mil la by mail direct inc business plan

8/3/2019 Mil La by Mail Direct Inc Business Plan

1/40

Milla by Mail Direct, Inc. Business Plan

alternative shopping solutions for busy women

1


2/40


Milla by Mail Direct, Inc.

Business Plan Draft

Confidential

Inside:

Executive Summary

Business Description

Management and Employees

Operations and Suppliers

Marketing Plan

Philanthropy

Competition

Financing Request

Business Financial Statements

Financial Ratios


2


3/40


Break-Even Analysis

Growth and Exit Strategies

Appendix: Financial Assumptions


3


4/40


Jamila Payne

2450 State Street

Philadelphia, PA

(215) 659-7544

John Christopher

250 East 11th Street

New York, NY 10009

April 20, 2006

Re: Financing Request

Dear John:

I am so glad Sarah introduced us when you were in Philadelphia and that you expressed an interest inseeing my business plan. We are currently seeking to raise an additional $50,000 in capital to expand ourmail-order business with a catalog campaign.

Milla by Mail Direct, Inc. (MBM) is a mail-order retailer founded with the purpose of providing a

shopping environment that is ideal for women on the go. Milla by Mail makes shopping easy and

convenient by offering a multimedia approach to purchasing, including catalog, Internet, and telephone.

Our mission is to become the destination fashion resource for style-conscious women by providing

quality merchandise, up-to-the-minute fashion information, and a shopping experience that peeks into the

customers lifestyle.

Our target customer is an active, affluent woman age 25 to 45. She is busy with her career, her

community, and her family. She wants her wardrobe to reflect her sense of style and compliment heractive lifestyle without the shopping process becoming a task. Our brand offers women image, distinct

styling in a broad range of brands and sizes, fashion and trend information, and a memorable shopping

experience through a multichannel platform designed to make her relationship with Milla by Mail easy

and convenient.

The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop.

Milla by Mails distinctive competencies are the merchandise, the personal expertise of the founder,

Jamila Payne, and the shopping experience that is offered to customers. Milla by Mail sets itself apart

from the competition by carrying a variety of merchandise that includes well-known brands, up-and-

coming designers, and our private-label brand Milladistributed exclusively via the website and, soon,

the catalog. MBM is very strategic about the items we carry. All items can be purchased as separates or

merchandised back to other items.

My business plan is attached. If you have any questions, please contact me at (215) 659-7544.

Sincerely,

Jamila Payne


4


5/40


Contents

1. Executive Summary

2. Business Description

3. Management and Employees

4. Operations and Suppliers

5. Marketing Plan

6. Philanthropy

7. Competition

8. Financing Request

9. Business Financial Statements

10. Financial Ratios

11. Break-Even Analysis

12. Growth and Exit Strategies

13. Appendix: Financial Assumptions


5


6/40


Executive Summary

Business Description

Realizing a void in clothing for contemporary women, Jamila Payne founded Milla by Mail, a specialty

mail-order retail business. Milla means I got it in Hindi, the Indian National Language. Milla by Mail is

dedicated to providing a quality fashion experience for the style-conscious consumer. The website

represents a combination of in-house design and manufactures lines fusing modern sophistication and

urban attitude. The company will grow by distributing catalogs in major metropolitan cities throughout

the United States, becoming an established resource for fashion information and lifestyle events.

On the MBM website the presentation of clothing is complimented by lifestyle images that represent the

Milla by Mail shopper. We take shopping online to a new level by developing marketing campaigns that

focus on the lifestyle of the customer. Milla by Mail becomes not just another place to shop. We reachinto our customers lives and make them a part of the experience.

The catalog and Internet will represent a lifestyle-shopping environment. Women can purchase

everything from work to weekend looks. The Milla by Mail clients, contemporary women ages 2545,

will find clothing for their lifestyle through our product line.

Business Contact Information

Milla by Mail Direct, Inc. (MBM)

The Laurence A. Baiada Center for Entrepreneurship in Technology

3225 Arch Street, Ground Floor

Philadelphia, PA 19104

Phone: (215) 659-7544

Fax: (215) 659-7203Website: www.millabymail.com

Email: [email protected]

Owner

Jamila Payne

2450 State StreetPhiladelphia, PA

Phone: (215) 659-7544

Social Security Number: XXX-XX-XXXX

Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years. She

has dressed celebrity artists and entertainers for everything from the stage to the red carpet.


