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Slide1
Aishu Ramamurthi, Will Hamilton, Amit Dodani
“By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the creation of this document.”
Slide2Qualitative Analysis
Customer Value Proposition
:
Value for customers
:
making young women feel emotionally and physically beautiful through fashion.
allowing them to experience luxury at a low-cost.
providing them with expert stylist recommendations to build trust in renting dresses online
Value for designers: exposing young women (an
undertapped
market for designer fashion to brands early
increasing the likelihood these women invest in the brand later
Low cost: $50-$300 per rental, this was between 10-15% of the total retail price for the designer dress.
Competition:
Avelle
and WTGT
WTGT was not operationally sound, poor website and inventory selection
Avelle
did not work directly with designers, would not be able to increase market share and allow consumers to rent new items.
RTR Response: Focus upon the experience, making it “feel-like-new” for women with incredible customer service. Additionally, provide hotel reservation-
esque
rental capability to schedule in advance for big holidays.
Go-to-Market Plan
inventory
Buy dresses from designers at wholesale, flip the dresses for rental for 10-15% of the total cost.
Return within two days or premium pricing option.
Distribution
ordering online through website
shipping covered by customer ($12.95)
ability to reserve dresses ahead of time
late fees for overdue dresses
High-end dry cleaning to reuse and maintain quality of dress
Marketing Strategy
facebook
/social media ad usage
Word of mouth marketing (playing up on service-based company model)
referral system with incentives ($20 credit)
PR firms to be written in high-end fashion magazines
Brand ambassadors (often sorority girls)
Problem area: Lack of inventory given huge demand based on initial investing round, will need to increase their valuation if they want to continue meeting the demand.
Technology & Operations Management
Team
Hymm
and Fleiss work well together, CFO and CMO with HBS Degrees, both willing to do the dirty work too.
Initial core team was committed to start-up mentality, recognizing the risk involved and willing to step out of their comfort zone.
Allowed them to hire people like Laura from Coach, big name brand, and others who saw the vision of the organization. Focused up on grit and passion.
Problem area: Lack of technology knowledge
needed a CTO, business based upon a user experience but no one on founding team understood tech
With growing demand, needed engineers to keep up with traffic and increase conversion rates.
Profit Formula
$50-$300 dresses at 10% of price
4-day rental process
shipping covered by consumer
insurance $5 for consumer
Problem area: how to increase customer conversion rates from website
Money required in next financing round: $678,000
Slide3Quantitative Analysis
External Financing Required
to Expand
Current Inventory
2000
Needed Inventory
5000
Inventory to Purchase3000Cost of Dress to RTR 226Money Required only for Dresses678000
Cost of Dress to RTR226Cost of 2 Dresses (one free)452Revenue per Rental 90Variable Cost/Rental31# of rentals necessary to cover costs:5.366666667
Market Share (calculated by customers not sales) Designer Dress Retail Sales80,000,000,000Assume: Average cost/dress1000# of customers in market 80000000RTR # of Members150,000% of market 0.1875
Key Take-Aways: Financing Required: 678,000 (38.7% of first round seed capital) – with MVP and proof-of-principle, should be easy to raise money Market Share: largely untapped market- expanded product line to expand target market seems wise~6 rental required to break even cost of dress: must increase conversation rate Customer Growth: Expected customer base in April 2011 = 750,000 (40% due to word-of-mouth; 60% publicity efforts) - must increase inventory to keep up with growth
Customer Growth
# of Customers at Beginning
30,000
# of Customers after 2 months
150,000
% Growth in Customers (/2months)
500
% growth/month
250
Expected # of Customers April 2011
750000
Slide4RecommendationsCut down on mistakes in early stages of company
Do research on all people they are hiring or working with1) Begin second round of capital to expand business
Increase
dress
inventory to address inventory shortage
Expand product line to expand target market
Finance required is ~40% of first round and now they have MVP
2) Hire technical employeesCan improve website and customer experienceRight now, lacking in developer experience3) Spend more capital on advertising to improve conversion rates With 40% word-of-mouth, continue virality Offer promotions Continue customer growth4) Test new products like jewelery accessoriesDo not spread money thin without testing