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Heel to Toe provides a marketplace platform for consumers to lend and rent expensive shoes for short periods. These shoes are at the height of fashion and are generally rented for a week or less. A large percentage (60%-80%) of the shoes rented are not owned by the company. Consumers can create a profile post their own shoes up for rental or they can browse the available shoes to rent.Each posting of shoe available for rent will be linked to the renter so that buyers can review their credibility and past reviews. When clicked on a posting, the consumer can view various key information about the shoes (times worn, how old, original price, size). When the renter completes a transaction, Heel to Toe then emails the shipping label with prepaid return shipping to the shoe owner who has two days to get the shoes in the mail to the buyer.After the shoes are returned using the prepaid shipping from Heel to Toe (less than a week after received), the payment will be directly credited into the renter’s account after Heel to Toe takes 2.5% transaction fee plus a $5 service charge.

Heel to Toe will encourage renters to charge around 15% of original retail price of the shoes. If the consumer rents a shoe out of Heel to Toe’s inventory, the warehouse sends the shoe to the consumer and the consumer sends it back with a prepaid shipping label. The shoes are then cleaned and repaired if necessary (Exhibit 3). Shoe renters are responsible for cleaning their own shoes. If shoes are overly dirty/damaged, the renter may be charged a damage fee. This paper will detail various aspects of the company, such as the business concept, market definition, insights from customer feedback, value propositions, guerilla marketing strategy, marketing mix strategy, plan of action, contingency plan, and profitability of operations as well as media campaign.

Company
Heel to Toe is a start-up that rents high-end designer women’s shoes to consumers via the internet. Its current team consists of three members withdifferent strengths: a marketing and sales specialist, finance and operations specialist, and a fashion and purchasing expert. Business Concept

Women often find themselves in situations where they need to dress up. Dressy outfits can be expensive especially when the person does not have appropriate shoes to match the outfit or desires to wear a luxurious pair of new shoes. This is out of many people’s price range, so a rental option can alleviate this pain point. Heel to Toe has an inventory of high fashion shoes that it rents out to consumers throughits marketplace platform. After the shoes have been rented out several times, they can be sold at a discounted price. By providing a marketplace and matching women with excess inventory of unused high end shoes with buyers who need affordable high end shoes, we can alleviate a huge pain point of our consumers.

The company will only have 20% of in house inventory to hedge against higher fixed costs. By allowing individual users to post their own shoes, our product catalogue will be constantly expanding.The product category is shoe rental and it is an existing category. While there are services that rent out dresses and other expensive goods such as handbags,there are no big players in the field of shoe rentals. Heel to Toe’s competitive advantage is strong focuses on affordability, efficiency, lack of high inventory costs, and most importantly, superior variety of products due to the consumer to consumer rental option. Market Definition

Heel to Toe has two market segments that it targets. The first segment is young women aged 15-21 from high income households. This includes high school and college aged consumers. Women in this age group are heavily dependent on their parents for large purchases. In this segment, we target young women with affluent parents as these would be most likely to spend more on special occasions. We estimate based on surveys that up to 30% of these consumers would have the need for our service 3 times per year. 20% of the market would want to use it regularly, 6-24 times per year. 6 is the conservative estimate which is once every other month; 24 is twice per month. There are 20,761,000 women in this age bracket (Exhibit 1), 21%also fit the income levels we are targeting (Exhibit 2). This number equals 4,359,810. With 50% of this number wanting to rent shoes, the maximum potential market size is 2.18 millionconsumers. The other segment is slightly older- 22 to 35. In this segment we target those who are lower income.

These are women who no longer have support from their parents and are looking for smart ways to save money while also looking good. This is also the age where people usually get married. In her late 20s, a woman is typically invited to 5-15 weddings per year. We can expect 50% of these women to have a need for our service 6 to 24. 29% (Exhibit 2) of this age group fits into our financial bracket, 25,299,000 match our age group (Exhibit 1). The total segment size is 7,336,710. The maximum potential for us in the segment is 3.67M people. While these segments are not likely to increase, there is still plenty of room for us to grow since it will take several years to market to this many individuals. Down the road, we can also increase our top line revenue by expanding our product line to attracting people from other segments, such as men and higher income women. Customer Feedback

In our surveys and customer interviews, we have had very positive responses. Many people mention how there are successful companies using similar renting models on plenty of other products: dresses, handbags, suits, cars, etc. What we learned from the survey is that while most people agree that this is a good idea and should be in place, several of the people (especially older people), do not consider themselvesto be in our target market and would not use our service. Many people are concerned about issues rising from wearing someone else’s shoes, which is a risk we are taking. Through further testing and proof of concept, we can find out whether enough there are enough people out there willing to wear rented shoes in order to save money. At the same time, there were lots of people who were excited at the concept of buying half priced shoes after they had been rented. This is good because resale is an important revenue stream that will allow us to break even easier on each pair. Please refer to Table 1 in the appendix.

Our competitive advantage is based on our high quality, low price rental alternative that replaces purchasing expensive luxury brand shoes. Through our rental service, customers have the ability to afford luxury shoes for special occasions, such as; weddings, galas, professional events, parties, job interviews, school dances, or every day wear that they would otherwise be unable to afford, or are not willing to spend. Our inventory selection will offer more basic, classic designer styles and some of the latest season’s must-have shoes. The individual sellers have control over the shoes they decide to rent, but are required to be designer, lightly worn, and with minimum retail value of $500. We offer a convenient delivery service that allows customers to quickly rent and receive the shoes they need without leaving their home. Customers are able to have the latest designer styles without paying the designer price. The short-term rental means that customer are able to wear the shoes of their dreams without committing to large expenses, when the shoes they are renting are most likely very specific for each event and would be worn only a few times. Customer Value Proposition

Heel-To-Toe.com is the ultimate luxury shoe rental website for fashionable females looking for the most convenient and affordable way to be a Fashionista strutting around town in the latest shoe styles without paying luxury brand prices. Please refer to Table 2. Lender Value Proposition

Heel-To-Toe.com is the ultimate luxury shoe rental website for fashionable females to rent out their own luxury designer shoes to other customers and make more money from the shoes sitting in their closet, than traditional resale.

