of
Promotional Flyer
Table 89 - Implementation Plan
Table 90: Sales Forecast 2019: Retailer Users
Subscription PlanTable 91 - Implementation
PlanFigure 314: Example of Promotional Flyer
Table 92 - Implementation PlanFigure 315: Example of
Promotional Flyer
Table 93 - Implementation Plan
Table 94: Sales Forecast 2019: Retailer Users
Subscription PlanTable 95 - Implementation Plan
Table 96: Sales Forecast 2019: Retailer Users
Subscription Plan
Table 97: Sales Forecast 2019: Individual Users
OperationsTable 98: Sales Forecast 2019: Retailer
Users Subscription PlanTable 99 - Implementation Plan
Table 100: Sales Forecast 2019: Retailer Users
Subscription PlanTable 101 - Implementation
PlanFigure 316: Example of Promotional Flyer
Table 102 - Implementation PlanFigure 317: Example
of Promotional Flyer
Business Plan of Clothie
46
Ads’. Here it’s possible to target an audience choosing from dozens of criteria, comprehending the
ones analyzed in the ‘targeting section’ of this project, like: demographic, geographic, psychographic,
socio-economic, and behavioral; this allows a specific and accurate selection of the public that will
visualize the contents posted on Clothie’s page.
Nowadays, establishing contacts with influencers represent a must to promote products on social
media. These people are considered ‘web-stars’ and are followed by millions of people every day.
Attracting their followers around one or more topics (i.e. fashion, sports, travels, luxury), they make
things easier for companies willing to grow in popularity. Clothie will focus a substantial part of its
strategy on finding and building relationships with the most active influencers in the areas of fashion
and travels, trying to acquire an engaged audience.
Webzines and innovation blogs such as Techcrunch.com and Shifter.pt are among the most searched
categories of website, giving their visitors access to the newest updates on technological development.
With Clothie being advertised through these communication channels, a public of innovation
enthusiasts will get to know the ideas behind the company, and the mission it wants to undertake.
Moreover, in order to gain a relevant number of Retailer Users since the very first day of business,
outbound and inbound lead generation strategies will be applied right before the first official release
of the App, in order to guarantee a minimum client base of 50 users in the area of Lisbon and Porto.
These pre-selected retailers will be contacted via e-mail, cold calling or in person, describing all the
features of the service, and offering a 1-month free trial of Clothie Premium, in order to create
immediate traffic on the platform.
13.4.2 Offline Promotion
Getting out of the office to show the skills, the commitment, and the passion of the team, is an
important move towards the aim of building customers’ trust. Business festivals, innovation fairs and
tech conferences are great opportunities to create connections with hundreds of investors and other
start-uppers. Attending these events can be expansive, but will bring Clothie under the spotlight,
capitalizing on the ‘temporary competitive advantage’ it can currently benefit from. Setting up
physical promotion stands in the most strategic points of Lisbon, such as the Portela Airport, the main
shopping malls, and in the proximity of attractions and universities, will guarantee to sponsor the
service to different target groups, included tourists, shopping lovers, and young adults.
Business Plan of Clothie
47
14. Project Planning & Implementation
Launching a successful start-up is certainly challenging, but without a clear and smart plan, it is
simply impossible. Table 7 and 8 describe Clothie’s operations during its first year of business; more
information and required clarifications follow.
Source: the author, 2018
1. Hiring Process: Around two months will be dedicated to creating a team of young talents and
experienced professionals. This is probably the most crucial moment for Clothie: a wrong
selection would cause severe issues to the development of the project, endangering its
outcome. Skilled programmers and expert marketers will be working closely to deliver the
best service possible to the final users.
2. Team Building & Training: Once the team is formed, the first week will be spent on team
building, in order to share relevant experiences and get ready for the new adventure - Clothie
wants to become a second family for each of its members. During this week, the entire
business plan will be analyzed, discussed and (if necessary) modified. Every member needs
to have a deep understanding of the business before starting off the job.
