I
A Work Project, presented as part of the requirements for the Award of a Master Degree in
Management from the NOVA
–
School of Business and Economics
Key customers retention as a company’s competitive
advantage: Chic by Choice case study
-Appendixes-
GAIA VILLATORA MILIČ
#3051
A project carried out on the Master in Management Program, under the
supervision of Professor Leid Zejnilovic
II
Chic by Choice internationalization strategy - Appendixes
Appendix 1. The four main variables considered by online customers (Yuan, David, John,
2010)
Appendix 2. Chic by Choice website visitors, registers, and customers in year 2016
Timeliness
•
Choice of
delivery date
and time
window
•
Specific time
slot
•
Quick delivery
•
Specification of
delivery time
slot.
Availabilily
•
Confirmation of
availability
•
Substitution
offer
•
Order-tracking
and tracing
system
•
Confirmation of
waiting time in
case of
out-of-stock situation
Condition
•
Order accuracy
and
completeness
•
Order in-transit
damage
•
Condition on
arrival
Return
•
Return channels
options
•
Promptness of
collection
•
Promptness of
replacement
Total visitors: 896.580
Registers: 84.976 (9%)
III
Appendix 3. Chic by Choice total monthly number of reservations, in 2015 and 2016.
Appendix 4. Repeated purchase rate expressed in terms of volume, year 2016
January February March April May June July August Septemb
er October
2015 144 121 153 172 205 187 140 219 284 240
2016 292 322 405 528 574 465 334 406 468 343
0 100 200 300 400 500 600 700
Total number of reservations
2015 2016
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Per
ce
n
tag
e
o
ve
r t
h
e
to
tal
re
ve
n
u
e
s
Monthly rates
Repeated purchase rate vs new customers
IV
Appendix 5. Bad online reviews about Chic by Choice.
Source: https://www.sitejabber.com/reviews/www.chic-by-choice.com
V
Appendix 7. Data on refund request by Chic by Choice customers in 2015 and 2016.
Appendix 8. Revenue by market, expressed as percentage of total revenues
2015 2016
Other EU 5% 6%
Germany 7% 14%
Portugal 7% 19%
UK 81% 61%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Chic by Choice revenues by markets
VI
Appendix 9. Cumulative order value of 10 of the Top-Spenders until October 2016
Appendix 10. E-commerce is expected to further increase in the UK until 2019
€ 687,00€ 725,00 € 728,00 € 744,00
€ 815,00 € 859,00 € 860,00
€ 1.048,00 € 1.096,00
€ 1.248,00
€ 0,00 € 200,00 € 400,00 € 600,00 € 800,00 € 1.000,00 € 1.200,00 € 1.400,00
UK UK UK UK LU UK UK UK UK UK
Co
u
n
tr
VII
Appendix 11. Chic by
Choice main competitor’s features
Primary competitors – onlinedress rentals Price range Delivery conditions Assortment of dresses Physical showroom? Additional information 39£- 109£ Customers must arrange the return; they have a prepaid label. International deliveries 30£; 9,95£ standard domestic delivery
Similar brands to Chic by Choice; More dresses for a night out; Accessories
YES –
Southwest London (UK)
Try-on service for 30£
First rental is free
Customers can upload photos and reviews
40£ -80£
Free shipping in EU; Customers must send back the dressa at the Postal Office; They have a prepaid label
Some brands are the same as CBC; More formal and wedding dresses;
NO Free
back-up size is sent, it must be returned within 24h for a refund if it does not fit
24,99£ - 50£
Customers are charged for delivery and returning the dresses (9,95£) they have to drop ita t the Post Office
Trendy dresses for a younger target
YES –
Burnley, Lancashire (UK)
15£ - 99£
Customers have to arrange and pay the return with the Postal Office
Same dresses as seen on the red carpet
NO Dresses are
rented and/or sold
50 –
700 € Customers must arrange the return; They have a prepaid return label
Wide assortment of not only dresses, but also skirts, tops, coats, accessories, wedding dresses
NO Market
leader in Italy;
VIII
Appendix 12. Main luxury multibrand online retailers
Main secondary competitors
–
luxury multibrand online retailers
Appendix 13. PESTLE analysis
•Brexit is a key aspect for future uncerainty, not clear exactly when the UK will no longer belong to the European Union
•Political instability and disputes between opposite parties, with different visions for the future of UK
POLITICAL
•Brexit effect: generally higher prices, the pound will have a lower value compared to other currencies
•Still, the purchasing power of the UK is one of the highest of Europe
•Concentration of the wealth in London, which is expected to further grow in the next years
ECONOMICAL
•Total opulation of 63 million people, 10 million in London
•Population growth rate expected to be of 0,71 in the 2010's and 0,58 in the 2020's
•High level of expatriates, often (38%) more qualified of the UK population (29%), holding a degree or higher
SOCIAL
•87,9% of the adults have used Internet in 2015
•Wide use of smartphones and tablets for online purchases
•e-Commerce penetration among the highest in the world, the first in Europe
•Clothing and footwear represent 14% of online sales
TECHNOLOGICAL
•20% corporate tax in UK.
