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1) Introduction 2) Reasons for choosing this Business Model 3) Company Profile 4) Sales Process a) Registration b) Designing c) Printing d) Delivery e) Mode of Payment 5) Viability Analysis i) Marketing ii) Staffing iii) Pricing 6) Locational Analysis 7) Financial Analysis 8) Break-Even Analysis 9) Profitability Analysis 10) Costing 11) Challenges 12) Potential Futures
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The Indian apparel industry, which took off in the mid 60s, is worth around $15 billion now. The growth over the years has been significant, and technology does have a role to play in that. In fact, the industry has evolved gradually in terms of technology adoption and has reached a critical mass today. The apparel solution market in India is over Rs 1,000 crore today and is growing regularly, according to the chairman of the Clothing Manufacturers’ Association of India, Mr. Satish Mahajan. Mr Mahajan had traced the growth of garment industry in terms of technology adoption. From pedal-operated machines in the 60s, the industry moved on to power-operated machines and steam presses in the mid-80s, started assembly line manufacturing in the late 80s and then entered the phase of using computerized machines. The industry saw a rapid change with the introduction of computerization in the garment industry. Automated machines for cutting, sewing, button-holes, CAD/CAM for pattern-making, etc, have brought down the cost of production considerably. As a result, garment companies now focus on technology to be productive and cost-effective at the same time. In terms of advancements in automation, today we even have under bed trimmers which stitch and trim excess thread simultaneously. This means a huge saving on threads and excess manpower. There are automated machines for stitching collars and cuffs, finishing machines, pressing machines, etc. There are more than a thousand garment manufacturing units in the country today, out of which less than 200 are big players while the rest are in the small and medium enterprises (SME) segment. One of the major restrictions in terms of using technology is the huge initial investment. But, technology adoption doesn’t come easy to this industry. For, at least an investment of Rs 2 crore is required for automating a 100-machine garment unit. Not only has the cost of technology been a deterrent, this has also placed India in a position much below other countries such as China, Sri Lanka and Korea, in terms of production efficiency. When Sri Lanka’s production efficiency is 90 per cent, India’s is just 50 per cent. However, post-2005, it would be a ‘do or die’ situation. For companies to survive and be competitive, they would have to improve on technologies. The quota regime is coming to an end and the market place is going to be free for any company wanting to set up shop. Technology investment would increase further in the industry in this scenario, as that would be a crucial factor to survive the competition. This assumes a greater importance, considering that the National Textile Policy of 2000 projects the garment exports from India to be $25 billion by 2010. 2
The garment industry is based on fashion and invariably goes through short fashion cycles. To survive in the market, there have to be regular innovations in colour, style, design, fabric, finish and fit. Automated machinery and IT solutions are key in such a scenario to be competitive and improve business results. Today, the garment industry will not survive without the right technology.
2. Reasons for Choosing this Business Model
Though less than a century old, the T-shirt has undergone much transformation to become a versatile American staple. The T-shirt is stronger than ever in decoration. There are so many more fabrications and styling options now. With the increase of options, there's a fit for every kind of imprinted category. In the decorated apparel and promotional products channels, T-shirts appeal to all market segments and lend themselves to most any form of embellishment. In a sea of trendy promotional garments and logo gifts, the decorated T-shirt is the one classic that you can always count on. Sales of customized T-shirts as a go-to apparel item and promotional product seem to be holding their own in today's market. In our opinion, the T-shirt market has grown by 3% to 4% this past year. The growth continues to be attributable to increased usage in the event merchandising, promotional campaigns and licensed product categories. In the customized apparel channel, T-shirts will continue to drive the bulk of business, and today's manufacturers are offering shirts with varying fabrications, weights and price points to satisfy all types of customers. The industry has its organic growth, and a lot of that is price driven and commodity driven. The T-shirt still remains the primary vehicle for everyone to get their message out there. That's why we continue to see growth. Tshirts are a staple, ideal American product which has spread famously throughout the world.