Nov-18 Dec-18 Feb-19 Mar-19 May-19 Jul-19 Aug-19 Oct-19 Dec-19
Hiring Process
Team Training
MVP Development
Event Participation & Fundraising
Selection of first 50 Retailers
Introduction to selected Retailers
Clothy v1.0 Development & Official Release
Social Media, Blogs & SEO
Inbound and Outbound Lead Generation - Retailers
Offline Avertising - Physical Stands
Online Advertising - Promote Direct Download
Performance Analysis and Results
Table 7: Implementation Plan
Table 107: Sales Forecast 2019: Retailer Users Subscription PlanTable 108 - Implementation Plan
Table 109: Sales Forecast 2019: Retailer Users Subscription Plan
Table 110: Sales Forecast 2019: Individual Users OperationsTable 111: Sales Forecast 2019: Retailer Users
Subscription PlanTable 112 - Implementation Plan
Table 113: Sales Forecast 2019: Retailer Users Subscription PlanTable 114 - Implementation Plan
Table 115: Sales Forecast 2019: Retailer Users Subscription Plan
Table 116: Sales Forecast 2019: Individual Users OperationsTable 117: Sales Forecast 2019: Retailer Users
Subscription Plan
Table 118: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 119: Total Sales Forecast 2019Table 120: Sales Forecast 2019: Individual Users OperationsTable 121: Sales
Forecast 2019: Retailer Users Subscription Plan
Table 122: Sales Forecast 2019: Individual Users OperationsTable 123: Sales Forecast 2019: Retailer Users
Subscription PlanTable 124 - Implementation Plan
Table 125: Sales Forecast 2019: Retailer Users Subscription PlanTable 126 - Implementation Plan
Table 127: Sales Forecast 2019: Retailer Users Subscription Plan
Business Plan of Clothie
48
3. MVP Development: The Programmers will have one week to develop Clothie’s Minimum
Viable Product. The MVP is a first concept of the App, useful to show the product and its
functions to VCs and to the first 50 selected Retailer Users.
4. Event Participation & Fundraising: VCs tend to invest in harmonious and competent teams
able to provide innovative and valuable solutions. From this, it comes the decision to look for
external funding only once Clothie team and MVP are completed. The participation of Clothie
in competitions, fairs and events dedicated to technology and innovation must have a
substantial impact on the audience, highlighting the problems it solves, the value it creates,
the competitiveness of the team, and the numbers it will generate.
5. Selection of first 50 Retailers: At the same time, fifty lucky fashion retailers from Lisbon
and Porto will be selected on the base of their online relevance and audience, and will benefit
from the 1-month free trial described in the Promotion section.
6. Introduction to selected Retailers: The fifty selected retailers will be introduced to the
platform, using the MVP to show the different features and explaining the advantages they
will gain by using the service. They will receive a notification when the first version of the
official App will be released on the leading digital distribution platforms.
7. Product Release: In the meantime, right after the development of the MVP, Clothie’s
programmers will work towards the realization of the first official version of the App. Some
might consider too short the 1-month period given to the programmers to deliver the product,
however quoting the co-founder of LinkedIn Reid Hoffman: “If you are not embarrassed by
the first version of your product, you have launched too late”. The first version of Clothie
does not need to be perfect, it needs to be used and improved following users’ feedback,
testing the market from its early release. From now on, Clothie’s Development Team will
work to fix bugs and implement into the platform the most relevant feedbacks, by publishing
weekly software updates.
8. Online Presence Enhancement (Social Media, Blogs & SEO): To build a strong brand
identity, it is essential to appear in front of potential customers as many times as possible. The
‘Marketing Rule of Seven’ states that your prospects need to come across your promotion at
least seven times before they can be converted into clients. Applying social media, blogs and
SEO strategies is the most productive way to be discovered by potential customers.
9. Inbound and Outbound Lead Generation - Retailers: fifty stores might be enough to
interest Lisbon and Porto residents (and tourists) at first glance, but Clothie needs to expand
Business Plan of Clothie
49
its paying audience to grow in revenues quickly. Therefore, traditional e-mails and cold
calling, together with more recent inbound lead generation strategies, will be utilized to build
Clothie’s customer base.
10. Offline Advertising – Physical Stands: Setting up physical promotion stands in the most
strategic points of Lisbon, as described in the Offline Promotion section.
11. Online Advertising – Promote Direct Download: Together with the physical stand’s
campaign, this is one of the crucial parts of Clothie’s customer development. When the App
is ready for the download on the App Stores, it needs to be continuously pushed to potential
users. To do so, the creation of always innovative, interesting, and entertaining media contents
is critical.
12. Performance Analysis and Results: At the end of the year, the number of new
subscribers/daily active users, financial indicators, and other significant factors will be
analyzed and interpreted, in order to implement new tailored strategies for year 2.
Table 8: Project Planning
Task Name
Start Date
End Date
Days
Hiring Process
01/11/2018
31/12/2018
60
Team Training
07/01/2019
14/01/2019
7
MVP Development
14/01/2019
21/01/2019
7
Event Participation & Fundraising
14/01/2019
21/06/2019
158
Selection of first 50 Retailers
14/01/2019
21/01/2019
7
Introduction to selected Retailers
21/01/2019
04/02/2019
14
Clothy v1.0 Development & Official Release
21/01/2019
20/02/2019
30
Social Media, Blogs & SEO
21/01/2019
01/05/2019
100
Inbound and Outbound Lead Generation – Retailers
25/02/2019
26/05/2019
90
Offline Advertising - Physical Stands
04/03/2019
01/12/2019
272
Online Advertising - Promote Direct Download
04/03/2019
01/12/2019
272
Performance Analysis and Results
01/12/2019
22/12/2019
21
Source: the author, 2018
Business Plan of Clothie
50
15. Economic and Financial Analysis of the investment
The Economic and Financial Analysis of the investment wants to convert into facts all the points
discussed so far, with the aim to understand if Clothie brings, other than innovation, relevant
monetary value to its shareholders.
