Toast Business Report accurate enough, cooperate with as many clothes
DBC 2021 brands as possible to widen the options for the users,
Executive Summary
Koreans have long held a vested interest in
how they dress. A fashion-conscious population and
the mass influx of innovative clothing brands have
resulted in a market more abundant than ever before.
Yet, filtering from the sea of available options can
be a daunting task. tAIlor seeks to address this
precise issue by harnessing the power of Artificial
Intelligence (AI), providing consumers with the
opportunity to both experience clothing tailored to
their unique preferences through recommendation
services and get a holistic understanding of the latest
fashion trends. Such a synthesis between the
lucrative apparel market and the rapidly expanding
AI field will usher in a new era of convenience and
connectivity in fashion.
Company Description
tAIlor is a company that would incorporate
AI with one of the essential elements of our daily
life, clothing. For free subscription, tAIlor aims to
match combinations of clothes and accessories that
users own based on a particular time, place, and
occasion (TPO). As for the priced subscription
service, the company will include clothes outside the
user’s closet and allow the user to borrow 6 clothing
items that the AI matches with their current closet
items. Furthermore, tAIlor also offers an option to
“follow” other people’s closets so that users could
learn trends from other people’s clothes and
accessories. With this, the target market would be
everyone in Korea who owns clothes and likes or
wants to dress well. tAIlor’s vision is to improve the
quality of people’s daily lives by providing
satisfaction with their looks from AI.
Moreover, the company hopes to expand the
options of clothes that people could wear from the
rental system, which would also help the
environment because of the reduced waste created
from the rental of clothes. To start, tAIlor would be
located in Seoul. This is because the majority of
clothing brands are located in Seoul and Seoul is
South Korea’s fashion hub. The company’s
immediate goals are to make the AI learn as much as
possible so that the matching that AI suggests are
and finally to gain as many users as possible in order
to effectively develop the closet following system
and expand its scale.
Industry Analysis
South Korea’s high demand for unique,
luxury, and high street fashion makes it a strong and
stable fashion market. According to the New Daily
Economy, the Korean fashion industry is moving
towards eCommerce platforms, as people spend
more time at home and work. Thus, although the
Korean fashion industry has been negatively affected
by the outbreak of COVID-19, the Korea Fashion
Index predicted that Korean fashion industry will be
worth $39 billion in 2021. In addition, as South
Korea’s rental and sharing service market continues
to grow, tAIlor and its services have potential to
succeed.
SWOT Analysis
S One major strength of tAIlor is that it offers both a
free and a paid service. Users who only want the
free service can simply download the app, while
users who want to borrow clothes to enrich their
styling can pay an extra subscription fee. By
providing different services, tAIlor will be able to
generate profit in two different ways and reach a
wider range of audience. Another strength is that it
offers an opportunity to try new clothes or current
fashion trends at home. Clothes for different
circumstances, such as pregnancy, can also be
borrowed every month, if subscribed to tAIlor.
W Despite the strengths tAIlor has, it also has some
weaknesses. In terms of the rental system, since
tAIlor only provides rental service, even if the
consumers want to keep the clothes, they would
have to look elsewhere to purchase the product.
Additionally, as the AI technology that will be used
for tAIlor is relatively unique and new, there may be
some trial and error the company faces initially.
O Considering the social and economic background
of South Korea, where people value how they look
and dress and live with a GDP of 1.647 trillion USD
as of 2019, tAIlor will be able to offer its services to
even more consumers as it grows. Furthermore, it
will be able to compete in South Korea’s competitive
fashion industry with its clear brand personality of
utilizing AI technology, which is unprecedented.
T However, despite having not many companies, a
major threat that tAIlor would face is existing
companies. Codibook and Style Share are two
popular platforms that allow consumers to either
directly purchase clothing items or share their
fashion styles and learn current trends. Moreover,
Closet Share also allows consumers to offer their
unused fashion items to borrow those of others.
Operations/Management
tAIlor will be providing its service to the
consumers by utilizing its website and smartphone
application. After the consumers sign in to either
medium, they will have access to all of our services.
Furthermore, the users may use the rental service,
which is included in our subscription model. The
clothes will be going through an intense quality
check by the AI comparing the initial and the current
condition of the rental product, and the users will be
able to receive a product with the best quality. In
addition, these rental products will be delivered to
the consumers in reusable, eco-friendly packaging,
taking into consideration the large amounts of trash
generated from packaging in South Korea.
Marketing Strategy
One way to advertise tAIlor would be using
social media. Advertisements on social media
platforms will expose tAIlor and its functions to
users across Korea, attracting people interested in
fashion and trends. Popular influencers may also
help advertise by posting reviews and describing the
effectiveness of using tAIlor in their daily lives.
Furthermore, tAIlor will also host promotion events
in order to effectively attract consumers and offer
discounts and gifts for loyal consumers, who have
subscribed to our services, to build consumer
loyalty.
Finance
Initial cost includes the development of an
application (AR development, AI scanner, servers,
database, and developer), advertisements, trucks for
clothes shipping, warehouse for storage, and human
resources, adding up to ₩783,774,000. Most of its
startup budget comes from a loan, adding a cost of
monthly interest with a rate of 0.5%. A minor part of
the cost is also accounted for by the venture capital.
The quarterly cost consists of the maintenance cost
of the application and the warehouse, the interest of
the initial loan, human resources, and new clothes.
The sum of each cost is approximately
₩570,000,000/quarter.
Regarding tAIlor’s revenue, most of the
projected revenue for tAIlor will be from in-app
subscription, which will be ₩70,000/month.
However, tAIlor will increase its revenue from app
download and advertisement as well, which will be
₩900 per download and ₩6,000,000 for 2
advertisements. Assuming 15,000 people download
the app each quarter and 20% of the users purchase
the in-app subscription, revenue per quarter will be
₩649,500,000. Computing total costs, revenues, and
net profits, the break-even point is projected to be in
early 2022, between the fourth quarter of 2021 and
the first quarter of 2022.
Long-Term Development
First, tAIlor’s would expand its operations
across Korea. Besides Seoul, tAIlor will establish
warehouses and distribution centers in other large
cities such as Busan and Incheon, creating sufficient
demand and facilitating the transport of apparel from
abroad from their proximity to airports and seaports.
In addition to expansion of its domestic
network, tAIlor will form Business-to-Business
(B2B) relations with various clothing companies,
from high fashion brands to relatively unknown
small businesses. Partnerships with the former will
increase tAIlor’s value due to the international
recognition of established brands, while the latter
will ensure that smaller firms receive a significant
opportunity to appeal their products.
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