Style and Shape
Though the basic T-shirt will always demand respect, style variations are slowly gaining larger shares of the market. Whether its specialty edging, distinctive sleeves or contemporary fits, new styles and silhouettes in the decorated apparel channel are catching the eyes of end users. In recent years, we've been able to add a lot of unique styling options and fabrications that really push the envelope in the wholesale industry. Our development teams will always be experimenting with new fabrics and we are planning to add a ton of options into our line now. Staying abreast of current trends in the retail and wholesale segments is crucial for firms like us. We are obliged to add a lot of modern touches year after year to cater to a more body-conscious and fashion-forward demographic. The company's new men's ring-spun T-shirt has a more contemporary fit. The sleeves contour to follow the arm shape, the collar is narrower to allow for better styling and it even has an easy-to-remove label.
3. Company Profile
Name of the Parent Company: Diablos Apparel Pvt. Ltd. Name of the Current Business Line: E-Shirts Name of the Website: www.e-shirts.com Business type: Selling Customized T-Shirts for Men online, starting off in Mumbai and its surrounding suburban regions. Primary competitive advantage: • • • • • Innovative designs Premium quality Sound infrastructural set-up Timely delivery Reasonable price
Future Prospects: 1) Venturing into the women’s apparel market (est. January 2010) 2) Expanding our Area of Operation to all major metros and also the satellite towns (est. January 2011) 3) Launching our own Retail Chain (est. January 2014)
4. Sales/Order Process
Getting traffic on the web site is the aim and desire of all web-sites. We will adopt the ongoing strategy of providing incentive to the people for becoming the members i.e. signing up with our web site and create an account over there. The various incentives we will provide, alongwith the registration and order process is as follows:
a) Registration & Promotional Activities
• • • • Initially, a potential customer will be lured to our website based on various means of advertisements which will be put out by us, as explained later. A customer first has to log on to www.e-shirts.com and register as a first time user, following which; he is referred to as a ‘member’. A member can earn Points called ‘chips” on inviting every other member by giving his/her email id. The latter can become the member by entering details along with his/her mobile. Following which, the system will send an SMS containing the verification code so that the duplication and fake id’s can be avoided and a genuine account is created by that way. Also after the members accumulate 300 chips they can get it credited by buying Tshirts worth those many points. Again, the web site will host a best designer of the month award. The one who designs the best T-shirt in our opinion using the set up on the web site will be awarded with Gift vouchers upto Rs.10,000/-
b) Designing your own T-Shirts!
Once a potential customer registers, he can immediately start designing his T-Shirts. 1. The customer chooses among the various price ranges which have been made available. 2. The customer then picks from his choice of colours and the best fitting size.
3. Following this, he can choose from different existing prints which are already available for shipment;
4. Or, he can choose to use our special online software to design a T-Shirt which will be close to his heart:
Any which way, the customer is definitely going to enjoy creating a personalized T-Shirt as it gives him the freedom to express himself to the fullest and be unique in his own, creative way, as every man has a little artistic child hidden inside, who longs to come out and play to its heart’s content!
In addition to individual customers, we plan to expand into the corporate segment by giving major business houses an offer to create their own special versions of customized T-Shirts. The methodology is as follows: For bulk purchases to commemorate special office occasions, the following style of Tshirts will be designed. The colour codes will be selected by them according to their needs.
Since such kinds of T-Shirts are in constant demand by the corporates, we plan to attract and exploit this lucrative market as well, as part of our expansion strategies.
c) Printing the ‘E-Shirts’
Once the customer has finalized his E-Shirt, it has to be printed and embossed accordingly. For this purpose, we have used state-of-the-art T-Shirt printers and Embossing Machines, as displayed below: 1. Large T-Printer:
This machine, when fully operational, can print 4 T-Shirts per minute on each panel, and is ideal for bulk orders.
2. Singular T-Printer:
This smaller, sleek cousin of the bigger T-Printer is faster, and can print 5 T-Shirts per minute, ideal for smaller, more expensive styles of prints.