15.1 Start-up Capital
The first topic to introduce in this section brings to a question every entrepreneur wonders before
starting a business: “where do I get the money to start?”. Many start-uppers rely on bank loans, but
interest rates can quickly transform the strategy of a potentially successful business into the first cause
of its failure; therefore this funding strategy is excluded.
Some entrepreneurs start crowdfunding campaigns, immediately delivering their products to early
adopters through platforms such as Kickstarter and Indiegogo; or undertake equity-crowdfunding
campaigns, raising capital by selling shares to private investors. Clothie offers a service that doesn’t
match the requirements of crowdfunding, since it does not deliver a physical product, and doesn’t
want to have its shares spread among a high number of unknown investors, a natural consequence of
equity crowdfunding campaigns.
The Government of Portugal offers three main incentives to help start-up founders: Portugal
Ventures, a governmental Venture Capitalist often interested in tourism-related projects;
Empreendedorismo Qualificado, that receives funds from the QREN to finance innovative projects;
Impulso Jovem a program that offers several measures to support and incentive young entrepreneurs.
Clothie wants to reach an initial investment of €200.000 (through governmental incentives, VCs, and
co-founders financing) in order to be able to pay its expenses and grow sustainably without requiring,
but not excluding, other capital increase in the subsequent five years - as assumed in the development
of the Statement of Cash Flow.
15.2 Sales Forecasts
As described in the previous chapters, Clothie will profit from two main revenue streams: the monthly
subscription fees paid by its Retailer Users, and the fixed fees applied to in-App booking and buying
operations. To make this forecast as accurate as possible, it is required to focus the attention on the
Business Plan of Clothie
51
first twelve months of activities, taking into account all the variables described in the Implementation
Plan.
Tables 9 and 10 depict the first year of business, starting from January 2019, when the hiring process
will be completed. The first two months are going to be flat, up until the first version of Clothie is
delivered to early customers. From March to June, it is forecasted a constant increment of new
Retailer Users (due to the concentration on advertising campaigns) with a subsequent decline in the
following months, resulting from the limited area in which the service will be offered during year 1.
Cancellations from the service are always taken into consideration, but offering a great value to
Retailer Users will guarantee a decreasing churn rate over time. The fear of losing the momentum,
conceding an advantage to their competitors, is likely to lead a considerable part of retailers to opt
for one of the two full-optional subscription plans (Regular and Premium), producing an increase of
value in the Average Revenue per User.
Source: the author, 2018
Buying and Booking fees represent a smaller part of the total revenues, this is especially true in the
first years of business. However, with the increment of daily active users and strengthened brand
identity, the two operations might become as profitable as the subscription plans paid by Retailer
Users. Also in this case, the growth in active users will be constant, thanks to the online and offline
promotion strategies implemented.
Table 9: Sales Forecast 2019: Retailer Users Subscription Plan
Table 133: Sales Forecast 2019: Individual Users OperationsTable 134: Sales Forecast 2019: Retailer Users Subscription
Plan
Table 135: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 136: Total Sales Forecast 2019Table 137: Sales Forecast 2019: Individual Users OperationsTable 138: Sales
Forecast 2019: Retailer Users Subscription Plan
Table 139: Sales Forecast 2019: Individual Users OperationsTable 140: Sales Forecast 2019: Retailer Users Subscription
Plan
Table 141: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 142: Total Sales Forecast 2019Table 143: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 144: Total Sales Forecast 2019
Business Plan of Clothie
52
Source: the author, 2018
Table 11 shows the complete Sales Forecast for the Year 2019, considering both revenues coming
from subscription plans and operations’ fees.
Source: the author, 2018
Table 12 illustrates the revenues coming from retailers’ subscription plans over a five-year period. A
concrete boost in subscribers is attributable to the expansion of Clothie to new countries. As described
in the Internal Analysis, Clothie can benefit from a temporary competitive advantage, which implies
the development of a quick and smart expansion strategy in order to defeat future competitors.
