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Net-a-Bargain business idea

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  • According to Enders Analysis, the retail coupon market is worth £30bn in the UK alone. Themkt is even larger market in the US.It’s a growing market too as proven by a recent study conducted by Forrester Research which showed voucher code usage is on the rise. According to the study: 66% of UK voucher code users indicated that they were likely to use more voucher codes in the nxt year. Additionally, 42% of voucher codes users (50% of whom were under the age of 32) said they expected to use voucher codes for 25% or more of their online purchases.The retailer industry also seems very positive about voucher code usage, as illustrated by the 2 quotes at the bottom of this slide.
  • Google trends data offers a very useful way of illustrating the trend of people searching for deals online, for terms like: vouchers, coupons and voucher codes.You’ll notice that searches for “voucher codes” and other related terms began increasing significantly after 2007 onwards (the global economic downturn)
  • Read firstSimilarly there are a wide range of related keywords with substantial search volume and relatively low levels of competition. For example, the term vouchercodes, which has only 33,100 monthly searches.Read lastThis doesn’t even include longtail search queries for which the competition is very low and where there is a good opportunity to rank highly with minimal effort. SERPs = search engine results pages
  • There are many costs associated with starting a business. The graph in this slide illustrates our business development costs. You’ll notice that our main cost comes from employee salaries. We plan on having 7 full time employees all with a starting salary of approximately £18,000. This gives us a total for employee salaries of £126K. We have also included costs for ....... The total comes to £274,437. Say notes. List the cost by category and state the total initial investment figure.
  • We are using an affiliate revenue model. Assuming that we start trading on the 1st January 2014 we have based our financial forecast on the fact that we will attract 100,0000 unique visitors in the 1st month. Our conversion rate will be 15 ... Increasing to 20% in 6 months. That our average order value will be £50, and ... This gives us a cumulative revenue of £3,243,846 before expenses.
  • When is comes to marketing spend we will mainly be allocating our budget to PPC and display advertising. These are our main mkting channels. We will spend on average 76% of our revenue on marketing. This is to support our ambitious growth plans.Our profitability target is to make 326, 889 net within the 1st year. By month 11 we will be profitable with 8,169. In month 12 our profit will £52,452. And our full year profit will be 60,621.
  • Primary Target MarketThe primary target market for Net-a-Bargain is the group described as ‘the squeezed middle’. Definition: “working-age households who are living largely independent of the state but with incomes below the median (middle).” Source: Resolution Foundation research 2013This group of 10.1 million adults and 5.8 million households comprises approximately one third of the working age population, living on an average household income of £20,500 after tax. They constitute 31% of the British population and earn less than the median wage but more than the bottom 10%. This group is often referred to as the LMI (low to middle income group).*Secondary Target MarketPeople who do not fall into the above category, but who are looking for bargains online. They may fall into the AB socio-economic classification. People in this group are characterised by upper-middle and middle class citizens who typically work in middle to upper management roles, and are highly skilled professionals. These consumers although wealthier have proven to be more savvy shoppers and are increasingly adopting the use of coupons, vouchers and money saving advice. 74% of AB consumers are looking to use coupons and ‘money off’ offers this festive season according to research conducted by Valassis and Gfk.
  • SituationThe retail coupon & money saving market is a very competitive one with over 500 competitors.ObjectiveNet-a-bargain is entering the market as a start-up with no name or brand recognition, however we aim to become the number 1 UK destination online for people looking to save money.MissionWe will achieve this by bringing money saving information and advice under one umbrella making it easier for people to find what they want in one place.Taking into account the competitive environment and our need to build a strong customer base its our Key Business ObjectiveTo build brand awareness, a loyal subscriber base and also strong social media communities.
  • Our value propositionWe will position Net-a-Bargain as the destination for online savings, and will provide our customers with relevant, accurate and up-to-date listings of money saving devices through our website, app and on social media platforms.The communication strategies to be leveraged include:Blog, infographics, posts on social media sites, PPC advertising, display advertising, and e-newsletters amongst other thingsto help disseminate useful and engaging money saving advice and tools to our customers
  • We have thought carefully about the Actions we need to take in order to succeedWithin 90 days of launching Net-a-Bargain we intend to refine our ability to search for coupons, try geo-personalisation and sign agreements directly with merchants (hence attaining higher affiliate commissions).Full details of our marketing plan can be found in within these slides.