6


7/40


Jamila has been featured inIn Style, Entrepreneur Magazine, the San Jose Mercury News, as well as in

many other local and national newspapers. She has been honored by the Philadelphia Tribune as

One of Philadelphias most Influential under 40. Jamlia can be seen on shows such as the NBC

morning show 10! presenting the latest fashions or discussing lifestyle trends.

Jamila is high-energy, fun, delightful, and has a great sense of style. She is very humble about her success

as an entrepreneur and enjoys sharing her fashion knowledge with people through her traveling

fashion workshop Can You See My Style?

When Jamila saw the expecting Kelly Ripa wearing one of her own Mimi Maternity designs on

television, she knew she had a true talent for knowing what works. As her work responsibilities

became more time-consuming, however, Jamila didnt have the ability to visit all her favorite

boutiques. Shopping has always been special and exciting to me, she says. I really enjoy

developing my personal style.

Many of my coworkers and friends had the same problem. And I realized that busy women need

a place to shop that will do two things: It must represent the perfect compilation of all of theirfavorite stores, and shoppers need to have the ability to get there regardless of their schedule.

Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including

Anthropologie, Mimi Maternity, Fubu, and Nylon Magazine. Jamila graduated from

Drexel University as a Design and Merchandising Major, currently resides in Philadelphia, and

is working on a book entitled Shopping for the New Me scheduled to be released in the fall of 2004.

Professional Relationships

Accountant: Don DeMarco, JLB & Associates, (215) 674-5322

Banker: Sarah Breekman, Bank of America, (215) 674-5200 X 12

Insurance agent: Lionel Hardness, State Farm, (215) 892-2100

Attorney: Richard Gabel, Esq., DSLMH, (212) 259-3208

Board of Advisors

Alice Chamberlain: Co-chairman Step UP Womens Network. Alice and Jamila meet for lunch once a

month to discuss growing the business and involving it in philanthropy related to womens issues, such asdomestic violence, which is Step UPs primary mission.

Charles Payne: Jamilas grandfather, a retired Philadelphia investment banker who advises Jamila on

financing and operations.


7


8/40


Steve Mariotti: founder of the National Foundation for Teaching Entrepreneurship, Inc., available by

phone to Jamila for consultations on networking, business organization, and reaching out to potential

investors.

Legal Status: Milla by Mail Direct, Inc. is a Sub-S Corporation incorporated in Delaware.

Purpose:Milla by Mail is a mail-order retailer founded with the purpose of providing a shoppingenvironment that is ideal for women on the go.

Mission: The company mission is to become the destination fashion resource for style-conscious women

by providing quality merchandise, up-to-the-minute fashion information, and a shopping experience that

peeks into the customers lifestyle.

Status: Milla by Mail is an ongoing business that plans to expand to become the go-to destination for

style-conscious women by providing quality merchandise and up-to-the-minute fashion information.

Business Type: Non-store retail. The corporate office operates MondayFriday 9:00am to 5:30pm.

Products/Services: Milla by Mail makes shopping easy and convenient by offering a multimedia

approach to purchasing, including catalog, Internet, and telephone. The company brings the elements of

boutique shopping to a larger arena. Our goal is to promote the proliferation of individual style by

providing an atmosphere where customers can be creative in their shopping experience and develop their

own look. We dont tell our customers how they should look; we just present some great choices, and

they take it from there.

Reasoning: Milla by Mail sells womens apparel and accessories. The company targets women ages 25

45 young professionals and college women. These individuals spend or influence the spending of $200

billion per year.

Womens roles have shifted in society; not only are they mothers and wives, but they are also moving up

the corporate ladder. This shift brings about increased responsibilities and decreased time. Although

women do not have the time they once had, they are still expected to dress the part of their new executive

role. Women still want access to quality merchandise and fashion information but need to be able to

obtain that access quickly and from the convenience of their homes and offices.

Goals

The company plans to achieve the following short- term goals:

Add 34 team members (March)

MBM will add team members for the following positions: Marketing/Pr (part-time), Sales/Customer

Service (part-time), and Affiliate Marketing Coordinator (Contractor).


