Galaxyonsale is a new company established for Australian consumers to do online shopping through its “galaxyonsale.com” website with the convenience of home delivery and pick-up service from their Melbourne-based warehouse at a competitive price. Australian shoppers are increasingly voting with their mouses as recent figures from business research firm IBISWorld show Australian online spending will grow by about 5.5% annually for the next 5 years, from $15.1 billion in 2007-08 to $21.2 billion during 2013-14 (Tan, 2003). While Australia has experienced rapid growth in online shopping, the lack of local big brand retailers selling online is forcing shoppers to buy from overseas competitors (Tan, 2003). Industry commentators say Australia is several years behind the US and UK in online shopping (Tan, 2003). As the consumers are aware of the benefits of doing online shopping on the costs and convenience basis, galaxyonsale is being launched in the market as a vital player. All of their products will be stored in their Melbourne warehouse for faster delivery to their prospective customers. Galaxyonsale product range consists of fashion for men and women, kitchen wares, electronic accessories and home wares. This company has also determined to increase its product pool according to the demand and needs of customers. The main suppliers of Galaxyonsale will be from overseas, since they can get items in affordable price.
1.0 Executive Summary
By setting up this website, Galaxyonsale will like to achieve several objectives. One of them is to create an online shopping environment that caters to the apparel needs of Australian. Besides that, this company will like to become the number one fashion warehouse by earning 60% of the market share. Galaxyonsale also has the objective of receiving 50% profit margin and to have a customer base of 10 000 by the end of the first operating year. Last but not least, this company hopes to achieve a net profit of $75 000 by year two and $100 000 by year three.
Galaxyonsale’s mission is to offer quality, name brand western and mid Asian wear in an assortment of sizes and styles to accommodate all varying body styles and shapes as well as to provide branded kitchen ware and electronic accessories in reasonable prices.
1.3 Keys to success
There are a number of ways that Galaxyonsale are planning to implement in order to achieve success in this field. Firstly, this company is organizing to carry an assortment of sizes to fit the more ample frames of all Australians including Asians and South Americans who are also their customer target base. Aside from that, another key to success is to provide customers with top notch personalized customer service in an atmosphere of southern hospitality that Australia is so famously known for. In addition, Galaxyonsale will have to be able to provide branded fashion ware to the door of the consumer with reasonable price. Advertising and promoting are also one way to reach their goals (Bates & Basch, 2003). This should be done in areas where their target customer base can learn about their warehouse and online shopping. Finally, Galaxyonsale are required to continuously review their inventory as well as sales. Adjustment towards the inventory needs to be done accordingly (Bates & Basch, 2003).
2.0 Company Summary
Galaxyonsale is an online business company mainly focused on men’s and women’s fashion as well as essential home ware products. It will be located at 33 Newtons Rd, Little River VIC 3211 being the epicenter of the Avalon airport and harbor (Bates & Basch, 2003). The hours of operation will be on Monday till Friday from 8 a.m. to 6 p.m. Meanwhile, they will be opened from 9 a.m. to 5 p.m. on Saturday. There will also be extended special hours designated during massive sales and during the Christmas holiday shopping season. All merchandise will be purchased according to the company’s mission and customer focus of outfitting all sizes including women’s plus sizes as well as men’s big and tall.
2.1 Company Ownership
Currently, this small business venture is set up by a few trusted investors living around Australia. The purpose of having multiple partners is to form partnerships in order to reduce the risk of losing a lot of money if the business fails (Steingold, 2011). This situation may change once the company is successful and becomes a global organization.
2.2 Start-up Summary
A certain undisclosed amount of money has been invested into the company to enable Galaxyonsale to purchase the necessary equipments, hiring professionals, buying products, maintaining the website and etcetera (Steingold, 2011).
2.3 Company Locations and Facilities
The company is located in Victoria, one of the small towns in Australia. Galaxyonsale has decided to buy a warehouse in Melbourne to ensure fast and efficient deliveries of their products to the customers.
Galaxyonsale will carry nationally recognized various western and Asian brands that will be listed in the next section. Their selection will range from the basics of Zara to Ralph Lauren, Armani, Calvin Klein, Burberry and Dior. This company will be purchasing from sales representatives and manufacturers in a variety of sizes, colors and styles to fit their target market base. The greatest percentage of merchandise will be in fashion wear followed by accessories, jewelry and kitchenware. The decision to in traduce or eliminate certain brands, styles and sizes will be determined by the management based on customer feedback, suggestions and sales report.
