Chapter 1 Introduction

 

1.1 Background

As an introduction we are going to analyze three different backgrounds, and everybackground would be studied in a general way and then more specifically how it works inChina, the first one is going to be Internet, as the project and company I am creating aredevelop mainly through this environment. Secondly the background analysis will befocused on luxury e-commerce or the “ on-line shopping malls” (spaces where you canfind several and different brands) and how they work in China and in the third place wewill make an overview of how does Social media work nowadays and how it affects ourlife and how it functions in China.Internet is a tool with a small history behind but it has grown and it still growing veryfast through the last 30 years, Internet was born in the U.S around 1960 by the DARPA(Defense Advance Research Projects Agency) they create this tool as a solution for usingthe computers more efficiently and in better ways. By that time people started to discoverthe wide range of possibilities this new “dimension” could offer, they discovered that theywere able to communicate with other institutions, obtain information that was available inother places and at the same time, they realize they where able to generate their owncontent also.During 1990 the first web client appear, Worldwide Web, after them many other userscame, and surprisingly their origins where not related with sciences, government… theywhere from normal citizens. Nowadays there are more than 2000 million users. Internettoday has evolved from what it was (a military tool) to what we see now in our daily lives,today we consider the Internet as one of the biggest tools for communication, one of thekey elements that helped globalization and to take the distance barriers away.In China Internet works in a different way, compared to the rest of the world, this isdue to some laws and regulations created by the Chinese government in 1996, in order tobe able to apply all this stipulated regulations the Chinese government has created whatthey call “the Great Firewall of China” (in a reference to the Chinese Great Wall) but itsofficial name is “Golden Shield Project” (Electronic Frontiers Australia, 2002) with thecapability to leak the content that is published, they control this through key words and IPdirections among others.

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1.2 Current Status

There are some existing companies similar to what the current project Idea is, but notthe same, we have companies such as mei.com focus on the sale of fashion and luxuryproducts, but with no interaction between consumers and with no collaborative economyincorporated into their business model, we also have Alibaba considered one of the biggeston-line sites for shopping everything you can imagine, but its not very reliable when wetalk about fashion (they have many fake items), as social networks we can talk aboutWeChat and Facebook both of them allow their users to interact, share, comment, like…they also have advertising on their pages but not completely integrated.This idea came to me when I realized that many companies have stock and once thefashion season is over they don’t sell them again, so I realized that talking with thiscompanies, getting into agreements with them for obtaining better prices and try to sellthose products through the internet will be a good business, but then I realize that manyweb pages where offering similar products with also good prices (maybe because of theirpurchasing power or because they offer products with defects) is here when I thought aboutintroducing the key fact of the idea, my competitive advantage, Collaborative economyand all under a social network format. Nowadays collaborative economies are boomingand it’s a good opportunity to help the society and at the same time an incentive that willgenerate traffic to the page.For the moment is just an idea that I will develop with the help of this final project,and I will try to start working on it in reality while I shape it. Its going to be a mixturemixture between on-line “shopping malls” and social networks combined withcollaborative economy and focused on the fashion and luxury sector. My aim is to create asocial network destined exclusively to people that love fashion and luxury products but cannot access to them with their original price, always with a social network essence wherethe citizens and the companies interact, both obtaining benefits.

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Chapter 2 Literature Review

 

2.1 Literature Review

The following academic papers are going to complete the theoretical frame I’msetting, on which my studies, idea, strategies and finally implementation of the same aregoing to be based. I am going to divide them on topics, as follows:- Luxury E-Commerce and E-Commerce in the world and China: The“E-Trust readiness indexes assessment at E-Transactions in the context of B2CE-commerce” (Kahani & Najafi, 2016) academic paper shows how to measure theamount of readiness of a company in order to be trusted by the consumers on theiron-line payments. The article titled “Designing corporate brand experience in anon-line context: A qualitative insight” (Laili Hamzah, 2014) contributestheoretically to this project by establishing and proposing new dimensions of theCorporate Brand Experience at on-line environments, being this dimensionsclassified into the Identification of: The corporate visual Identity, the emotionalexperience, functionality, lifestyle and corporate self-identity components.“The impact of E-commerce Strategies on Firm Value: Amazon case” (Filson,2016) highlights the importance of introducing long-run relationships combinedwith promotional alliances and advertising, remembering that pricing is a strategythat should be carefully studied together with the competitive advantage all alongwith the lines of expansion, service improvement and competitor strategies weshould set. Trying to decrease our competitors and not drawing some customersfrom my competitors.The article “Effects on cluster on China′s E-Commerce: Evidence from theTaobao Village” (Guihang & Guangfan, 2014) sets through the 5 Forces of Porterand other theories the competitive advantages brought by clustered-basede-commerce in China. Affirming that large economies (external) contribute to theperformance of the industry and its development and therefore the conditionsenjoyed by the clustered on-line vendors are bigger, it also give enough evidenceswhich supports that other factors like knowledge and differentiation strategies canhelp companies avoid future financial losses.