•7th easiest country to do business in the world according to the World Bank.
•Refunds must be given within 14 working days, either online or offline sales.
•With the Brexit, free flows of goods within the EU might be more difficult in some years
LEGAL
•Freight Transport Logistics Action Plan (2007),suggests actions for long-term logistics efficiency and CO2 and pollution reduction
• Overall, the UK is decreasing the level of greenhouse and CO2 emissions (- 8% in the years 2013-2014); Trasport represent 23% of the total emissions
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Appendix 14. Cost benefit analysis 2017
–
2019
(estimated with a discount rate of 3%)
-
S1: Status Quo
-
S2: Improved logistics
Y0 - 2016 Y1 - 2017 Y2 - 2018 Y3 - 2019 Total 2017-2019 Total in 2017 EUR Warehouse and office € 26.400,00 € 26.400,00 € 26.400,00 € 26.400,00 € 79.200,00 € 76.915,60 Labor € 64.800,00 € 64.800,00 € 64.800,00 € 64.800,00 € 194.400,00 € 188.792,84 Customer service (4 people) € 33.600,00 € 33.600,00 € 33.600,00 € 33.600,00 € 100.800,00 € 97.892,58 Marketing € 200.000,00 € 200.000,00 € 200.000,00 € 200.000,00 € 600.000,00 € 582.693,94
-€ €
-€ € -Annual total fixed € 324.800,00 € 324.800,00 € 324.800,00 € 324.800,00 € 974.400,00 € 946.294,96
-€ € -Delivery costs € 47.082,00 € 69.589,95 € 86.987,44 € 104.384,92 € 260.962,31 € 252.436,57 Cleaning costs € 12.390,00 € - € -Refund management € 61.421,00 € 82.242,67 € 102.803,33 € 123.364,00 € 308.410,00 € 298.334,13
-€ € -Annual total variable € 120.893,00 € 151.832,62 € 189.790,77 € 227.748,92 € 569.372,31 € 550.770,70 TOTAL COSTS € 445.693,00 € 476.632,62 € 514.590,77 € 552.548,92 € 1.543.772,31 € 1.497.065,66
-€ € -Revenue Reservations from UK € 296.852,00 € - € -Reservations from EU € 189.791,00 € - € -Annual Total € 486.643,00 € 632.635,90 € 790.794,88 € 948.953,85 € 2.372.384,63 € 2.294.877,93
-€ € -ANNUAL PROFIT € 40.950,00 € 156.003,28 € 276.204,11 € 396.404,93 € 828.612,32 € 797.812,27
Fixed costs
Variable costs
Status quo
Y1 - 2017 Y2-2018 Y3-2019 Total Total in 2017 EUR
Warehouse in Lisbon € 26.400,00 € 26.400,00 € 26.400,00 € 79.200,00 € 76.915,60 Labor € 64.800,00 € 64.800,00 € 64.800,00 € 194.400,00 € 188.792,84 Customer service (6 workers) € 50.400,00 € 50.400,00 € 50.400,00 € 151.200,00 € 146.838,87 Marketing € 200.000,00 € 200.000,00 € 200.000,00 € 600.000,00 € 582.693,94
Annual total fixed € 341.600,00 € 341.600,00 € 341.600,00 € 1.024.800,00 € 995.241,25
Delivery cost/cleaning € 69.589,95 € 90.466,93 € 117.607,01 € 277.663,90 € 268.277,81
- € 0,00 €
-Refund management € 44.284,51 € 57.569,87 € 74.840,83 € 176.695,21 € 170.722,24
€ 0,00
Annual total variable € 113.874,46 € 148.036,80 € 192.447,84 € 454.359,10 € 439.000,06 TOTAL COSTS € 455.474,46 € 489.636,80 € 534.047,84 € 1.479.159,10 € 1.434.241,31
Revenue Reservations from the UK € 385.907,60
Reservations from EU € 246.728,30