We, at E-Shirts guarantee delivery within 2 working days, anywhere in Mumbai. A small, additional charge will be levied for smaller consignments, but mostly, home delivery will be free.
e) Mode of Payment:
Payment will be made via Credit/Debit Cards on the website itself. But, once a loyal customer base is created, we plan to introduce Cash-On-Delivery (COD) system.
5. VIABILITY ANALYSIS
One can get exhausted thinking of one specific plan to market one’s own product which is not at all always feasible and therefore one has to be continuously keep on exploring newer opportunities to keep oneself abreast with the marketing of an APPAREL which has a fashion statement that keeps on changing from time to time. What marketing strategies the group thinks that will be aiming the customer segment are as follows: Websites: We will be very keen to get the youth customers to our website by organizing the Quizzes, Events announcements, providing membership points and also have a group of clubs/communities formed for our customer segment that will have similar shopping needs and fall under one category. Social Networking: One would really be interested to know that marketers today hasn’t left even social networking sites to market their products and if not marketing the product awareness can be gained through these sites or by just maintaining a community websites like Orkut, Facebook etc. Mall Kiosks: To tap in the Indian market, making the feel of the product through the touch is the utmost important factor. For this the group plans to promote the brand and the concept through Mall kiosks which will make youth and other customers to get invited and feel of the product. This will definitely work as the no. of footfalls created in the Indian Malls is increasing and the Indians have the tendency to buy the best products preferably apparel at a best price wherever they then tend to be! College Fests, Sponsorships: Not only the above mentioned things are in the minds of the key members of the group but also of the sponsoring the college fests. This is will not only publicize the brand name and the concept but may even lead to sudden sales at the college premises only if the pricing factor is carried on correctly.
If not feasible in the short run or in the initial period to distribute freebies in the form of various T-shirts, the group can rethink to retap this market by just sponsoring the main events of the fest which may be in the form of Fashion Shows, Western Dance etc. Youth Magazines: Marketing is not only about selling your product but also comprises of advertising and PR activities also. Herein, we think of trying to capture the space of the newspapers thereby creating a HYPE of the same old service in the new electronic fashion. Thus what the group thinks of under this strategy is JAM magazines, YUVA, What’s Hot and many more. Along with it, one would also look out for an article or a column in business magazine also at a later stage when the company adds a sophisticated look to its product. Youth Films/Theatres: If one can capture the theatrical shows that keeps on happening in colleges nothing can be considered as less enough to market the product. Along with it one can also think of getting the mini actors or even the supporting roles on low budget films wearing the same attire of the company designed apparel and T-shirts. Sports Matches: No association with the sports part of the youth will just make the work of the marketers a little cumbersome. So the group also thinks of targeting the sport matches that take place at the regional and national level along with special focus on people who bet on their play of Gully Cricket.
The role of people in a business is crucial and cannot be undermined. Our Company is not into manufacturing as the production is going to be outsourced. However, skilled laborers personnel will be required for marketing, developing and programming the web site and managing the finance and unskilled or semi skilled personnel will be required for transportation and office supervision.
People will not be required for the production since the products are outsourced. The top level comprises of the managers or the owner or the promoters of the company. The will manage the operations like advertising – to some extent, office supervision and general business. The staff is basically classified of the skilled/ professional personnel (Web developers and Designers, Finance department – CA and online advertisers) and Unskilled or semi-skilled workers (The transporters and the delivery man and a office receptionist). All work for the promoters/managers and are responsible to them. Web developers and the designers are the most important people. They are the one who will develop, alter, modify and monitor the Web sites. Their role is crucial as for a web based company the web site is the most important connecting link between the firm and the Customers A CA will look after the finances of the company. We will hire his services for managing taxation, Accounts, etc. The online marketing service will be outsourced to a specialist online marketer who can provide appropriate penetration through optimum page ranking and search preferences by listing in major Search engines and directories. Manpower required for carrying the goods from the place of production to the place of consumption. The delivery boys will be hired on full time basis to facilitate smooth flow of good. A receptionist will be required at the registered office of the company to manage the information flow. The receptionist will answer the queries of the customers and the suppliers. A receptionist just needs to be well spoken and informed about the company plans and policies.
