The internet is gaining immense importance when it comes to marketing and customer services. Traditional fashion providers are changing in response to the customer requirements of increased product customization, product consulting, and even the character of shopping. Online purchases by U.S. consumers [alone] increased by a better-than-expected 25% in 2007, helped by a 61% increase in apparel sales, according to the annual survey of Internet retailers by Shop.org and Forrester Research (2008). Moreover, the fashion industry is going through a phase of fast-changing collection cycles, i.e. short product cycles, all this resulting in considerable price struggles in an industry which always had a history of quick movements. Internet marketplaces enable immediate comparison of prices and worldwide product search, individual consulting with automatic virtual sellers, around-the-clock shopping, and much more has become the trend of the day. Thus marketers are trying to tap this growing market with the latest innovations which would provide the customers with enriched experience in home/interment shopping as well as provide solutions to the problems faced by retailers in this changing phase of customer needs. So they are now concentrating on new technologies such as virtual reality, intelligent agents, and animated individualized avatars.
For this purpose, we have come up with a product called the Virtual Fitting Room. This is an interactive virtual fitting room with a real-time clothing changing function (1998). It provides a series of mechanisms to establish interactive shopping procedures and consulting by means of agents and robots in order to improve service offers for purchasers of the apparel. (Noll, Griff & Schiffner 1998).
About the Company
Our product is based in the technology industry. We intend to tackle problems pertaining to online shopping. We provide the solution to an enhanced online shopping experience. Our company is an internet-based B2B company. As it is a maiden venture it is yet to make a market base for itself.
About the Product
The Virtual Fitting Room is a user-friendly software that the customers can download free of cost from the online retail websites with whom we have a partnership and that support our program. This software will enable users to find out in an instant whether the clothing item chosen fits them and even has a built-in feature to allow the user to view how the product will look like on her (Beck 2000). Clearly, it will erase all apprehension towards buying clothes online for fear of choosing the wrong size.
Keeping into consideration the solution mentioned above, we will take the end-user into the greeting page which allows them to key in their height, waist length, and bust size (for women). The user will then use the ubiquitous digital camera to take four full-body shots of themselves at different angles (front, back, and sides). These images will then be uploaded into the program and scaled to size with the height entered as the scaling factor. This scaling factor can then be used to calculate certain essential measurements like the user’s arm length (for sleeve measurement) and leg length (for pants). After all the requisite data and images have been inputted, the user will be ready to shop online.
By selecting an item online, the user just has to key in its region of origin, size and the result will automatically be presented. If the item is deemed too small, the user will be prompted to select another item. Otherwise, an item that is either fitting or too big will be processed for 3D modeling on the user. With a click, the user will be able to see how she would look in the particular item. Clothing items can be mixed and matched for a more interactive and fun experience.
However, it should be kept in mind that although virtually any clothing item that comes with size can be used by the user to check for a sizing match, only those from our online distributors will have modeling results. We intend to ensure the same by providing a modeling algorithm to our distributors to scale and model their items. The likely outcome of this is that users will tend to gravitate towards our distributors as they get to view images that are realistic and more appealing visually.
Client Needs and Values
A distinctive aspect of the apparel industry is the challenges to implementing electronic commerce. First is the difficulty of accurately displaying the product online. Many of the characteristics of a garment that are pivotal to the consumer decision-making process – color, feel, and fit – are difficult, if not impossible, to communicate “virtually”. Moreover, apparel purchasing decisions are closely linked to individuals’ feelings about themselves: their body image and the image they wish to project.
Our product will help the e-retailers enable their customers to understand the different sizes available and which one will be the best fit for them. For example, a size 2 for a ladies top in the U.S. is actually a size 5 in Japan or 32 in France. This presents a problem for the buyer of the apparel who might unknowingly select the wrong size and end up with a delivery that is either too big or small. A software that can tell the end-customers whether the item selected is the right fit and shows her a 3D image of how the item will look on her will be the answer. Thus, our software will eventually reduce the number of returns of products from unsatisfied customers of e-retailers who will be using our product.
In B2B marketing, the buying process of a product becomes imperative. For a virtual fitting room, the purchasing decision is though, taken by the management, but the process is initiated from the customer’s need for a more user-friendly system to evaluate/try the apparel they purchase online. So the factors that would affect the purchase decision are:
- Market share of the organization. For instance, eBay has a huge market share, but its decision to purchase a virtual fitting room will depend on their profitability from that particular segment of their business.