Annual Total € 632.635,90 € 822.426,67 € 1.069.154,67 € 2.524.217,24 € 2.438.889,21
ANNUAL PROFIT € 177.161,44 € 332.789,87 € 535.106,83 € 1.045.058,14 € 1.004.647,91 Fixed costs
Variable costs
X
-
S3: Warehouse in the UK
-
S4: Warehouse in the UK with a permanent showroom
.
Y1 Y2 Y3 Total Total in 2017 EUR
Warehouse € 68.720,00 € 66.720,00 € 66.720,00 € 202.160,00 € 196.386,70
Labor € 64.800,00 € 64.800,00 € 64.800,00 € 194.400,00 € 188.792,84
Customer service € 50.400,00 € 50.400,00 € 50.400,00 € 151.200,00 € 146.838,87 Marketing € 200.000,00 € 200.000,00 € 200.000,00 € 600.000,00 € 582.693,94
€ 0,00 € 0,00
Total fixed costs € 383.920,00 € 381.920,00 € 381.920,00 € 1.147.760,00 € 1.114.712,35
Delivery/cleaning EU € 27.140,08 € 35.282,10 € 45.866,74 € 108.288,92 € 104.628,35 Delivery/cleaning UK € 19.295,39 € 27.013,55 € 40.520,33 € 86.829,28 € 83.716,44 Refund management € 44.284,51 € 60.271,22 € 85.916,38 € 190.472,12 € 183.784,69
€ 0,00 €
-Total variable costs € 90.719,99 € 122.566,88 € 172.303,45 € 385.590,32 € 372.129,48
TOTAL COSTS € 474.639,99 € 504.486,88 € 554.223,45 € 1.533.350,32 € 1.486.841,83
Reservations from the UK € 385.907,90 € 540.271,06 € 810.406,59 € 1.736.585,55 € 1.674.328,84 Revenue Reservations from the rest of EU € 246.728,00 € 320.746,40 € 416.970,32 € 984.444,72 € 951.166,79 Annual Total Revenues € 632.635,90 € 861.017,46 € 1.227.376,91 € 1.918.940,63 € 2.625.495,64
ANNUAL PROFIT € 157.995,9 € 356.530,6 € 673.153,5 € 385.590,3 € 1.138.653,81
Fixed costs
Variable costs
Warehouse in the in UK
Y1 Y2 Y3 Total Total in 2017 EUR
Warehouse € 68.720,00 € 66.720,00 € 66.720,00 € 202.160,00 € 196.386,70
Physical store € 67.190,00 € 64.190,00 € 64.190,00 € 195.570,00 € 190.015,62
Labor € 64.800,00 € 64.800,00 € 64.800,00 € 194.400,00 € 188.792,84
Customer service € 50.400,00 € 50.400,00 € 50.400,00 € 151.200,00 € 146.838,87
Marketing € 220.000,00 € 200.000,00 € 200.000,00 € 620.000,00 € 602.693,94
€ 0,00
Total fixed costs € 471.110,00 € 446.110,00 € 446.110,00 € 1.363.330,00 € 1.324.727,97
Delivery/cleaning UK € 23.748,18 € 56.409,22 € 93.517,94 € 173.675,34 € 166.664,04 Delivery/cleaning rest of EU € 27.140,08 € 35.282,10 € 45.866,74 € 108.288,92 € 104.628,35
-€
Refund management € 50.518,41 € 78.972,91 € 130.925,12 € 260.416,44 € 250.600,62
€ 0,00
Total variable costs € 101.406,67 € 170.664,24 € 270.309,80 € 542.380,70 € 521.893,01
TOTAL COSTS € 572.516,67 € 616.774,24 € 716.419,80 € 1.905.710,70 € 1.846.620,98
Revenue Reservations UK € 474.963,57 € 807.438,07 € 1.453.388,52 € 2.628.842,09
Reservations rest of EU € 246.728,00 € 320.746,40 € 416.970,32 € 951.166,79
Annual Total revenues € 721.691,57 € 1.128.184,47 € 1.870.358,84 € 3.720.234,88 € 3.580.008,89
TOTAL PROFIT € 149.174,90 € 511.410,23 € 1.153.939,04 € 1.814.524,17 € 1.733.387,91
Fixed costs
Variable costs
XI
Appendix 15
. “Window store”
in New York launched by Net-a-Porter as part of its
omni-channel strategy.