Table 10: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 159: Total Sales Forecast 2019Table 160: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 161: Total Sales Forecast 2019
Table 162: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 163: Total Sales Forecast 2019Table 164:
Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 165: Total Sales Forecast 2019Table 166: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 167: Total Sales Forecast 2019
Table 168: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 169: Total Sales Forecast 2019
Table 170: Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 171: Five-Year Sales Forecast: Individual Users OperationsTable 172: Five-Year Sales Forecast: Retailer Users
Subscription PlanTable 173: Total Sales Forecast 2019
Table 174: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 175: Total Sales Forecast 2019Table 176:
Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 177: Total Sales Forecast 2019Table 178: Sales Forecast 2019: Individual Users Operations
Individual Users Operarations
Table 179: Total Sales Forecast 2019
Table 180: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 181: Total Sales Forecast 2019Table 182:
Table 11: Total Sales Forecast 2019
Table 185: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 186: Total Sales Forecast 2019
Table 187: Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 188: Five-Year Sales Forecast: Individual Users OperationsTable 189: Five-Year Sales Forecast: Retailer Users
Subscription PlanTable 190: Total Sales Forecast 2019
Table 191: Five-Year Sales Forecast: Retailer Users Subscription PlanTable 192: Total Sales Forecast 2019
Table 193: Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 194: Five-Year Sales Forecast: Individual Users OperationsTable 195: Five-Year Sales Forecast: Retailer Users
Subscription Plan
Table 196: Five-Year Sales Forecast: Individual Users Operations
Table 197: Total Five-Year Sales ForecastTable 198: Five-Year Sales Forecast: Individual Users OperationsTable 199:
Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 200: Five-Year Sales Forecast: Individual Users OperationsTable 201: Five-Year Sales Forecast: Retailer Users
Subscription PlanTable 202: Total Sales Forecast 2019
Table 12: Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 211: Five-Year Sales Forecast: Individual Users OperationsTable 212: Five-Year Sales
Forecast: Retailer Users Subscription Plan
Table 213: Five-Year Sales Forecast: Individual Users Operations
Table 214: Total Five-Year Sales ForecastTable 215: Five-Year Sales Forecast: Individual
Users OperationsTable 216: Five-Year Sales Forecast: Retailer Users Subscription Plan
Table 217: Five-Year Sales Forecast: Individual Users OperationsTable 218: Five-Year Sales
Forecast: Retailer Users Subscription Plan
Business Plan of Clothie
53
If in 2019 Clothie will focus its business only within the areas of Lisbon and Porto, from the year
2020 two more countries will be approached: Italy and Spain. The key factors considered in choosing
these countries were: the volume of tourism flows, the importance given to fashion in the specific
culture, and the current economic situation. Both Italy and Spain were chosen because of their high
concentration of fashion enthusiasts and their relevant number of annual tourists (Eurostat, 2017),
with Milano internationally recognized as one of the world's leading fashion capitals.
Portugal, Spain, and Italy share similar Mediterranean economies, recently characterized by SME
suffering the hard pressure of big corporations in all sectors, including the fashion industry. The first
cities covered by the service will be the ones most visited by tourists in recent times, such as Milan,
Rome, Venice, Florence, Madrid, Barcelona, Sevilla and Valencia (Ansa, 2017; Reuters, 2018).
From the year 2022 greater attention will be given to improve the existing client base within the three
already targeted markets, and to expand the business in smaller touristic cities like Coimbra, Braga,
Naples, Bari, Bilbao, and Malaga. In Table 13, the five-year sales forecast concerning the Individual
Users operations shows how, undertaking compelling marketing strategies, also this side of the
equation can bring important profits to the company.
Finally, the complete sales forecast for the five-year period illustrates the exponential growth of
Clothie, typical of start-ups which accurately execute the subscription business model. A business
like Clothie needs to expand its boundaries at the first opportunity, gaining market share and visibility
to induce retailers and users to trust and use the service. The path starting from the Year 2023 will be
Table 13: Five-Year Sales Forecast: Individual Users Operations
Table 237: Total Five-Year Sales ForecastTable 238: Five-Year Sales Forecast: Individual Users
Operations
Table 239: Total Five-Year Sales Forecast
Table 240: Expenses Forecast 2019 - PayrollTable 241: Total Five-Year Sales ForecastTable 242:
Five-Year Sales Forecast: Individual Users Operations
Table 243: Total Five-Year Sales ForecastTable 244: Five-Year Sales Forecast: Individual Users
Operations
Table 245: Total Five-Year Sales Forecast
Table 246: Expenses Forecast 2019 - PayrollTable 247: Total Five-Year Sales Forecast
Table 248: Expenses Forecast 2019 - Payroll
Business Plan of Clothie
54
characterized by a persisting growth, resulting from the continue expansion to other European
countries.
Source: the author, 2018
15.3 Investments and Expenses
Clothie’s starting team will be composed of its two co-founders (CEO and CTO) and four employees.
The team will focus its attention on software development and marketing, in order to rapidly scale
and deliver a working platform in a matter of weeks. The decision to correspond a higher salary to
Clothie employees rather than to its executives (which for the first years of activities will receive the
minimum legal wage eligible in Portugal), represent a strong signal to the team, future partners, and
investors; the ultimate outcome is to let the company grow in revenues and profits, personal benefits
are of secondary importance. Clothie’s payroll expenses for the year 2019 are described in Table 15.