- This will depend on the orders being returned due to the ill-fit of the product.
- Increased number of end customer complaints to the e-retailers.
Thus from the reasons, we see that the decision to purchase the product will indirectly be initiated by the customers themselves. Now the factors that will influence the choice of this product are its quality, ease of use, and service quality. Quality is important as this will create an image among the customers. For any technological product ease of use for the end-users is important for the end customers who will actually be using it should be comfortable in using the product.
Hence, the product must be user-friendly. We need to provide excellent service quality, as this market is very competitive and in B2B selling service becomes a key differentiating factor. Since the end-users of our product are the customers of the e-retailers, so it becomes important that though we market the product to other organizations, we need to show them the use or help it will provide to their business and help the end-customers. So we will have to be up-to-date with the customer needs for this product and how they perceive it. Hence we need to do extensive internet marketing of the product directly to the end-customers. The interest in the Internet and its implications for marketing is increasing exponentially, and this trend is expected to continue, placing Internet marketing at the central sight of marketing research in the new millennium (Watson et al, 2000).
The target markets for our company are the traditional retailers who are interested in tapping the increasing market of web/convenient shoppers. This would include companies like Levis, Marks and Spencer’s, Gap, eBay, etc. These retailers are well-known brands that are trying to enter the virtual market as this market is in a boom (except eBay). As our business model is a B2B model, we will target the traditional retailers to sell our products rather than selling them directly to the end-users.
The e-tailing business has been expanding at a tremendous pace in recent years and according to a retail-trend report released by research firm eMarketer in April 2005, online commerce will grow to $142.5 billion this year, a 21% increase from last year’s $117.7 billion. This trend is likely to continue for several years, climbing to $232.1 billion by 2008.
Broadband adoption has been a key driver in the double-digit growth of online shopping. Almost two-thirds of 64% of U.S. Internet users with broadband make online purchases, compared to 49% of dial-up users.
EMarketer also estimated that $84.5 billion of the total e-tailing revenue for 2005 will come from retail sales, up 22.1% from last year’s $69.2 billion. According to the same report, the average spending of US internet users in 2008 may be about double that in 2003.
As a whole, the outlook of internet retailing is indeed cheering. Even online retail giant, eBay, is strategizing to capture a piece of the growing market; particularly the China market. The company is sinking an additional $100 million into China this year – much of which shall be channeled into marketing.
However, a large portion of internet users is still reluctant to make purchases online due to several reasons such as security, information overload, or bogus ads. One of the most compelling reasons that discourage online shopping for apparel is that the goods often turn out to be ill-fitting and does not match customer expectation. This is particularly so when Asians are buying US or UK brands or vice versa. According to market research on members of the popular forum for online shopping enthusiasts, Flowerpod.com.sg, 90% of online shoppers have had the experience of making online purchases that turned out to be ill-fitting. Among this group of shoppers, a huge majority are receptive to the idea of having a virtual model of themselves so that they can try the clothes on before making a purchase. Our product will help shoppers make more informed choices and promote online sales for retailers at the same time.
As far as the level of competition in the industry is concerned, currently, it is low. One of our main competitors will be My Virtual Model Inc., based in Canada. Established brands like Adidas, Speedo, and Levi’s have engaged My Virtual Model Inc. to create 3D models that put on apparel to give consumers a vague idea of how these items will look on them.
Doing a SWOT analysis of our competitor we see the following:
Strength: the company is in the market since 2000. So they already have the first mover’s advantage. These 3D models are similar to online mannequins created from general vital statistics entered by the user.
Weakness: The mannequins usually have a default face, which of course is not the users’. Personalized mannequins are possible, but only after a lengthy process of contacting My Virtual Model Inc. and possibly paying a fee. Further, even with a personalized model, the body is one that is selected from their range of default body shapes as well. Hence, personalization is lost on the individual’s body contours. Our product differentiates through personalization. It is a precise model for our users, thus allowing her to judge the fit of the apparel based on the 3D image. Judging from the current demand for virtual modeling, we are confident that our product will be very well-received by consumers who want to have a better online shopping experience, as well as retailers who want higher sales and fewer returns of goods. In addition, privacy is an issue with My Virtual Model. Their program provides customized users with an account that they can sign in to at any online store that carries My Virtual Model. The problem with this is that once a user’s model is stored in a centralized server, hackers can whip up the system to download these images, putting them to the wrong use. The Virtual Fitting Room, on the other hand, faces no such issue as all models are strictly confined within a user’s hard disk.