Guerilla Marketing

Guerrilla marketing will play a key role in spreading the word about Heel-To-Toe.com without incurring large marketing costs. The best way to reach a large amount of target customers in a short period of time is by having a presence at all major events and events that attract our customers. This goal will be achieved by employing a staff of young volunteers to wear the season’s latest shoes at these events and take pictures of the shoes that guests are wearing. They will give each individual a card with the Heel-To-Toe.com website, where they can find the professional pictures of their shoes. In addition, the card will have a QR codes that will lead those who scan it to our website, which can later lead to 10% discount on their next purchase or rent. The QR codes will also give us the ability to track the event that the code came from, so that we have a more concise understanding of the events and customers that we need to focus on to increase the efficiency of our the volunteers’ time. The professional pictures taken by the volunteers will eliminate one of the most difficult and time consuming steps for the individual creating an account, which will increase the likelihood that the individuals photographed, agree to rent out their shoes. Marketing Mix Strategy

Our service is high end shoe renting. These shoes are very expensive and many consumers cannot afford to own them. Heel to Toe offers short term rentals at prices everyone can afford. Some of these rentals are through the Heel to Toe inventory and some are C2C, where shoe owners can post pictures of their shoes, and with our help, easily send them to people who want to rent them. Heel to Toe is an online renting platform. We will have a few warehouses strategically placed around the country for our inventory, but our C2C platform allows us to have limited inventory and become an online based service. When doing this, we send the lender a prepaid return shipping label to the other address. This way, shipping can be affordable and easy, making everyone happy about the renting process. We are looking to promote very close to our targeted segments.

The best way to do this is connect with venues that put together the events that people use our service for. This includes banquet facilities, high schools during proms and other key dances, churches and halls that host weddings, and clubs with enforced dress codes. At these places, we can drop off coupons for print advertisements and discounts on first rentals that will help customers find out about our site for a relatively low customer acquisition cost. These coupons will also have codes and landing sites so we can tell which promotion channels are generating the most leads. The price of a shoe rental from our own inventory is going to be around 15% of the shoes retail price. This is low enough where our customers will see the value in renting over ownership. For thirty party consumers, we will encourage that they lend out at not much higher than 15% as any higher would most likely discourage sales. Plan of action

Heel to Toe plans to reach national distribution in its first year. However, its marketing efforts will be targeted city by city. The first two cities it will target are fashion hub: New York and Los Angeles. We think these are two cities where fashion is in the foreground and people are more focused on what they are wearing. Once the company grows in profit and number of employees we can increase our stronghold to other cities in order of what makes more sense based on our findings in LA and New York. We will target new cities that align with market conditions of LA and New York if our results of initial operation in these cities are satisfactory and we can continue to expand using the current marketing strategies and if not, pivot and re-strategize. Since our inventory is constantly changing, it is important to keep track of style trends and update our inventory accordingly. The most important thing for us is our service reputation. If we try hard to acquire customers but they have a negative experience, that could be a huge threat to our company. We need customers to feel like they can rent from us on a regular basis and decrease their need to purchase shoes. This brand loyalty is the best way to sustain our business. Contingency Plan

The contingency plan of the company is liquidation. The bulk of Heel to Toe’s assets is inventory and every piece of inventory is intended to break even and then get sold off. If we decide that the company is not working, we can rent out the remaining shoes a few more time and then sell them. Also, because of the hybrid inventory model, if the problem comes from one of the two models, we can move our business fully into the one that is working better for us. Profitability

When determining the profitability of Heel to Toe we calculated the average amount of times per year our customer will use our service, which came out to 3.34 times. The average amount of revenue each time a customer uses our service will be $30 (Exhibit 4). There will be two types of rent out to customers; straight through our inventory which will count for around 20% of the transactions, and then the rent out from people who rent out their own shoes to customers which counts for approximately 80% of all transactions. Customers who rent shoes from our inventory will be charged 15% of the retail price of the shoe, and the owner renting out her shoes will be charged 2.5% and an additional $5 service fee. This sums up three revenue streams (Exhibit 4).

We assumed three different percentages of how many customers in our target group we would be able to reach out to; Conservative 2% which generates revenue of $11,623,200 (profit: $6,623,200), Neutral 3.5% with revenue of $20,340,600 (profit: $11,115,845) and Optimistic 5% which brings in $29,058,000 (profit: $16,128,350), all for the first year. We are aware that these numbers are very high yet it is important to remember that the shoe industry is approximately $35bn in the U.S. The contribution margin for our service was calculated to an average of $17.25 per rent with a contribution margin % of 57.5%. We will reach break-even after 33,623 transactions at revenue of $1,008,696 (Exhibit 3 & Exhibit 4).

Profitability on Media Campaign
We created a spreadsheet of the profitability of our media campaign which is attached as Exhibit 5. We will give a 10% discount coupon as an incentive for potential customers to try out our service. The media cost will total ($2,100) and the campaign will generate revenue of $13,560 which implicates a media ratio of 6.4. The whole campaign will incur total costs of ($10,568) and with the $13,560 revenue that leaves a profit contribution of $2,992.5 and a profit margin of 22.07%. The customer acquisition is $23.38, which is a significantly low and good amount to spend per new customer the campaign brings in. Lastly the closing ratio in the campaign is 0.57 which means that slightly over 50% of the people who will engage in our campaign will follow through to purchase.

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