Source: the author, 2018
Table 16 outlines the importance attributed to marketing, which alone counts for more than half of
the whole overheads (excluding payroll expenses) for the year 2019. Clothie will start operating in a
co-working space, considerably reducing rental costs. Launching a startup in Lisbon is inexpensive,
the legal opening costs stand for only 360€, with less than 100€ more to be added for the handling of
Table 14: Total Five-Year Sales Forecast
Table 263: Expenses Forecast 2019 - PayrollTable 264: Total Five-Year Sales Forecast
Table 265: Expenses Forecast 2019 - Payroll
Table 266: Expenses Forecast 2019 - Other ExpensesTable 267: Expenses Forecast 2019 - PayrollTable 268:
Total Five-Year Sales Forecast
Table 269: Expenses Forecast 2019 - PayrollTable 270: Total Five-Year Sales Forecast
Table 271: Expenses Forecast 2019 - Payroll
Table 272: Expenses Forecast 2019 - Other ExpensesTable 273: Expenses Forecast 2019 - Payroll
Table 274: Expenses Forecast 2019 - Other Expenses
Table 275: Five-Year Expenses Forecast - PayrollTable 276: Expenses Forecast 2019 - Other ExpensesTable
277: Expenses Forecast 2019 - Payroll
Table 278: Expenses Forecast 2019 - Other ExpensesTable 279: Expenses Forecast 2019 - PayrollTable 280:
Total Five-Year Sales Forecast
Table 281: Expenses Forecast 2019 - PayrollTable 282: Total Five-Year Sales Forecast
Table 283: Expenses Forecast 2019 - Payroll
Table 284: Expenses Forecast 2019 - Other ExpensesTable 285: Expenses Forecast 2019 - PayrollTable 286:
Total Five-Year Sales Forecast
Table 287: Expenses Forecast 2019 - PayrollTable 288: Total Five-Year Sales Forecast
Table 15: Expenses Forecast 2019 - Payroll
Table 289: Expenses Forecast 2019 - Other ExpensesTable 290: Expenses Forecast 2019 - Payroll
Table 291: Expenses Forecast 2019 - Other Expenses
Table 292: Five-Year Expenses Forecast - PayrollTable 293: Expenses Forecast 2019 - Other ExpensesTable 294:
Expenses Forecast 2019 - Payroll
Table 295: Expenses Forecast 2019 - Other ExpensesTable 296: Expenses Forecast 2019 - Payroll
Table 297: Expenses Forecast 2019 - Other Expenses
Table 298: Five-Year Expenses Forecast - PayrollTable 299: Expenses Forecast 2019 - Other Expenses
Business Plan of Clothie
55
official paperwork. Investments in office equipment as well as in intangible assets, will be the
minimum necessary to don’t excessively weigh on Clothie’s finances.
Source: the author, 2018
Table 17 and 18 show the 5-year projected expenses. The drastic increase of costs is attributable to
several factors, such as the expansion of the business outside of Portugal, the boost in marketing
campaigns targeting different countries, the increase in the number of employees, and the willingness
to reward their effort with performance-based pay raises.
Source: the author, 2018
Table 16: Expenses Forecast 2019 - Other Expenses
Table 315: Five-Year Expenses Forecast - PayrollTable 316: Expenses Forecast 2019 - Other
Expenses
Table 317: Five-Year Expenses Forecast - Payroll
Table 318 - Five-Year Expenses Forecast: Other ExpensesTable 319: Five-Year Expenses
Forecast - PayrollTable 320: Expenses Forecast 2019 - Other Expenses
Table 321: Five-Year Expenses Forecast - PayrollTable 322: Expenses Forecast 2019 - Other
Expenses
Table 323: Five-Year Expenses Forecast - Payroll
Table 324 - Five-Year Expenses Forecast: Other ExpensesTable 325: Five-Year Expenses
Forecast - Payroll
Table 326 - Five-Year Expenses Forecast: Other Expenses
Table 327: Total Five-Year Expenses ForecastTable 328 - Five-Year Expenses Forecast:
Other ExpensesTable 329: Five-Year Expenses Forecast - Payroll
Table 330 - Five-Year Expenses Forecast: Other ExpensesTable 331: Five-Year Expenses
Forecast - PayrollTable 332: Expenses Forecast 2019 - Other Expenses
Table 333: Five-Year Expenses Forecast - PayrollTable 334: Expenses Forecast 2019 - Other
Expenses
Table 335: Five-Year Expenses Forecast - Payroll
Table 336 - Five-Year Expenses Forecast: Other ExpensesTable 337: Five-Year Expenses
Forecast - PayrollTable 338: Expenses Forecast 2019 - Other Expenses
Table 17: Five-Year Expenses Forecast - Payroll
Table 367 - Five-Year Expenses Forecast: Other ExpensesTable 368: Five-Year Expenses Forecast - Payroll
Table 369 - Five-Year Expenses Forecast: Other Expenses