8


9/40


Develop the advisory board (March)

The MBM advisory board will provide real-time feedback to the company about its product line and

services. The group will consist of the 3 professionals currently involved plus 3 more with professional

experience in a variety of industries.

Launch look book (August)

The Milla by Mail look book is the companys take on the traditional catalog. The book will feature some

special items that are not available on the web. It will also introduce Millathe Companys private-

label brand.


9


10/40


Expand private-label brand Milla (August)

The Company plans to broaden the assortment by manufacturing more garments under the Milla label.

Products manufactured under the private-label brand have the highest profit margin.

Grow membership base to 10,000 (December)MBM will grow the membership base by hosting various contests on the web. The increased membership

base will give the company the opportunity to sell advertising space in the e-mails that go out to

members.

Industry Trends/Outlook

Non-store retailing is a retail channel that has experienced double-digit growth for close to a decade. The

channel consists of catalogs, online retailing, and TV home shopping.Retail Forwardprojects that non-

store retailing will grow at an average annual compound rate of 7.9 percent over the next five years. The

e-commerce subset of this channel will grow at an average annual compound rate of 26.5% in the same

time period.

E-commerce will grow at a still-powerful 26 percent compounded annual growth rate (CAGR) over the

next five years. Barring unforeseen events, e-commerce will grow to $217.8 billion, representing 8

percent of total retail sales by 2007. By 2007, another 26.4 million U.S. households will join the 36.5

million households already shopping onlinefor a total of nearly 63 million or two-thirds of all U.S.

households. Online shopping still makes up a fraction of all retail sales at 4.5 percent; its the fastest

growing category, according to theNational Retail Federation.

Cataloging

In the United States, 7,000 major retail catalog producers are responsible for the average American

Familys receipt of approximately 75 catalogs per year. With so much growth, many retailers are

beginning to publish catalogs and many catalog operations have decided to open retail outlets. Nationally,mail-order sales account for 4 percent of the total retail dollars spent.

Catalog sales growth has been outpacing that of the overall industry thanks in large part to the natural

synergy between catalog and Internet operations. The mail-order industry has matured, creating a highly

competitive environment. Three out of ten start-up catalogs survive after five years. The phenomenal

acceptance and growth of the Internet as a complementary channel of marketing for cataloging has

opened new vistas for traditional paper catalogs and retailing. The Internet is rejuvenating the catalog

industry. New non-traditional mail-order buyers are shopping on the web and, in many cases, have been

driven to the Internet by a printed catalog. The two media are interconnected. The paper catalog is

unlikely to be replaced by electronic commerce in the next decade because the two channels are quite

complementary. Together they will promote growth in direct selling while enhancing the creditability andauthority of each marketing channel.

Customers expect to shop when and where they want. And, if you have a multichannel buyer shopping in

the store, catalog, and online, retailers have a better customer, as she typically buy more and more often.

A few years ago it was predicted that the catalog would become extinct, mainly because the Internet was

emerging. However, according to theDirect Marketing Association, Americans are expected to spend

nearly $133 billion shopping through catalogs in 2004, up from $126 billion spent last year.


10


11/40


Catalog shoppers are generally more upscale than non-catalog shoppers and are willing to pay higher

price points to get what they want. Catalog shoppers might be won over because they indicated that they

had no preference when asked to name a first-choice department store. Those who shop the catalogs

also tend to be familiar with the regular use of modern technology. They are also more likely to own apet. Catalog shoppers lead more active lives. They like to read more, preferring the editorial, lifestyle, and

business/finance pages of the newspaper. Catalogers like to eat in full-service restaurants and go to

movies, concerts, and live theater performances.

Online shoppers greatest concerns about shopping, in order of importance, are convenience, security,

customer service, and price. A study performed byBruskinGoldring has determined that 52 percent of

women who shop online prefer to do it after 5pm, while 20 percent shop after 8pm. Another finding pegs

women as seekers, who begin with a to-do-list, find products and services quickly, and log off. Saving

time is the major reason women are turning away from the mall and to the Internet, according to Andrea

Claster, president ofClaster and Co. Consulting Company.

