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E-commerce Start-up Business Plan

Executive Summary is an e-commerce start-up company positioning itself to become the market leader in offering online merchants and consumers a uniform and trouble-free way to return merchandise purchased online. The company offers a business-to-business solution to online merchants of physical, non-perishable products. The company utilizes a consolidation approach in handling all product returns that allows online merchants to instantly save bad sales, restore customer satisfaction and stimulate repeat sales, while offering consumers a convenient, centralized online location to claim returns. By creating a new service category and utilizing the first-mover advantage, positions itself for rapid growth and gains a strong opportunity to raise entry barriers for possible competition.

The Market

E-commerce continues to accelerate and the amount of money spent on purchases made through the Internet shows no sign of decline. During the past holiday season (November 20 to December 19), retailers saw online revenues quadruple, jumping 300% to about $11 billion and far exceeding expectations, according to a study by and Boston Consulting Group. The study of 30 retailers in such categories as apparel, books and music, home and garden, specialty foods and electronics showed a 270% growth in the number of orders. The study indicated that online sales were growing at 145% annually and it projected online retailer revenues of more than $36 billion for last year. An earlier study conducted by Ernst & Young, before the holiday frenzy, already estimated that total revenues for online retail and consumer products for the calendar year just completed were around $25-30 billion. Currently, the average rate of returns for Internet-based companies is 9%. In the coming year the value of returned merchandise was $1.5 billion. This indicates an amazing opportunity.

Service Offerings's services streamline the entire return process for retailers. They allow retailers to outsource a large part of their business, allowing the retailer to concentrate on their core competencies and not get distracted with activities that add little value. will reduce capital expenditures of a company that uses their services, increase customer service of the retailer, increase sales opportunities, increase revenues, and improve inventory management. Customers will benefit by having a convenient, easy way to return their purchases as well as the ability to track their returns.

Keys To Success has three ambitious and obtainable keys to success. The first is the development of a customer service / customer satisfaction software application. This robust software will be's engine that ensures a seamless management of all of their business activities. Their second key is the formation of strategic relationships with online merchants, shippers, and credit card companies. The relationships with merchants will allow to quickly grow their customer base of retailers served. Alliances with shipping companies will be formed since the actual cost of shipping is their largest cost driver. Partnerships with credit card companies will allow to offer the respective cards as the preferred credit card thereby generating an additional source of revenue.

Management Team

There are two principals that are responsible for the idea and the progress of the firm up. They recognize as the companies quickly grows, certain positions such as CEO and CFO will need to be filled. The company was founded by Steve Logic and Dan Codder. Steve has spent the last ten years at Federal Express. While at FedEx, Steve was responsible for their logistics system. Steve has the incredible skill of perceiving business needs and creating a solution to address the need. At FedEx, Steve was the architect behind their benchmarked logistic system that has the ability to track customer packages and share the information with the client. What this meant for FedEx is that they could tell the customer exactly where their package is at any one point. This logistics system is the main driver behind FedEx's exponential growth. Dan Codder is a twenty-year veteran in the computer industry. Self taught, Dan has worked at IBM, Cadence, Tektronix, and several other companies. Dan has the ability to design and write computer code very quickly and accurately. will leverage Dan's skills for the completion of their customer service software engine.

Financials's financials are conservative yet quite promising. Once they are up and running and sign up some merchants as customers, will quickly gain momentum and generate impressive sales. Revenue for year two will be $19 million, climbing to $59 million by year three. Net profit for these years respectively will be $4.7 million and $27.3 million. Even more impressive is's net profit margin. Year two will only see a net margin of 25%, but the following year will see a sustainable 45%. will be creating a new service category leveraging their first mover status and seizing the incredible market potential of Internet-based retailers.

1.1 Objectives

The ultimate benefit of the program is that it enhances the overall image of the online merchant. Consumers demand not only convenience but a peace of mind. The proposed program offers both, and it will increase the number of online shoppers, thus causing a market expansion for online merchants. The first retailers who implement the proposed program will also be able to differentiate themselves and capture larger market shares in their respective segments. Once embraced by the majority of retailers, the program will become an industry standard. Due to lack of current competition, has the first-mover advantage and is well positioned to establish itself as the leader in the newly created service category. therefore has an enormous upside potential and is poised for rapid growth. By securing agreements with companies such as and Yahoo! that host large numbers of merchants, will raise high entry barriers for possible competition and will significantly minimize the replication factor.

1.2 Positioning Statement strives to position itself as a strategic partnership between online merchants, Web hosting companies and portals, shipping companies, and online payment agents such as credit card issuers. Due to demand aggregation, the strategy will produce reduced or totally free shipping of returned merchandise to consumers. This differentiating element will multiply the consumer acceptance factor and will draw more revenues to all participating companies. The proposed program is therefore a win-win solution to all parties involved. Moreover, the software architecture and website format will be wireless-friendly thus designing the service in such a way that consumers will later be able to easily use it via cellular phones and other personal wireless devices.

1.3 Keys to Success

In order for the company to operate, a number of specific ingredients are needed. Following are things to put in place before the service can be offered.

  1. Develop a customer service & customer satisfaction software application that uses order number (of a merchandise item) and merchant's Web address to:
    • Retrieve all pertinent information on a participating merchant.
    • Match appropriate return procedures against the returning item.
    • Present procedures to the consumer in the most concise format.
    • Provide reference to the merchant's entire return policies if requested.
    • Inform the merchant of the entire transaction as it occurs.
    • Gain authorization from the merchant to return merchandise if needed.
    • Present the merchant's website to consumer for selling opportunities.
    • Provide confirmation emails to the customer of the actions taking place if requested.
    • Interact with the merchant's database for further customer details if needed.
    • Maintain a record of the transactions for the company's own database.
  2. Develop successful relationships with online merchants to facilitate exchange of information.
  3. Develop strategic alliances with online merchants, shipping companies, and credit card issuers to negotiate reduction or elimination of the shipping costs to consumers on returned merchandise.
  4. Design, maintain, and promote a user-friendly website, the corporate trademark, that offers an easy and trouble-free merchandise return procedure for consumers.

1.4 Mission

Our mission is to enhance customer service of online merchants, boost their customer retention and increase their sales. We strive to improve the overall image of the online merchant and therefore stimulate growth of online shopping. We put our efforts to increase customer satisfaction when consumers deal with retailers, to enhance the interaction process when retailers communicate with consumers, and to streamline the problem resolution order in all possible ways.

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