Table 370: Total Five-Year Expenses ForecastTable 371 - Five-Year Expenses Forecast: Other
ExpensesTable 372: Five-Year Expenses Forecast - Payroll
Table 373 - Five-Year Expenses Forecast: Other ExpensesTable 374: Five-Year Expenses Forecast - Payroll
Table 375 - Five-Year Expenses Forecast: Other Expenses
Table 376: Total Five-Year Expenses ForecastTable 377 - Five-Year Expenses Forecast: Other Expenses
Table 378: Total Five-Year Expenses Forecast
Table 379: Five-Year Projected Income StatementTable 380: Total Five-Year Expenses ForecastTable 381
- Five-Year Expenses Forecast: Other Expenses
Table 18: Five-Year Expenses Forecast: Other Expenses
Table 341: Total Five-Year Expenses ForecastTable 342 - Five-Year Expenses Forecast: Other
Expenses
Table 343: Total Five-Year Expenses Forecast
Table 344: Five-Year Projected Income StatementTable 345: Total Five-Year Expenses ForecastTable
346 - Five-Year Expenses Forecast: Other Expenses
Table 347: Total Five-Year Expenses ForecastTable 348 - Five-Year Expenses Forecast: Other
Expenses
Table 349: Total Five-Year Expenses Forecast
Business Plan of Clothie
56
The total expenses for the 5-year period are illustrated in Table 19.
Source: the author, 2018
15.4 Projected Income Statement
Clothie’s Projected Income Statement shows an inevitable loss in the first two years of operations,
due to the nonexistent initial client base and the growing (but necessary) expenses in marketing and
wages. However, the third year of operations represents the breakeven point, closing for the first time
with a positive balance, and forecasting an exponential growth in profits starting from the following
years. Depreciation and Amortization are not considered in the statement, since both tangible and
intangible assets have low value and should be considered as expenses in the company’s accounting.
Income Corporate Tax in Portugal is set to 21% (Flat Tax System), while the Municipal Tax varies
as described from the Autoridade Tributaria e Aduaneria (2017), with Lisbon offering tax exemption
to business with an annual turnover (net sales) of less than €150.000. However, Clothie will respect
this condition only in Year 1, where is supposed to generate a net loss.
Source: the author, 2018
Table 19: Total Five-Year Expenses Forecast
Table 393: Five-Year Projected Income StatementTable 394: Total Five-Year Expenses Forecast
Table 395: Five-Year Projected Income Statement
Table 396: Five-Year Projected Cashflow StatementTable 397: Five-Year Projected Income
StatementTable 398: Total Five-Year Expenses Forecast
Table 399: Five-Year Projected Income StatementTable 400: Total Five-Year Expenses Forecast
Table 401: Five-Year Projected Income Statement
Table 402: Five-Year Projected Cashflow StatementTable 403: Five-Year Projected Income Statement
Table 404: Five-Year Projected Cashflow Statement
Table 405: Net Present Value (NPV)Table 406: Five-Year Projected Cashflow StatementTable 407:
Five-Year Projected Income Statement
Table 408: Five-Year Projected Cashflow StatementTable 409: Five-Year Projected Income
StatementTable 410: Total Five-Year Expenses Forecast
Table 411: Five-Year Projected Income StatementTable 412: Total Five-Year Expenses Forecast
Table 413: Five-Year Projected Income Statement
Table 414: Five-Year Projected Cashflow StatementTable 415: Five-Year Projected Income
StatementTable 416: Total Five-Year Expenses Forecast
Table 20: Five-Year Projected Income Statement
Table 419: Five-Year Projected Cashflow StatementTable 420: Five-Year Projected Income
Statement
Table 421: Five-Year Projected Cashflow Statement
Table 422: Net Present Value (NPV)Table 423: Five-Year Projected Cashflow StatementTable 424:
Five-Year Projected Income Statement
Table 425: Five-Year Projected Cashflow StatementTable 426: Five-Year Projected Income
Statement
Business Plan of Clothie
57
15.5 Projected Cashflow Statement
Clothie’s Projected Cashflow Statement in Table 21 highlights how, with an initial investment of
€200.000, its operating activities will bring the Company to reach a sustainable growth, not requiring
(but not excluding) any other future external investment. In the five-year period analyzed, dividends
are not considered to be paid, since all the cash generated will be re-invested to finance the Company’s
future development.