  • Point 1 – this gives us a stable customer base, that will continue to exhibit bargain hunting behaviour, thereby increasing our revenues

Transcript

  • 1. Brought to you by
  • 2.  Net-a-Bargain is a “money saving” digital business, launching in January 2014.  We identified a lucrative opportunity caused by the global economic downturn within the retail coupon market.  This market is worth an estimated £30bn in the UK alone. JP Morgan estimates that there are 200 voucher code sites in the UK, 500 in the US and a massive 2,000 in China. Although there are some well-established companies in this highly competitive market, the market is very fragmented and no single company offers a complete money saving solution. This represents an attractive opportunity for us. We stand to make an estimated £326K in the first year alone.  Net-a-Bargain shall mainly generate revenue through affiliate commission & advertising  We will also generate revenue through paid product placements on the website, App and community assets.  Our clients our people described as the “squeezed middle”, who work but find it difficult to make their earnings go far enough. A problem that is compounded by the stagnation in wages increases.  We aim to attract, engage, convert and retain customers by building and leveraging social media communities and also by taking advantage of opportunities we identified in both paid and natural search.  Net-a-Bargain aims to be the single largest online resource offering money saving advice & devices (i.e. coupons, vouchers, ‘money off’ deals) to its members. This document illustrates how we intend to achieve this.
  • 3.  According to Enders Analysis, the retail coupon market is worth £30bn in the UK alone. It is an even larger market in the US worth $280bn (£173bn) a year.  This is a growing market. A recent study by Forrester Research, found that the frequency of use of online voucher codes is increasing. Some other findings from the study included:  Overall, 66% of UK online voucher code users indicated that they were likely to use more voucher codes in the next year versus only 8% who said that they would be unlikely to do so.  In addition, 42% of all online voucher code users and 50% of those under the age of 32 said that they expected to use voucher codes on 25% or more of all their online purchases.  Besides Forrester’s findings, the retail industry itself is very upbeat about the use and value of coupons as demonstrated by the following quotes: “We’re up 23% against last year on our affiliate program spending. Voucher code use was massive for us last year, and it’s going to be even bigger for us this year” Digital marketing manager, multichannel retailer “Our use of voucher codes has grown tremendously in the past year or two, and we expect it to continue growing for the foreseeable future” Affiliate marketing manager, multichannel retailer
  • 4.  The trend for people searching for deals online can be illustrated with Google Trends data for terms like vouchers, coupons and voucher codes  Searches for voucher codes and related terms began increasing from 2007 onwards
  • 5.  According to Adwords there are approximately 246,000 monthly searches for the term voucher codes and the competition is medium  Similarly there are a wide range of related keywords with substantial search volume (some examples right), for example opportunities such as vouchercodes which has 33,100 monthly searches and low competition  There are also opportunities to optimize the site and appear in the SERPs for long tail search queries for which there is very little competition:
  • 6. Voucher Codes e.g. VoucherCloud • (+) Offer a very wide variety of deals • (+) Have over 2m monthly visitors to their website • (+) High visibility on multiple app platforms and across social media • (-) Their offering is limited to deals/vouchers Cash Back e.g. Quidco Money Saving Tips e.g. Money Saving Expert • (+) Brilliant money-saving advice platform • (+) Loyal and significant community • (+) Good reputation in the market • (-) Viewed mainly as an information source, and not as a ‘deals’ website Spot Deals: e.g. Groupon • (+) The market leading coupon and deals website with over 42.6 million active customers • (-) Offer a limited variety of deals • (-) Low customer retention rate • (-) Sustaining severe profit losses The Money Saving Market:  Highly competitive market  High growth rate over the last few years  Many established companies already offering deals and discount offers Diners Club e.g. Tester Club Group A Price Comparison e.g. Price Runner => The market is very fragmented and there is no single company that offers a complete solution that includes the best money saving advice and tools
  • 7. Net-a-Bargain Net-a-Bargain takes a fragmented market place and brings together the best money saving advice and tools (i.e. vouchers, coupons etc) for its members. Overview Competitive Advantage Defensibility • The single largest source for all your money saving needs. • Making saving money simple and helping members enjoy great bargains. • Support for customers – through peer-to-peer and expert reviews. • Support for merchants selling vouchers – through customer loyalty and retention planning tools. • Offers its members a combination of the best money saving tips, discounted offers and user generated deals • Facilitates social sharing of content • Contracts with financial experts who write for us • Contracts with review websites • No one else currently support merchants with loyalty and customer retention tools • We offer a mixture of peer and expert reviews on deals
  • 8. The Cost of Developing the Business Initial Start Up Costs £140,000 £120,000 £100,000 £80,000 £60,000 £40,000 £20,000 £0 • In order to facilitate the growth of the business, we will need a live database for merchandise, transactional data and customer data, etc. • The front end of the website will need to be as fast as our competitors. Page load times are key for maintaining conversion rates. User experience (UX) is a top priority. • Our mobile product, the mobile website and mobile app will be developed with the desktop site. • We will also make use of web crawlers that will scrape selected websites for our desired information. • We are asking for an initial investment of £274,437.