Our product i.e. E- shirts would be initially available in various price points of Rs. 200, 300, 500, 800 and 1,000. This will enable us to tap the entire market with various price points. Most probably, the lower range products will be of more focus at the initial stage since that will have the highest sales levels. While when one talks about the higher price points of Rs. 800 & Rs.1, 000; then Corporate Sales would be definitely come in our mind. BASIC 200 & THRILLING 300: • • • • • These price points will attract the basic college goers wanted to fashion out themselves with the limited amount of money they get monthly. This would ensure the basic medium level sales and would be determined as the fastest sold product. It would have basic designing with mediocre level of quality used. This would be the introductory product for the company. This segment would be termed as the CASH COW for the company.
FASHION 500: • • • • This is the price point that will ensure fashionable and varied products within various fancy colours for esp. the people with the STYLISH attitude. This will add premium to the product basket of the company. The company would be interested in having a limited range of this category and will tend to update the designs with the saga or issue lying under those conditions. On the basis of this product, STAR would be the given rating by the company.
ETIQUETTE 800 & NASCENT 900: • Considering the no. of employees working in the ever big organizations , and the sophisticated dressing and attire that one opts for at the executives level , the company will think to enter to tap the CORPORATE segment only when the company has established its foot in the basic stages of 200 & 300.
The company would be having the above product ranges as the ones at this initial stage of set up but later may diversify as per the Customer’s changing requirements and preferences.
6. Locational Analysis
In the product chosen by us, one should be determined to conduct online sales and hence physical appearance hardly matters for our clients or customers. But when we talk about the Indian audience, customers do need some physical appearance for the service or the product be bought. This is because we Indians are too uncomfortable with severe intangibles and hence to tangibilise the impact of the company, we will be setting up a small office which will take care of the following things: Administration. Customer Queries. Goods receipt and payment to our distributors. Record Maintenance of T-shirts. Website Maintenance and Online Marketing Issues. The office that will be set up within Mumbai Jurisdiction most probably in Sion wherein the rental premises haven’t arose to that extent as that of the adjacent areas like Dadar, Bandra or Matunga. One other factor which plays an important role in selecting a premise would be the Internet connection and Web Infrastructure which will lead to operating the website with no glitches in updating and other internet related problems.
Online- Locating the company:
More than the office set up what matters to us is the success rate of our sales through the Internet. This will lead to up-to-date maintenance of website and then how fast are we servicing our online clients.
Location of the selected distributors:
Distributors who will get orders from us will be placed in a location who can reap the benefits of minimal costs, no matter in the long run we ourselves will help the distributor in setting up the manufacturing unit within an area which will reap the best benefits of resources and tax advantages along with minimal costs to us for the product type delivered.
What we look for in our distributors or manufacturers:
Location plays an important role when one speaks about the apparel industry as even a penny saved can be profitised or even be offered as a discount to the customers. So for this, we will definitely like to know the following things: He is located at a premises wherein there is cheap labour for low level of job is available. This will not only reduce our costs to an extent but also will lead us to a better position in the future to bargain on the offered price. Ease of transport will be the other factor that one looks out for in a distributor. No matter the distributor will be located in a location which will be within the outskirts of Mumbai but ease of utility service like C&F agents, Octroi free location, transport facility of railways esp.; and also the carrier facility. Accepted the fact that there is always a power shortage in the backward located regions even after being located in the adjacent areas of Mumbai, one has to see that the load-shedding patterns will not much harm the production process and delivery orders. Also, last but not least, one should also look out for a manufacturer who is not new to the apparel industry and should have a good reputation among the other customers. This will lead us to be in a better position of reputed sales to even corporate clients as well.
Considering these facts one can easily think of the distributor who is basically located in the Jeans Market as it is profoundly known as of Camp No.5 of Ulhasnagar or Ambernath outskirts.