Online retail sales continue to grow along with the size of the Internet population. While it appears to be afunction of economic weakness, the drop in spending per customer is occurring because e-commerce

shoppers are starting to look more like the average overall consumer.

One of the more apparent trends in recent years has been the marketing focus of the apparel companies on

the Generation Y and Generation X demographic. It comprises 75 million individuals, or 25 percent of

the U.S. population, and spends (or influences the spending of) approximately $200 billion a year.

These individuals have been instrumental in changing the rules of corporate and casual dress, demanding

stylish clothing that can transition from the office to evening looks. Apparel, and related fashion items,

account for a significant portion of adults discretionary spending, according to a study conducted by

Harris Interactive, a market research firm in Rochester, New York. The study found that, on average,young women ages 1834 spend 75 percent of their earnings from work on clothing and related

accessories.

Technology

Several online retailers have sparked e-commerce growth by making online shopping easy. Future

success hinges on similar improvements. MBM will regularly implement new technology features that

will enhance the customer shopping experience. Upcoming features include:

adding an account management function that will allow customers to manage their purchase

history

a gift registry and a real-time customer service feature that would allow customers to click a

button called customer service which will launch a new window where the customer could type in

questions and a customer service rep would respond.


11


12/40


Management and Employees

Milla by Mail Direct, Inc.

Sole proprietorship (non-store retail)

Management

Owner: Jamila Payne will manage the Milla by Mail operations and handle day-to-day operations. Systemmaintenance and printing will be outsourced. The owners salary will be minimal in the early stagesof the business to allow for the business to grow and sustain cash flow.

Jamila Payne, founder of Milla by Mail, has been a fashion stylist and trend expert for many years.

She has dressed celebrity artists and entertainers for everything from the stage to the red carpet.Jamila has been featured inIn Style, Entrepreneur Magazine, the San Jose Mercury News, as well

as many other local and national newspapers. She has been honored by the Philadelphia Tribune

as One of Philadelphias Most Influential under 40. Jamila can sometimes be seen on shows,

such as theNBC morning show 10!, presenting the latest fashions or discussing lifestyle trends.

Prior to her career as a fashion entrepreneur, Jamila worked for top fashion names including

Anthropologie, Mimi Maternity, Fubu, andNylon Magazine. Jamila graduated from

Drexel University as a Design and Merchandising Major. She currently resides in Philadelphia and is

working on a book entitled Shopping for the New Me, scheduled to release in the fall of 2004.

The order management and accounting systems produce all the reports that management needs to run the

business, including but not limited to:

inventory reports

merchandise sold

source frequency

fulfillment ratio

sales reports

Employees

Milla by Mail plans to hire two part-time employees in March/April. We will also bring in three interns

for additional support staff.As business increases, staff will be added to the corporate management team.

The staff will include, but not limited to, business managers, merchants, customer service, and

administrative professionals. The company plans to use four primary methods of recruiting employees:

(1) scouting other retailers

(2) receiving referrals from retail skills centers

(3) recruiting from colleges

(4) advertising and posting on the Milla by Mail website


12


13/40


The company will seek out employees who have retail experience or who are pursuing fashion design,

Merchandising, or retail careers. Prospective employees will fill out an application and undergo two

interviews and a telephone service test. This will give management the opportunity to accurately evaluate

customer interaction, selling ability, and natural service skills. Once hired, all employees will attend

training classes, as will the managers. Topics to be covered include position expectations, companyhistory, mission, operations, customer service, and sales.


13


14/40


Milla by Mails employment philosophy is to hire ordinary people to do extraordinary things.

The company believes that with proper training the Milla by Mail employee will have the ability to

exceed performance expectations. Salaries will reflect fair market value. Some of the available positions

will include:

Sales/Customer Service

Setup Corporate Affiliate programs

Coordinate out-of-office reps

Develop package inserts and special offers

Create new promotions

Develop contests

Sales analysis

Packing and shipping orders

Customer followup and returns

Marketing/PR Assistant

Put together press kits

Develop releases and announcements

Event planning

Promotion execution

Relationship-building with press

Pitching stories and ideas to TV shows and magazines

Assistant Buyer

Competitive shopping

Inventory projections

Open to buy

Attend trade shows and market weeksProduct development

Trend analysis

Assist with managing Get the Look program

Web product updates

Photo shoot production

Recaps and analysis


14


15/40


Operations and Suppliers

Product

Clothing for the Milla by Mail catalog and millabymail.com website will be purchased from showrooms

primarily in New York, Los Angeles, and London. The Milla by Mail merchants first job is to develop

and source great product. The Milla by Mail Internet and catalog concept-development process is a highly

proactive process that requires tenacious observation and tracking of the competition, active attendance at

trade shows, aggressive vendor pursuit, talking with and soliciting ideas from customers, and

brainstorming.