3.1 Product Description
Galaxyonsale will provide a selection of brands that fall within their mission statement. The company’s goal is to carry a selection of labels from the hardcore western wear to the more sophisticated Asian styles. Some of the labels that they will carry for fashion are Wardrobe, Adidas, Nike, Diesel, Ralph Lauren, Calvin Klein, Dior, Polish, Gucci, DG, Decca, Classica and G Star just to name a few.
3.2 Competitive Comparison
Galaxyonsale has a number of advantages that will allow them to build their brand identity, add value to their merchandise and build a loyal customer base while standing apart from their competitors (Botha, Bothma & Geldenhuys, 2008). One of the reasons is this company will be the first Australian fashion warehouse providing branded fashion wear that is at least 50 percent less than other retailers like Myer, Boss, Hype and etcetera. Besides that, this company also offers the ‘Galaxy Premium Membership’ that will entitle members to a 10 percent discount on each purchase throughout the year. Another advantage is their ability to offer clothing from XS to XXL sizes for both women and men in order to cater to the various needs of their customers. Galaxyonsale is also determined to ensure that deliveries are made within 5 to 10 working days for efficiency purposes. Last but not least, maintaining a detailed record on each customer by logging their addresses, purchases, sizes and brands will enable Galaxyonsale to perform effective customer follow-up and in-house promotion (Botha, Bothma & Geldenhuys, 2008).
3.3 Sales Literature
Galaxyonsale will use a targeted advertising and sale program to generate publicity and build a customer base (Botha, Bothma & Geldenhuys, 2008). Among one of programs is to distribute 2000 full-colored postcard flyers with a 10 percent discount coupon two weeks prior to the grand opening event. Besides that, they are also planning to mail 200 grand opening invites to new potential customers two weeks before the grand opening in June, 2012. The invitation will also include a promotional 10 percent coupon off a customer’s first purchase. Aside from flyers and invites to attract customers, Galaxyonsale will also give out a total amount of 5000 business cards with Galaxy Shopper Card on the reverse side that entitles the customer to a 10 percent discount on the second purchase.
Since Galaxyonsale is an online business company that carries multiple brands and products, this gives them an opportunity to source their materials from various places (Rich, 2006). There are many factors that come into play when a company decides the locations on where to get their goods. For this company, they put a lot of emphasis to bring quality products to their customers with an affordable price. Therefore, the core suppliers for Galaxyonsale are from Asian countries such as India, China, Pakistan, Nepal, Vietnam, Thailand, Taiwan and Indonesia in order to keep the price down (Rich, 2006). These are some of the places where this company is planning to source their key products like fashion for men and women, kitchen wares, electronic accessories as well as home wares.
As Galaxyonsale make use of the World Wide Web to do their business, it is crucial for the company to hire information technology professionals to maintain the website. It has to be up and running 24 hours 7 days a week without any glitches. Any form of malfunction will cause inconvenience to the customers and cause them to lose trust in the company (Rich, 2006). Aside from that, building up a good storage system for keeping their customers’ data is also one of Galaxyonsale’s top most priorities. Nowadays, online shopping companies have a lot of competitors. One way to make the website pops and more attractive to the customers is the layout as well as the design of the page. Galaxyonsale has a talented group of website designers on board the company (Rich, 2006).
3.6 Future Products
There are no concrete plans yet regarding future products as Galaxyonsale is still a new business company. The decision will be determined by the response from their customers. If the company is gaining sufficient profit according to their expectations, customers can be assured that there will be more brands and products that will be on sale. There is also a possibility that they will try to break into the world of online shopping through mobile by creating special applications.
4.0 Market Analysis Summary
4.1 Market Segmentation
Galaxyonsale has decided to implement market segmentation as one of their marketing strategies. There are many ways the consumers market can be segmented. Generally, it can be divided into four major categories. They are demographic, geographical, psychographic and behavioristic variables (Daft & Marcic, 2003). Demographically, Galaxyonline is trying to market their products to all age groups especially to teenagers and working adults who are familiar with the Internet as well as using a computer (Daft & Marcic, 2003). Therefore, this company’s main focus is to serve customers between the age of 14 to 45 years old. Since Galaxyonsale is an online business company, it is hard for them to segment their customers geographically. However, they are mainly aiming at the consumers market in Australia. As for psychographic variables, they are trying to market their products according to the various personality traits of their customers (Daft & Marcic, 2003). For their fashion and electronic accessories, they are targeting those who are between 14 to 35 years old. This group of customers tends to be more fashion savvy. Meanwhile, they are trying to market kitchen and home wares to consumers within the age group of 22 to 45 years old who are probably married and are more interested in setting up a comfortable home.