  • 9. Affiliate Revenue Model Assuming the business begins trading on 1st January 2014, we aim to generate 100,000 unique visits in month 1. We expect to be able to grow monthly visits by 5% per month. Initially we estimate a conversion rate of 15%, topping out at 20% by month 6. We assume an average order value of £50 per conversion. Our revenue comes from a commission of retailer GMV. We will use affiliate networks and negotiate affiliate deals with retails themselves. During the first 13 months we will grow our average commission rate from 15% to 20%. Our projected revenue is calculated as visits x average conversion rate x average order value. Projected revenue is initially £112,500 in month 1 and increases to £359,171 by month 13. During this 13 month period, our revenue will total £3,243,846. Project 13 Month Revenue and Commission Rate Projected 13 Month Conversions and Conversion Rate Monthly Conversions AVG Conversion Rate Monthly Revenue 40,000 25% 35,000 20% 30,000 25,000 15% 20,000 10% 15,000 10,000 5% 5,000 - 0% Sum of AVG Commission £400,000 £350,000 £300,000 £250,000 £200,000 £150,000 £100,000 £50,000 £- 25% 20% 15% 10% 5% 0% Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2 3 4 5 6 7 8 9 10 11 12 13 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2 3 4 5 6 7 8 9 10 11 12 13 Jan 1 Jan 1 Jan
  • 10. Projected 13 Month Combined Spend Marketing Spend Monthly Employee Costs Monthly Average Salary Monthly No. Staff £45,000 £40,000 £35,000 £30,000 £25,000 £20,000 £15,000 £10,000 £5,000 £- Projected 13 Month PPC and Display Spend PPC Spend Monthly Operating Costs Display Spend £300,000 £250,000 £200,000 £150,000 £100,000 £50,000 £Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2 3 4 5 6 7 8 9 10 11 12 10 8 6 4 2 0 Jan 13 Our projected 13 month revenue will be driven by the number of site visits. We will grow our monthly visits with PPC and display advertising. Our monthly PPC and display spend will average 76% of revenue. Month 1 marketing spend will be £87,188, increasing to £265,103 by month 13. During this period, expect our CPC to increase from £0.39 to £3.88 and our CPA to increase from £3.88 to £7.75. Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 1 Jan 1 12 2 3 4 5 6 7 8 9 10 11 12 13 We expect to be able to hire one new employee every four months. By month 14, we should be able to raise our average salary to £40,000 from £18,000 Projected Profitability by Month Net Take Profit £300,000 Profitability Target £200,000 £100,000 • With an initial investment of £274,437, we expect to be profitable as early as month 11, if our aforementioned financial targets are met and if we divert our net take to reducing our debt. • Our net take is calculated as revenue – marketing spend – employee costs – operating costs. £1 -£100,000 -£200,000 -£300,000 -£400,000 -£500,000 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
  • 11. Our customers are savvy shoppers looking to save money Primary Audience Secondary Audience Bargain hunters falling into the upper-middle and middle income bracket (i.e. AB consumers). Their Needs To make their money go further Definition People described as ‘the squeezed middle’ or low to middle income group (LMI). Our Proposition The one-stop shop for saving money online Consist of: 10.1 million adults and 5.8 million households Wealthier, but very budget conscious shoppers One third of the working age population Skilled professionals What Influences Them Word of mouth, reviews and peer recommendations Average household income = £20,500 after tax Earn less than the median wage, but more than the bottom 10%
  • 12. 1. Situation 2. Objectives: • • • • Vision – Become the number 1 destination online for UK shoppers who want to save money on their shopping and other expenses. About 500 competitors, a few with a strong presence Very fragmented market place None offering all money saving devices in one places Main players – Hotukdeals, Vouchercodes, Moneysavingexpert, Groupon, etc Net-a-Bargain: • A start-up • No brand presence, website or any other digital assets Mission – Bring money saving information & resources under one roof making it easier, faster & simpler for customers to save money online or offline. Key Business Objectives: • Create brand awareness • Create subscriber base • Build communities on social networks • Engage with users on mobile devices Goals: • Reinforce brand message through online advertising • Grow visitor numbers to website • Build fan base on Social Media sites • Generate subscribers on website • Grow app downloads and awareness • Create & grow subscriber base • Build & Grow revenue