The Milla by Mail catalog will launch as a 21-page book with 23 items per page; approximately 44 to 66

items will be selected. The web-site and the catalog will work off of a concept or theme each season.

Once items have been selected, data on each product needs to be collected on a specification sheet that isincluded in the product folder. A product folder contains everything pertinent to the product: vendor tear

sheets and information, terms, product photographs, samples, and so forth. The specification sheet known

as the Product Information form is submitted to each vendor at the time the purchase order is issued,

along with the vendor manual. Ultimately, the folder is handed over to the production team, where it

becomes the copywriters source for sell copy. The art director will also review the information to place

products in the page layouts.

The information in the product folder and specification sheet will be entered in a simple, off-line

merchandising database. Maintaining a product vendor database makes it easier to gather all the products

from one vendor in order to negotiate the entire purchase, or to see quickly how many products are in

acertain category or at a certain price point. An organized database also makes it easier to track open

purchase orders and to transmit payment information to the accounting department.

Creating the Product Forecast and Buy Plan

Once the marketing group estimates how many catalogs will be printed and mailed, the merchandisers

and inventory planner can create a buy plan that forecasts how many of each item are planned to be sold

in the catalog and online. Pricing will be finalized at this time so that margin or costs of goods sold can be

determined and checked against the financial benchmarks. Milla by Mail will maintain its markup

between 50 and 60 points. After seeing the creative layouts, preferably with copy and photography in

place, the buy plan will be reviewed again.

The Internet buy plan will be determined based on the sales projections. Once management has

established the yearly sales goal for millabymail.com, the merchant and planner project how muchinventory is needed to make the sales goals. Millabymail.com had a $98.00 average order value (AOV) in

year one. Because a great photograph or full-page presentation will always influence sales, the buy plan

sometimes needs a final adjustment before purchase orders are issued to make sure larger orders are

placed for products given a generous presentation.


15


16/40


Milla by Mail plans to mail 500 catalogs, have an order response rate of 40 percent, and receive 200

orders with an average of 2 line items per order, or 400 items ordered. The AOV is expected to be

$100.00 with a 1 percent cancellation rate and 2 percent return rate.

Placing Purchase OrdersOnce products have been selected, vendors investigated, and the catalogs forecast and buy plan

developed, purchase orders are placed. This happens in sufficient time so that the product will arrive in

the warehouse one to two weeks before the catalog mail date. This will allow time for the inventory

control analyst to receive, inspect, perform quality checks, apply bar codes or item numbers, and place

goods in stock. All orders are in writing and confirmed.

Receipt of Product and Quality Control

The merchandise is pre-retailed1so that the retail prices can be marked onto the price tags when it is

received. The Milla inventory control analyst verifies

(1) the shipment was ordered

(2) the completeness of the shipment

(3) the actual contents of the shipment match the description on the purchase order

(4) the rate charges are comparable to the total weight rate schedule

(5) goods are not damaged

Accounting receives verification of this completed process before invoices are paid.

Rebuying

Once merchandise has started selling, the re-buying or control buying will take place. Item product

forecasts are revised, and products are repurchased throughout the cycle or life span. The catalogs

forecasting report, in conjunction with a response curve by week, will help to track seasonality within the

catalogs selling season. Millabymail.com merchandise is reordered based on the response to the goods.

Its ideal to have a quick turnover on merchandise by maintaining minimum stock and allowing for a

minimum amount of back=ordered items. Items that have a back order log will be removed and re-postedon the site once a new in-house date has been confirmed with the vendor.