4.2 Target Market Segment Strategy
Unlike market segmentation, targeting strategy is more specific where only one or two groups of consumers are chosen by the company so that a more detailed program can be created specifically to cater to their needs better (Daft & Marcic, 2003). From the previous section, there are two groups of customers that are targeted by Galaxyonsale. They belong to the age group between 14 to 45 years old as well as consumers who are computer literate.
4.2.1 Market Needs
Nowadays, most consumers are busy with a hectic schedule and with the current economic turmoil, finding time to go shopping especially during festive seasons seem to be a thing in the past. Therefore, there is an ongoing demand for online shopping, thanks to the growing influence of the Internet. This method of shopping can save the consumers’ time and they are able to view countless of options just by sitting at the comfort of their home (Reuvid & Ollington, 2005). Besides that, sometimes it can be very difficult for plus size men and women to find fashionable clothing at the local stores (Reuvid & Ollington, 2005). This is also one of the reasons why many consumers are turning their options towards online shopping. Aside from that, the Internet is also able to offer consumers with big brands at an affordable price in comparison to retail outlets (Reuvid & Ollington, 2005).
4.2.2 Market Trends
With the options that the World Wide Web is offering to customers, the numbers on online shopping has been growing drastically (Reuvid & Ollington, 2005). Everybody is trying to look for fashion that is unique and different from others. Therefore, there is a demand from big brand retailers which the consumers cannot find them locally. Furthermore, due to changing lifestyles, there are more plus size people nowadays. As a result, there is also a higher request for bigger size clothing that is not available at local stores.
4.2.3 Market Growth
Although Australia is still far behind the US and UK in terms of online shopping, however, in 2010, it is estimated that Australian consumers spend roughly about 3 to 50 percent of their expenditure shopping for their needs on the Internet (Johnson, & Scholes, 2006). If this is divided into every household, each will be spending an estimated of 3 percent. Meanwhile, in 2011, about 25 percent of mobile users are also shopping online using their phones (Johnson, & Scholes, 2006). It is reported by eBay that an item is sold every 15 seconds through mobile online shopping. There are also some online markets that are able to increase their revenues by up to 40 percent in 2010 (Johnson, & Scholes, 2006). Therefore, the online shopping industry is, definitely, an industry that is fast growing.
4.2.4 Industry Analysis
According to recent survey, Australians are spending about $12 billion on online shopping in 2010 and it has increased to about $13.6 billion by 2011 (Johnson, & Scholes, 2006). It is also predicted that this industry will be growing at double the rate in comparison to retail markets in Australia for the four years. Besides that, by 2015, the online shopping industry is estimated to experience a growth of about 12.6 percent with an increase in revenue up to $21.7 billion (Johnson, & Scholes, 2006).
4.3 Main Competitors
There are a few main competitors that will threaten the online shopping industry in Australia. Other international websites that are also promoting online shopping such as eBay and Amazon are assumed to be one of the biggest threats (Partner & Danton, 2009). Besides that, there are an increasing number of big retail chains that are opting to grab a piece of this booming industry such as Myer, Harvey Norman and David Jones have been making small online business such as Galaxyonsale harder to generate profit (Partner & Danton, 2009).
4.4 SWOT Analysis
1) Online business allows the company to grab potential customers from all over the country.
2) The cost of maintaining a website is low.
3) The ability to offer a lower price in comparison to retail stores.
1) It can be troublesome when customers want to return unwanted products via mail.
2) Shipment of products that are heavy can be expensive.
3) Marketing can be a challenge due to less knowledge on the Internet.
1) There are ample opportunities to increase the traffic to the website by getting the name out via blogs, forums and ‘electronic word of mouth’.
2) A thorough research on trends for the year and around the country can help marketing strategies.
3) Customers’ loyalty will be able to help the business during slow times and contribute ideas for additional product lines.
1) Online shopping is a tough niche because there are many competitors.
2) There are still some trust issues when it comes to buying things online.
3) Larger businesses can set lower prices and threaten small business companies like Galaxyonsale.