7. Financial Analysis
One Time Costs: Office Equipment & PC Internet Installation Registration Deposits (non-refundable) Website Designing A Fixed Monthly Costs: Rent (100sq.ft x Rs.90/sq.ft) Internet Service Electricity Telephone Stationary B Salaries: Transporter/Delivery Men (2 x Rs.3000 each) Secretary/Administrator (4000 p.m.) C Variable Costs: Advertising (12000/12) Website Maintenance (12,000/12) External Marketing Activities CA charges D Excess Cash Balance: E TOTAL (A+B+C+D+E) -1000 -1000 -4000 -1000 7000 -5000 1,00,000 -6000 -4000 10,000 -9000 -1000 -1000 -1000 -1000 13,000 -30,000 - 2000 -10000 - 8000 -15,000 65,000
SALES REVENUE FOR 7 Months 1 Units 200 300 500 800 1000 TOTAL SALES 20 10 5 9500 2 40 15 8 16500 3 60 23 10 23900 4 100 35 13 37000 5 150 55 15 10 10 72000 6 180 85 20 20 20 107500 7 200 100 25 30 30 136500
8. Break Even Analysis Give the sales revenue and our cost we forecast to break even in 4months & 12days. 9. Profitability Analysis Here we have to find total cost of each t-shirt (in different price range). Or we can simply say that our margin is 20-25% (normal margin in this business)
Per Unit Cost Basis: Material Thread Design Emboss Colour/Dyeing Wages Additional Craftsmanship Packaging Delivery Raw Material Total CPU (Rs.) 05 07 08 15 15 15 03 02 77 147
The above analysis indicates that profit is Rs. 53 on sale of a T-Shirt costing Rs200. That means our profit margin is 26.5%, which is almost at par, or in some cases even better than established industry averages in organized retail. So for other price points, we can assume we have an average profit margin of 25-30 %.
It is simply obvious that any entrepreneurial undertaking is incomplete without challenges which come up in the course of daily transactional business. As a result, we have managed to compile a list of potential weak points in our business plan. These are as follows: a) Low Internet Usage among Indians: Inspite of having an abundance of human resources, the number of people who are internet-savvy is abysmally low in our country. And as our business is completely dependant on the internet, a lesser number of people will hamper our expansion plans. b) Lack of Knowledge about new innovations: Not many people who surf the net are actually eager to learn about new innovations which have emerged in the past 3-4 years. They prefer to stick to tried and tested methods of doing things. c) Mistrust about Online Ventures: Any new totally online venture is considered unethical and there is a general mistrust in the market regarding Internet businesses as the tangibility factor is not present. As a result, people might view our project with skepticism. d) Low use of Credit Transactions: Most of the time, apparel is purchased directly from the shops in exchange for cash. India as a whole has not embraced credit cards with faith as there is a chance of overspending, which might prove costly for us. e) Low Tangibility of the Product Online: Inspite of a quality ad campaign and various promotional offers on show, we lack the basic level of tangibility at various moments of truth. As a result, the customer might feel dissatisfied with the final product on delivery, as it may not be up to his expectations. f) High Perishability due to changing Market trends: The entire apparel market is affected by this factor, not only us. What is “in” today might be “out” tomorrow. As a result, bulk purchasing is out of the question for our firm.
12. Potential Futures
What does the future hold for us? Will E-Shirts be the next big thing among online startups or will we end up as yet another failed entrepreneurial exercise? The important aspects which come into picture here are: a) The Steady Increase in Demand for Apparel: Due to our ever-increasing population, the need for quality clothing will NEVER go down. Even if we are able to tap 0.1 % of the projected Rs. 78000 crore markets, we will have succeeded in fulfilling our primary goals and missions. b) Larger Internet Exposure: Due to the unprecedented boom in the IT sector, more and more potential customers are added everyday to the untapped portion of the market and it is up to us whether we are able to successfully convert them into our loyal customers. c) Entering New Market Segments: We plan to launch a new line for women, which should essentially double our markets, once we are financially stable and able to raise additional capital to finance our ambitious growth plans. Entering a new market segment is thus imperative for our future to have a bearing on us. d) Retail Outlets: There is a distinct possibility that we are able to launch our own retail stores which have a made-to-order section as well so that customers can help themselves to wearing some of their own creations with a smile on their face and a song on their lips!
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