Source: the author, 2018
Table 21: Five-Year Projected Cashflow Statement
Table 445: Net Present Value (NPV)Table 446: Five-Year Projected Cashflow Statement
Table 447: Net Present Value (NPV)
Table 448: Return on Equity (ROE)Table 449: Net Present Value (NPV)Table 450: Five-Year Projected
Cashflow Statement
Table 451: Net Present Value (NPV)Table 452: Five-Year Projected Cashflow Statement
Table 453: Net Present Value (NPV)
Table 454: Return on Equity (ROE)Table 455: Net Present Value (NPV)
Table 456: Return on Equity (ROE)
Table 457: Compounded Annual Growth Rate (CAGR)Table 458: Return on Equity (ROE)Table 459: Net
Present Value (NPV)
Table 460: Return on Equity (ROE)Table 461: Net Present Value (NPV)Table 462: Five-Year Projected
Cashflow Statement
Table 463: Net Present Value (NPV)Table 464: Five-Year Projected Cashflow Statement
Table 465: Net Present Value (NPV)
Business Plan of Clothie
58
15.6 Evaluation of the Project
15.6.1 Net Present Value (NPV)
Considering the five-year projected cash flows, a discount rate of 10% (based on data collected on
discount rates applied to similar businesses) and the initial capital of €200.000, Clothie’s NPV is €
100.421, which confirms the attractiveness of the investment.
Source: the author, 2018
15.6.2 Return on Equity (ROE)
After the first two years, Clothie is expected to generate positive ROE, which can further increase
after Year 5, when the project will be mature enough to count on a solid client base and will expand
to new European countries.
Source: the author, 2018
Table 22: Net Present Value (NPV)
Table 471: Return on Equity (ROE)Table 472: Net Present Value (NPV)
Table 473: Return on Equity (ROE)
Table 474: Compounded Annual Growth Rate (CAGR)Table 475: Return on Equity
(ROE)Table 476: Net Present Value (NPV)
Table 477: Return on Equity (ROE)Table 478: Net Present Value (NPV)
Table 479: Return on Equity (ROE)
Table 480: Compounded Annual Growth Rate (CAGR)Table 481: Return on Equity
(ROE)
Table 482: Compounded Annual Growth Rate (CAGR)
Table 483: Pessimistic Scenario - Net Present Value (NPV)Table 484: Compounded
Annual Growth Rate (CAGR)Table 485: Return on Equity (ROE)
Table 486: Compounded Annual Growth Rate (CAGR)Table 487: Return on Equity
(ROE)Table 488: Net Present Value (NPV)
Table 489: Return on Equity (ROE)Table 490: Net Present Value (NPV)
Table 491: Return on Equity (ROE)
Table 23: Return on Equity (ROE)
Table 497: Compounded Annual Growth Rate (CAGR)Table 498:
Return on Equity (ROE)
Table 499: Compounded Annual Growth Rate (CAGR)
Table 500: Pessimistic Scenario - Net Present Value (NPV)Table 501:
Compounded Annual Growth Rate (CAGR)Table 502: Return on Equity
(ROE)
Table 503: Compounded Annual Growth Rate (CAGR)Table 504:
Return on Equity (ROE)
Table 505: Compounded Annual Growth Rate (CAGR)
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59
15.6.3 Compound Annual Growth Rate (CAGR)
The CAGR measures the rate of return of an investment over a period of time, calculating the year
over year returns, compounding them, and considering the investment values. It is one of the most
used evaluation indicators, since it provides a practical understanding of business growth over time,
in this case in terms of sales.
The results in Table 24 shows how, if Clothie’s sales growth is compounded over the years, its annual
growth rate would be an astonishing 117%.
Source: the author, 2018
15.7 Optimistic and Pessimistic Scenarios
To further examine the possible outcomes derived by undertaking this project, it is essential to
consider two more scenarios apart from the one described so far, the Optimistic and Pessimistic
Scenarios. Both situations will be analyzed using the NPV, generally considered the best measure for
investment appraisal.
15.7.1 Pessimistic Scenario
The Pessimistic Scenario has been formulated taking into account three highly volatile factors, whose
alteration can decisively impact Clothie’s operational cash inflows:
- A 10% decrease in the number of ‘Booking Operations’ for each of the five years considered.
- A 10% decrease in the number of ‘Buying Operations’ for each of the five years considered.
Table 24: Compounded Annual Growth Rate (CAGR)
Table 523: Pessimistic Scenario - Net Present Value (NPV)Table 524:
Compounded Annual Growth Rate (CAGR)
Table 525: Pessimistic Scenario - Net Present Value (NPV)
Table 526: Optimistic Scenario - Net Present Value (NPV)Table 527:
Pessimistic Scenario - Net Present Value (NPV)Table 528: Compounded
Annual Growth Rate (CAGR)
Table 529: Pessimistic Scenario - Net Present Value (NPV)Table 530:
Compounded Annual Growth Rate (CAGR)
Table 531: Pessimistic Scenario - Net Present Value (NPV)
Table 532: Optimistic Scenario - Net Present Value (NPV)Table 533:
Pessimistic Scenario - Net Present Value (NPV)
Table 534: Optimistic Scenario - Net Present Value (NPV)
Table 535: Optimistic Scenario - Net Present Value (NPV)Table 536:
Pessimistic Scenario - Net Present Value (NPV)
Table 537: Optimistic Scenario - Net Present Value (NPV)Table 538:
Pessimistic Scenario - Net Present Value (NPV)Table 539: Compounded
Annual Growth Rate (CAGR)
Business Plan of Clothie
60
- A 10% decrease in the ‘Average Annual Revenue per Retailer User’ for each of the five years
considered.