Disposing of Excess Inventory

The final phase in inventory management is disposing of poor-selling merchandise. During the selling

season, up-selling and in-the-box shipment package insert sales have been most effective. The Internet

sale page has also been an effective method of liquidating overstocked or poor-selling merchandise. Milla

by Mail direct also plans to hold private sale events in local markets for customers. Advisory board

members will also be given the opportunity to purchase sale merchandise.

Merchandise Post Analysis

After order activity runs its course, the catalog and online campaign will be analyzed, including reportson returns, cancellations, and excess inventory. The Milla by Mail order management system also

provides real-time reporting on Internet sales and inventory data.

1 The buying process of deciding the selling price of merchandise before it is purchased and recording that price on

the stores copy of the purchase order


16


17/40


Facilities

Office SpaceMilla by Mail is currently headquartered in the Laurence A. Baiada Center for entrepreneurship in

technology. There is no cost associated with using the space, which is reflected in the cash flowstatement.

We are projecting that this space will be available until May of 2007. Milla by Mail will then relocate to a

new office space in the city of Philadelphia.

Warehousing

An efficient warehousing function will ensure that orders are picked, packed, and shipped promptly. Extra

workers will be hired during peak seasons to ensure order turnaround. Total fulfillment operating cost

should fall between 15 and 18 percent of net sales.


17


18/40


Product/Distribution Channel

The Business Model


18

Completely

Satisfied Customer

Invitation to Return

Circulation to Customers

and Prospects

Customer Places Order

Acknowledgement

of Order

Order Processing &

Fulfillment

Cycleof

Service

Shipment Notification

Shipment Tracking

Order Receipt

Returns & Exchanges


19/40


Step 1: Customer Places an Order

Customers can place orders online, over the phone, by fax, by mail, or at an event. Phone orders are taken

down on an order form, and then keyed directly into the order management system and sent for

processing. When an order is mailed into the home office, it is batched into a group and keyed in the

system. Internet orders are downloaded electronically into the order management system, and all pendingorders are printed for processing on a daily basis (MondayFriday). Online shoppers also have the option

of printing out the order form and faxing it in. All orders are verified for completeness and accuracy.

Name, mailing address, shipping address, phone number, credit card information, item number, and color

and size information will be checked. Once an online order has been placed, the customer receives an

auto response e-mail confirming her order summary.

Step 2: Order Processing

All pick tickets are hung for processing in the order in which they were received. Orders are packed and

shipped as merchandise becomes available. If an order is placed that contains three items, and all items

are in stock, then the order is shipped immediately. If one or more items are missing from an order, the

available item is packed and held until the additional items arrive. If the out-of-stock item has an expected

delay that exceeds the maximum shipping time (8 business days), the customer is sent a postcard that

makes them aware of the anticipated ship date. At each stage of the pick, pack process the order is

checked for completeness. Most orders will be shipped via the United States Postal Service (USPS), and

expedited shipments are sent via Airborne Express.

Inventory Management

MBM maintains low quantities of inventory so that we are able to ship to our customers immediately after

receiving the order. In most cases when there is no item in stock, MBM is able to obtain the merchandise

from the vendor within 57 business days, which still allows us to make our 8-business-day shipping

window. Going forward we are planning to take on more consigned merchandise. This will allow MBM

to change the assortment of product on the website without committing huge dollars to different vendors.

By decreasing the budget allocated for market buys, we will be able to increase our private labelassortment.

Step 3: Credit Card Billing and Banking

Credit cards are processed electronically using a third-party clearinghouse. Authorizations are submitted

prior to shipment, and deposits are made into the MBM company bank account. Orders paid by check or

money order are deposited in the bank and cleared before the order is shipped. In most cases, MBM does

not accept payments by check. Very large orders paid by a check ($100.00 or more) will be held until the

check is verified by the bank.

Step 4: Fulfillment & Shipping

Once an order is packed and verified for completeness, then it is prepared for shipment. Every packagemailed to a customer includes an order summary, a merchandise return and exchange form, and a

promotion or offer to return. When the order is prepared to ship, the customer ship-to information is

keyed into the MBM postage printing software. The software generates a tracking number for the

package, which is manually keyed into the web administration system. The system then generates an

automatic e-mail to the customer with the order detail and shipment tracking information.