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2.2 Models, Concepts, Frameworks

The basic concepts I am going to develop are the main implications that will help meto have a better understanding of the framework I’m working on and to give my project acorrect basis:- B2C: It is a relatively new concept and its normally associated to theon-line business because thanks to it now companies can skip their intermediariesand sell directly to the consumers, but the B2C has existed since the commerceappear. It’s a marketing strategy focused on the recruitment and retention of thefinal consumer by using several tools as advertising and promotions.- SWOT: The father of this analysis is Albert S. Humphrey. Is a businesstool that help us to study and analyzed the current situation of a company, productor sector and therefore establish some future strategies, this matrix is divided intothe external factors that affects a company (opportunities and Threats) and theinternal ones (Strengths and weaknesses) (Pi edo).- PESTEL: This practical analysis while working out the present project istrying to analyze the situation of the surroundings of the company at several levels,applying the different situation and giving an accurate estimation of how this willaffect to our company or if the company is already working, how it affects it rightnow. The analyzed levels and an example of each are: The Political (governmentcurrent situation), economical (inflation), social (cultural factors), technological (Technology and its evolution), environmental (recycling measurements) and legal(norms and regulations that affect to our company).- BCG: A matrix created by Bruce Henderson president of the BostonConsulting Group in 1970. It′s aim, was helping to decide and clarify the differentoptions a company has about investing, disinvesting, maintaining or giving up,taking into account the position the company has in the market. I will alsointroduce the variables Gelb, Barksdale and Harris added to the matrix in order toobtain more accurate results. (Reeves & Moose, 2014)

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Chapter 3 The Opportunity........ 18

3.1 The Opportunity...... 18

3.2 Industry Analysis.....31

3.3 Strategy...........36

3.4 Ethichs And Sustainability........37

Chapter 4 The Company And Team............ 38

4.1 Legal Structure........ 38

4.2 Ownership.......38

4.3 The Advisory Board......... 38

4.4 The Management Team....39

4.4.1 Expected Contributions By Each Team.........39

4.4.2 Expected Salary......... 40

Chapter 5 Marketing Plan.......... 42

5.1 Identification Of Customers...... 42

5.2 Number Of Potential Customers.........42

5.3 Requirements Of Various Customer Segments....44

5.4 Appropiate Sales And Promotion Approaches.....47

5.5 Analysis Of How Purchase Decisions Are Made...........50

5.6 Customers Price Sensitivity.......53

5.7 Cost Of Acquiring And Retaining Customers......54

5.8 Strengths And Weacknesses Of Competitors And Ways That Competitors AreLikely...........55

 

Chapter 6 Operating And Financial Plans

 

6.1 Conversion Of Inputs Into Outputs That Customer Value

All the products sold through AD3 are imported directly from the Fashion and Luxurybrands houses, or from the different spaces and stockage places. The company from thevery beginning will work with all the brands that want to collaborate, with this flash salesand with the idea of collaborative economies. The Idea is at the same time to increase thenumber of suppliers as our number of users and sales grow. They are the ones in charge ofgiving us competitive prices, in order to sell at low prices (stock products of past seasons),and to obtain this we are going to be in a constant negotiation over each product.As we said AD3 is going to be in a constant contact with the suppliers for getting thebest possible prices, getting into agreement about the delivery dates of the products fromtheir warehouses into ours and the date they want to make the promotions using ourplatform . The negotiation process has to be well studied and adjust to the deadlines, everybrand will need about 3-5 days to start with each product negotiation separetly, anegotiation for the setting of the products and the dates of the flash sale, this two lastnegotiations are done with all the products together (the other negotiation needs to beproduct by product because it depends on the specific characteristics of each good, thePrice that was set for the public when it was offered, the materials employed…).During the negotiation we set the payment terms on 30/60/90 days such as in Europe,we received the products and once we obtained them we have this amount of days to paythem back, unless the flash sale is programmed on date out of this terms, Meaning this thatif we receive the good on January but the brand wants to make the flash sale on October,our payment terms will start on October, once the sale has started (This are specialoccasions where we need to have the products before the selling period, normally wewould not work like this, once he products are at our offices we up-load them to theplatform and start the selling).

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onclusions

 

At this point I would reflect, what would happen in case the original plan does notwork, making a brief explanation of the modifications introduce to the business plan, inorder to make it viable again.- If the number of sales is not as high as expected or is not nearly reachingthe estimated numbers, and the traffic generated to our Social network/ platform islow, being this the reason why of the low sales, AD3 will contact again toinfluencers and make new collaborations with them, asking for new pictures at theirprofiles giving them the texts already written (always letting them to include ormodify them a bit) and with this try to generate more traffic to the page,transforming this into sales or possible sales (wish lists). This would be our firstplan, because in AD3 we don’t like the idea of giving up, we try it until the end andonce we waste all of our ideas is when we think about changing processes or evenchanging and giving a second think about the original one.- Directly link it to an existence Social Network: Instead of creating myown social network as the initial Idea was, AD3 will let the users to share theproducts and flash sales they want on the Social platform they decide, being this akind of announcement at, for example, Facebook were people can click, and oncethey do this advert directly redirects them to AD3.com to buy, the web will bedesign to know thanks to whom of your friends you are at AD3 and if they make abuy, directly pay them a 3% of the purchased product to their accounts.- Selling the business idea: If once AD3 has entered the market there is nopossible reason to grow due to the existence of giant competitors in the sector;Alibaba, Amazon, E-bay, Mei.com… The steps to follow will be to try andnegotiate with one of this companies the selling of the AD3 Idea, in this caseselling AD3 competitive advantage, the one that allows people to earn moneythanks to their sharing’s on their social networks. This contingency plan not onlyworks for E-commerce platforms if there is a social network like Facebook willingto buy it and incorporate it to one of their platforms is also a possibility that can bestudied and negotiated.

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References (abbreviated)