Opportunity: The competition in the market is still low. There is expected to be a huge market for this product as it will change the way e-retailing is done. So we see a potentially growing market in this area.
Threat: Nevertheless, we do foresee that competing products will be launched on a large scale once the budding market of online apparel fitting reaches a certain critical mass.
Doing a SWOT analysis of the
Our business model is based on business-to-business selling (B2B). Hence, our customers and/or distributors of the Virtual Fitting Room will generally be online apparel retailers such as eBay, Abercrombie & Fitch, Victoria’s Secret Direct, etc. These channels will allow our product to reach the end-user – the online shopper.
Description of Target Business Partners and Sponsors
As our product gets more sophisticated, we may consider collaborating with Macromedia to run our modeling results on their popular Macromedia Flash player. However, this will be subject to the condition of us integrating the player into our Virtual Fitting Room. This way, the end-users will not be required to go through the additional step of downloading Macromedia Flash Player to view the 3D models, a practice many websites are currently engaged in. This will protect our interests, the copyrights of the product as well as retain our bargaining power. In return, Macromedia shall increase the network externalities of their flash player with satisfied users of their fine imaging results and resolution of our models.
Since our product is a niche product, targeting a niche market, our market segmentation will be based on ‘single-segment concentration’. Through concentrated marketing, we will gain a strong knowledge of the segment’s needs and achieve a strong market presence. Our product being at an introductory stage, we need to capture as much information available from the market in order to develop our product. This is unavoidably important in technology-intensive product marketing. As our target segment by default is the online customers, that too, people who purchase apparel through the internet. Hence the apparel e-tailing market is our market segment.
Price: Our company’s revenue model will be based on three sources:
- We would charge our clients US$200 for the digitization of their garments.
- A 20% charge for every visit by the end-user to the client’s site.
- To integrate the virtual model into the client Web site we would charge US$1000.
Place: As ours is a web-based business so we would target any customer from any geographic location.
Promotion: we will indulge in a direct selling model to customers. So we would need to adopt direct promotional strategies. Further, we would participate in trade shows initially to increase brand awareness among the e-retailers. Further, we would print our advertisement in retailer’s magazines.
Product: Our product as discussed earlier is a unique software that would help to recreate a virtual fitting room for the purchasers of apparel online.
Sales Strategy and Forecast
The category of apparel, accessories, and footwear outsold personal computers for the first time in the 10-year history of the study. We intend to adopt a B2B selling model. The selling strategy that we intend to adopt, Virtual Fitting Room being a new product in the market, is through eBay (worldwide). It will be our sole distributor for the first year of operation, followed by the addition of Victoria’s Secret in the second.
We chose eBay as its gross merchandise volume, which is the aggregate transactional amount of successfully closed listings on its sites, for clothing and apparel is $3.1 billion as of Q305. As the cost of a lower-price clothing item on eBay typically costs around $10-$25, eBay typically makes $1.03 to $1.91. This is more than enough to cover a cost of $0.06 per buyer, assuming each buyer uses three transactions on average. Further, as of Q305, eBay registered an active user base of 68 million. Taking into account clothing and apparel’s 8% makeup of eBay’s gross merchandise volume and the fact that this figure is distorted by high-cost items like motor vehicles, we can pessimistically assume that the user base of clothing and apparel is 12% of eBay’s total active users. Bancorp Piper Jaffray predicts eBay’s revenue will hit $9.9 billion by 2010. Morgan Stanley is more enthusiastic, forecasting $11.4 billion. So if we collaborate with eBay, then its market for apparel will boost considerably. (Wingfield, 2003)
Victoria’s Secret, one of the most successful lingerie retail, is our other engine of growth. Purchase of lingerie online is catching on and since the trying of lingerie is generally disallowed even in stores, we believe our Virtual Fitting Room will provide the solution to millions of women who wish to make a more informed choice before committing to the online purchase. Victoria’s Secret Direct, which is the online and catalog arm of Victoria’s Secret, reaches more than 390 million clients each year. Using half of this figure in our second-year forecast in addition to transactional sales to eBay, we can see that our sales will be huge.
With a booming internet retail market, we expect this product to add value to the mass customization process that the retailers are aiming to achieve. Clearly, this form of customization will not necessarily deplete the brand equity of the product but will enhance sales by providing more convenience to the customers. Clearly, this product will make the purchase experience over the internet more pleasing and satisfactory as there will lesser instances of complaints from unsatisfied customers.
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