Step 5: Order Receipt


19


20/40


When the customer receives the order, one of three things can happen:

(1) The customer keeps the product

(2) The customer calls customer service with questions about the product.

(3) The customer returns part or all of the shipment, and the return is processed by the warehousing

function and re-entered into the system for a credit or refund to the customer.

It will take 24 hours or less to respond to any customer service inquiry via phone, mail, or e-mail. The

goal is to process all returns within 24 hours and to ship low cost orders (under $100) in one day and all

other orders in two days for credit card verified orders and check orders over $100 after check pre-

approval.

Step 6: Returns and Exchanges

Milla by Mail will be happy to exchange or give a credit or refund for the merchandise price of an item

within fourteen (14) days of the ship date. All returned items must be unworn and accompanied by proof

of purchase such as a receipt or packing slip. Sale items are for merchandise exchange or store credit

only. Once a return item is received, it is put in wait for processing. MBM guarantees a ten (10)-dayturnaround for processing returns and exchanges.

Returns

Customer returns tend to be a challenge in the mail order business. MBM is working to overcome this

barrier by developing tools that will help track, access, and correct the issues that cause returns. On the

MBM merchandise return and exchange form there is a section where customers select a reason for return

based on 12 choices that are listed. There will always be customers that change there minds or who orders

merchandise in sizes that may not fit but we really want to correct the issues of customers that return for

other reasons like dissatisfaction with the quality of the garment.

MBM is implementing a customer satisfaction survey that will be sent to every customer that returns

merchandise. This survey will include questions that speak to the reason for return, how we could haveprevented the return and how we can maintain their business. Customers that complete and return the

survey will receive a gift certificate to purchase.

Step 7: Invitation to Return

Milla by Mail operates at a high service level. The clients are the number one priority. Our service

features will include:

(1) contacting the customer when new merchandise arrives

(2) reminding the clients of special occasions for which they may need gifts

(3) sending thank-you notes to customers that purchase

(4) following up with sales calls

(5) providing discounts to unsatisfied customers(6) providing an online suggestion box

(7) offering season preview and private sale events for preferred customers

The Milla customer service representative (CSR) is the most important element of service. Our number

one objective is service. If the company does what is right for the customer, the sales will follow. The

development of a loyal customer base will ultimately result in an increase in sales. Providing quality


20


21/40


service will also help prevent losses from theft. The company would eventually like to offer a private-

label credit card2, which will be convenient for customers as well as increase catalog sales.

800 Customer Service Calls

The Milla by Mail customer expects phones to be picked up promptly. Eighty percent of all calls shouldbe answered within twenty seconds. Ninety percent of customer-service calls should be handled

completely while the customer is on the phone. MBM currently manages its call center in-house. We hold

training sessions and plan to mail sample garments to our telephone representatives so they are familiar

with the products.

Order Fill Rate

The initial fill rate determines how many orders can be filled from the first inventory orders placed before

triggering a reorder or backorder. Milla by Mail anticipates filling 90 to 95 percent of orders on the initial

order. The goal is to have a final fill rate of 95 to 98 percent.

Net Return RateWhile product returns are a cost of doing business, they need to be maintained at a reasonable level. The

mail-order industry standard is 15% to 30% of orders.

2A credit system that allows retailers to offer credit cards under their store name, but a bank operates and manages

the service


21


22/40


Plans to Add Customer Service Functions to the Website

In the category of retailers with store-front sites, the sites usually frequently update the variety of

merchandise and have special user functions. MBM plans to expand our website to include features that

create more of a lifestyle community environment and allow customers to be involved in fashion, style,

and the Milla by Mail brand.

Customer Service

Milla by Mail is planning to expand the functionality of the website to include a real-time-response

customer-service feature. Customers will be able to click a button on the website, and a customer-service

question box will pop up, where they can type in their questions, and a representative will respond to their

questions right away.

Account Management

Customers will soon have the ability to manage their accounts online. Milla by Mail will track

information such as purchase history, contact information (with users having the ability to update the

data), order status, and a customer gift registry.

User Interaction

MBM plans to add two features to the website that will assist with creating a community environment.