Source: the author, 2018
As shown in Table 25, in this case the result is a negative NPV, which of course discourages
investments. However, these numbers show also a steady increase in positive cash flow after Year 3,
a fact that can only foresee positive results for the long run.
15.7.1 Optimistic Scenario
The Optimistic Scenario originates the expected remarkable results, taking into account the exact
opposite factors considered in the previous case:
- A 10% increase in the number of ‘Booking Operations’ for each of the five years considered.
- A 10% increase in the number of ‘Buying Operations’ for each of the five years considered.
- A 10% increase in the ‘Average Annual Revenue per Retailer User’ for each of the five years
considered.
Source: the author, 2018
Table 25: Pessimistic Scenario - Net Present Value (NPV)
Table 548: Optimistic Scenario - Net Present Value (NPV)Table 549: Pessimistic Scenario - Net Present Value
(NPV)
Table 550: Optimistic Scenario - Net Present Value (NPV)
Table 551: Optimistic Scenario - Net Present Value (NPV)Table 552: Pessimistic Scenario - Net Present Value
(NPV)
Table 553: Optimistic Scenario - Net Present Value (NPV)Table 554: Pessimistic Scenario - Net Present Value
(NPV)
Table 555: Optimistic Scenario - Net Present Value (NPV)
Table 556: Optimistic Scenario - Net Present Value (NPV)
Table 557: Optimistic Scenario - Net Present Value (NPV)
Table 558: Optimistic Scenario - Net Present Value (NPV)Table 559: Pessimistic Scenario - Net Present Value
(NPV)
Table 560: Optimistic Scenario - Net Present Value (NPV)Table 561: Pessimistic Scenario - Net Present Value
(NPV)
Table 562: Optimistic Scenario - Net Present Value (NPV)
Table 563: Optimistic Scenario - Net Present Value (NPV)Table 564: Pessimistic Scenario - Net Present Value
(NPV)
Table 565: Optimistic Scenario - Net Present Value (NPV)Table 566: Pessimistic Scenario - Net Present Value
(NPV)
Table 26: Optimistic Scenario - Net Present Value (NPV)
Table 567: Optimistic Scenario - Net Present Value (NPV)
Table 568: Optimistic Scenario - Net Present Value (NPV)
Table 569: Optimistic Scenario - Net Present Value (NPV)
Table 570: Optimistic Scenario - Net Present Value (NPV)
Table 571: Optimistic Scenario - Net Present Value (NPV)
Business Plan of Clothie
61
16. Conclusions
Clothie is undoubtedly an innovative idea, being the first location-based fashion shopping app ever
created. It does also bring great value to all its users, creating a new and fun way to shop for local
fashion and, most importantly, aiming to solve the problems of thousands of business owners who
are currently struggling to stay in business.
With the several tools and frameworks used throughout this business plan, it has been examined how
Clothie creates a unique value curve that can let it stand out of the competition; how weaknesses can
be minimized, and threats can be avoided with simple but efficient solutions; how Clothie can lead
the new wave of disrupting innovation for the fashion industry, in favor of the small realities.
The various financial projections performed, have shown the high growth potential of Clothie; the
generation of the forecasts has followed a realistic approach with an attitude to round down all the
results in order to avoid any type of speculations on the final outcomes, providing notable results
nevertheless.
The two-case scenario developed showed how, even in the worst case analyzed, the project is
expected to grow over time and be able (after the initial investment) to finance itself with its operating
activities alone, guaranteeing excellent returns in the long run.
The major risk of the investment can be the failure to efficiently carry out the business plan. Execution
is everything, and Clothie will launch only after a cautious and scrupulous selection of its initial team,
in order to achieve the expected results and minimize risks. Failing in the development of the product
would cause a delay in the business expansion, hence increasing the chances of losing the temporary
competitive advantage in favor of new competitors, ready to join the new ‘Blue Ocean’ created.
Clothie has all the characteristic required to be considered a potential ‘unicorn’ due to its global
scalability and unprecedented approach to the fashion market. Clothie is highly recommended to
investors who believe in the potential of the local, the special, and the unique; investors who want to
actively help the business growing, by advising and mentoring the team; investors who embrace
Clothie’s mission: support local fashion retailers to gain market share at the expense of the big
players.
Business Plan of Clothie
62
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