Visitors can purchase online the limited edition items displayed on the
windows.
Source: WordPress.com
Appendix 16. Chic by Choice current marketing budget distribution
2016 investment per channel Total marketing budget
Facebook and Instagram
37.52%
Bing
8.46%
AdWords
51.54%
Affiliation
2.48%
XII
Appendix 17. Chic by Choice communication strategy for the main segments
Segment Communication channels
Senior corporate (35-50), income of 80-150K/year; 8-10 rentals per year;
They prefer the quality of the fabric and the cut of a
dress to the brand
Events marketing, stylist advices, personal shopping
Professionals (27-40), income of 50-80K/year; 5 rentals per year;
They like to follow the latest trends and brands; Rent dresses mainly for social events or weddings
Facebook, Newsletters, Key influencers
Junior / Mid-Level professionals (22-35), income of 25-40K/year;
2 rentals per year; Rent dresses mainly for formal occasions and/or job events.
Blogs, Word-of-mouth, coworkers or friends recommendation
Young students (18 - 22), no income; One rental per year;
Rent dresses for special, formal balls or graduation ceremony
Blogs, Celebrities, Facebook, Instagram
Appendix 18. Possible layouts for Chic by Choice showroom in the UK.
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Appendix 19. Mapping the existing customers in London according to their postal code
London area
Total number of reservations
SW
152
W
148
EC
95
NW
78
E
78
N
73
SE
67
XIV
Appendix 20. Criteria considered for ranking the four different neighborhoods in
London.
The data collected are both quantitative and qualitative and help attribute a score to
the different location options.
Neighborhood London
area
Neighborhood
median income1
Active businesses
number/ Main
shopping Streets2
Cost to rent
a space3
(annual, per
sq/ft)
Public
transportation
Battersea S 718,50£ 17,445
NO
450-900£ Railway station,
one overground
train
Richmond SW 744,20£ 13,650
NO
450-900£ Overground train,
Subway
Hammersmith
& Fullham
SW 686.1£/week 13,465 450-800£ Served by hree
subways lines
Kensington &
Chelsea
W-Central
762.80£/week 13,635
Oxford Street
Knightbridge
>1000£ Served by three
subway lines
1 Source: Source of the income:
http://startups.co.uk/starting-a-business-in-london-borough-by-borough-statistics/
2 Information taken from:
http://londondatastore-upload.s3.amazonaws.com/instant-atlas/borough-profiles/atlas.html
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Appendix 22.
Critical Success Factors method used to select the best location for Chic by
Choice.
Median
income
35%
Logistics
facilities
30%
Shops and
businesses
20%
Average
rent for a
space
15%
Weighted
score
Battersea
7
7
7
7
7
Richmond
8
5
5
7
6.35
Hammersmith&Fullham
6
9
8
7
7.45
Kensington&Chelsea
9
9
9
5
8.4
Appendix 23. Virtusize is a valuable already in use by online shopping retailers to help
customers find their perfect fit.
Source: Virtusize.com