5.0 Strategy and Implementation Summary
5.1 Competitive Edge
There are a few opportunities that small business companies such as Galaxyonsale can use to their advantage. Firstly, small businesses can offer better communication to their customers (Partner & Danton, 2009). They can do this by having customer service that operates 24/7 as well as utilizing emails and chat rooms to solve any problems. A more personalize approach is possible for companies like Galaxyonsale as they do not need to deal with a huge number of customers. Besides that, online shopping can be done at any given time or place at customers’ convenience (Partner & Danton, 2009). They do not need to specifically make time to go to retail stores in order to make a purchase.
5.2 Marketing Strategy
5.2.1 Pricing Strategy
Galaxyonsale initial plan is to set the pricing based on the competitors’ pricing (Meyerson, 2005). Besides that, market prices will also affect the pricing strategy that will be taken by this company (Meyerson, 2005). By taking into consideration factors such as competition and profit, Galaxyonsale will try their best to come up with prices that will appeal to the local consumer market.
5.2.2 Promotion Strategy
From the previous sections, there are a few promotion strategies that are going to be implemented by Galaxyonsale. First of all, they are planning to distribute 2000 colored flyers with 10 percent discount coupons. Besides that, the company is also going to give out 200 grand opening invites with a 10 percent coupon off a customer’s first purchase. Aside from that, other promotion strategies include the distribution of 5000 business cards and getting the name out via blogs and forums.
5.2.3 Distribution Strategy
All the promotional strategies will be carried out two weeks prior to Galaxyonsale’s grand opening in June, 2012. Besides that, this company is also going to target consumers’ base where they know the location of their warehouse that is in Melbourne.
5.2.4 Marketing Programs
A variety of channels will be used in order to ensure that the marketing programs can be carried out successfully to the intended audience. Galaxyonsale are using sources such as the Internet, public relations and print advertising to get their message across (Meyerson, 2005).
5.2.5 Positioning Statement
Positioning statement is very important to companies so that consumers can relate to a specific image that they are trying to create (Meyerson, 2005). As for Galaxyonsale, they are trying to come across as a small online business company that offers good quality products on fashion and kitchenware with affordable prices.
5.3 Sales Strategy
5.3.1 Sales Forecast
Galaxyonsale is confident that they will be expecting a return of about $400 000 worth of investment within the next 24 months. This company is also hoping to open warehouses in all the major cities in Australia. By the next 5 years, Galaxyonsale is forecasting that they will be able to globalize their online business venture.
6.0 Management Summary
6.1 Organizational Structure
The organizational structure of Galaxyonsale will consist of a president who is also the CEO of the company, a CFO, managers and a team of dedicated employees (Nemati & Barko, 2003).
6.2 Management Team
The management will be headed by a president who will also acts as the CEO of the company. He will be in-charged of making all the crucial decisions for Galaxyonsale. Besides that, there will also be a CFO who will take care of the financial situation of the company.
6.3 Personnel Plan
This will include the entire personal payrolls that are estimated to be given to each individual in the company for the upcoming three years (Nemati & Barko, 2003).
7.0 Financial Plan
7.1 Important Assumptions
There are few assumptions that are important to the success of Galaxyonsale. Some of the factors include current interest rate, long term interest rate and tax rate (Nemati & Barko, 2003). It is crucial to make a prediction of this information so that the company will not suffer from any losses.
7.2 Key Financial Indicators
Galaxyonsale is regarded as a safe investment and it is expected to generate an increase in revenue for years to come. Therefore, an amount of $400 000 will be used to start off the business and to cover the initial operating charges. As the company continues to grow, it will require more investment.
7.3 Break-even Analysis
The break-even analysis of Galaxyonsale can be determined by taking the average first year fixed monthly cost and an average margin (Meyerson & Scarborough, 2008). The company wish to reach $400 000 within a period of 2 years.
7.4 Projected Profit and Loss
Galaxyonsale is making an assumption that the company will be able to gain profit of about $200 000 annually through the sales of product. It is projected that the company will suffer from slow progress or some lost during the 6th and 7th month as the initial buzz from the advertising campaign wear off. However, as the month progresses, it is predicted that the profit margin is going to remain stable partly due to a loyal customer base.
7.5 Projected Balance Sheet
A projected balance sheet is a very important tool for management. It helps companies like Galaxyonsale to know precisely about the direction of the company’s financial growth as well as problems (Meyerson & Scarborough, 2008). Through this projected balance sheet, Galaxyonsale will also be able proposed present and future funding for the company.
There are many factors that need to be taken into consideration when it comes to setting up a business regardless whether it’s an online or retail store. A thorough proposal that covers all aspects is required in order to provide a general guideline to follow, a projection of the company’s current and possible accomplishment and a tool to attract potential investors.
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