  • 13. 3. Strategy: 3. Strategy: 3.1 Strategy: target segments 3.3 Strategy: content marketing Targeting people based on The Resolution Foundation definition:  New website, new blog, new online communities – Facebook Page, Twitter channel, G+, Pinterest  2 blog posts each week sharing other money saving tips, useful information  Develop 4 infographics and videos about saving money online, economic impact of the economic downturn and how to survive it.  Daily posts on social media platforms with fresh useful/helpful content.  “The Squeezed Middle”  “None-Squeezed Middle” – other bargain hunters (savvy internet shoppers) 3.2 Strategy: value proposition Brand positioning: One-stop shop for online savings, offering relevant, accurate, upto-date listings of money saving devices and advices. Being innovative, making it faster, easier & simpler to save money online, offering a massive variety of saving devices, customers can always find what they are after. Product: All money saving devices – coupons, vouchers, etc. Pricing: Members register free, coupons listed free, paid for placement, featured products paid for Place: Website, Social Media forums, App. 3.4 Strategy: communications strategy Priority acquisition channels:  Paid Search Advertising - Google AdWords & Yahoo!/Bing search advertising  Paid Display Advertising – use display advertising to raise brand awareness, featuring lucrative offers  Quickly build Email list and send regular emails based on member preferences  Build social media community memberships – Facebook fans, Twitter followers, G+ members, by posting regularly. Priority retention activities:  Monthly newsletters to members featuring the month’s best offers and general monthly saving tips  Daily hot offers on all social communities and other relevant money saving information.  Encouraging members to rate offers, share offers and recommend deals to others
  • 14. 4. Tactics: 5. Actions: (site, app, communities building Reach:  SEO focusing on long tail keywords, “where there is little competition and ability to rank fast in the search engine result pages (SERPs)  PPC (Pay per click) focusing on keywords with little or no competition.  Leverage cheap traffic from display networks to raise brand awareness and entice them with irresistible offers.  Build and leverage online communities – Facebook pages, Twitter feed, G+ community, Pinterest board. activities, etc) Act:  New regional landing pages  Build & develop crawler/scrapper  Refine onsite search facility Within 90 days launch website, app, create online communities and start online advertising • Q1: Fine tune web crawler/scrapper, focus on SEO efforts • Q2: Start trialling regional offerings • Q3. Sign affiliate deals with partner companies • Q4. Launch of “Festive Season” Campaign 6. Control: (Review performance through measurement and analysis) • Convert:  New member free gift offered via email, triggered by online sign-up Engage: • Monthly newsletter, tailored by customer preferences • Make Facebook, Twitter, G+ & Pinterest pages active, by posting regular informative and useful content. • • • Q1: Setup measurement & tracking for weekly review and improvement Q2: Q1 results review Q3: Launch conversion rate optimisation (CRO) campaigns – user testing, etc. Q4: Implement results from CRO campaigns.
  • 15.  Net-a-Bargain offers a lot in terms of investment –  Not only is the company founded on a clear consumer insight, it is based upon new consumer behaviour (deal searching and voucher using) that has grown up during this current period of recession. Whilst some elements of the recession have lifted, others, including how wealthy people feel, have not improved. Therefore, for the foreseeable future, this behaviour is commonplace and entrenched into how many of us shop.  Our company revenue stream is secure and profitability is planned to be £326,889 in our first year. We have begun from the position of a lean start up to minimize costs and maximize profit, crucial to the viability of the company as an investment.  The company is the first in the marketplace to offer this comprehensive money saving service. Therefore we can take a strong position in the field and steal consumers from other less-comprehensive websites.  We feel that by investing in Net-a-Bargain you would be investing in a future-proofed, stable and lean business that would expose you to current behavioural trends, whilst maximising your profit.
  • 16. Princely Bibi | Layla Brook | Julian Tozer | Elena Bostan Sophie Christiansen | Sarah-jane Thomas | Adrian Ng