First, we will send a monthly newsletter that will include trend information, Milla by Mail featured items,

and light advertisements from other companies. Second, MBM will implement a feature called Get the

Look. On the Get the Look page of the website users will receive instructions for sending in photos of

a designer or celebrity look that they would like MBM to recreate for them at an affordable price. MBM

will put the looks together for our clients and post them on the website. MBM will offer gift certificates to

the customers whose look is chosen.

Suppliers

Below is a short list of apparel vendors that MBM has met with and with whom we have placed orders.

All vendors receive The Vendor Shipping Manual, which outlines the details for shipping product.

Apparel Vendors:

Rebecca Taylor

HMB

BCBG

To the MAX!

Devan Apparel

Single

Anja Flint

Megan Noland

Derek Green

Corey Lynn Calter

Leroys Girl

Joes Jeans


22


23/40


Inventory purchases will be negotiated with net-30-payment agreements. Some vendors may request that

the initial order is paid C.O.D. After year one all inventory will be purchased with a net-30-payment

agreement for the betterment of cash flow. The amount of inventory purchased varies from month to

month. A $5,000 purchase of inventory would be considered full stock for the web-site. Smallerpurchases will be made for inventory fill-in and to update the styles that are shown on-line. Inventory will

also be stocked according to peak seasons, i.e., April, August, September, and December

Call Center

Milla by Mail will also eventually outsource its call center to maintain the in-house (800) phone number.

During business hours customers can call in to place orders or receive customer service assistance. There

will be one to two people responsible for answering phones. As the call volume increases, Milla by Mail

will begin to outsource the call center. The third-party service will take customers orders and

electronically transfer the data to the Milla by Mail home office.


23


24/40


Marketing Plan

Buyer Profile:

Milla by Mail Direct targets college students and professional women aged 2545. Our customer type

breaks into three groups:

Super Shopaholic

Sarah Rosenthal, 38

High-level executive or self-employed

Lawyer

Doesnt have time to hit the malls regularly; however, she is very fashion-conscious, wears designer suitswith fashionable blouses, attends happy hours or social events 23 times a month, reads all the latest

fashion magazines, and quite often makes purchases based on the editors recommendations.

Takes yoga

Single or newly wed

Income $70,000 +

Sexy, Stylish

Amy Bleaker, 26

Works in fashion or entertainment

Shops for rare items and discounted merchandise; will pay more for something different. Visits shoppers

havens (shopping districts). Goes to the mall only if looking for something particular, but will definitely

attend a sample sale. Daily dress is fashion forward but with some casual classics. Must have a few of thehottest trends in her wardrobe.

Exercises occasionally, depending on work schedule

Single, but actively dating

Income $35,000 +

Town Trendsetter

Song Han, 22

Student, Ivy League University

Shops for the item(s) that will make her the talk of the town and discount merchandise that looks

designer. Frequents the malls, websites, and sample sales.

Exercises regularlyActively dating or has a steady boyfriend

Income $18,000 + - summer jobs, student loans, and daddys credit card

Product: Stylish Apparel for Women 2545


24


25/40


Our current assortment is a mix of well-known boutique brands like BCBG, French Connection, and

Rebecca Taylor, as well as up-and-coming designers and our own private label brand Milla. We are

currently building relationships with manufactures that have brands that are in high demand. Our goal is

to purchase some of these key brands (primarily denim, i.e., Seven Jeans) at a discount by offering to take

overstock or the prior seasons merchandise.

We believe that this type of partnership will be effective for both parties. MBM will be able to offer key

brands at a lower price point, so we can capture a good portion of the business. The manufacturer will

benefit because it can sell merchandise at a better per-dollar cost to MBM than the normal discount

outlets they use like TJ Maxx, Ross, and Daffys. The manufacturer will maintain the image of a high-end

brand by not having its merchandise marked down. This will work well with denim lines because the

styles only change slightly from season to season.

In fall 2004 customers will see an increase of Milla private-label merchandise in the collection. Its

important for the company to expand our house brand because the average profit margin is 60 to 70

percent of the total retail price versus 50 to 55 percent on market buys.

Benefits:Our customers get the convenience of shopping online, plus access to their favorite

clothing brands, at better prices than they would find at stores.

Differentiation:Our merchandise offerings are characterized by fun, feminine, and novel items

that can transition from work to casual wear. We use an energetic color palette in our assortment

and visual presentation. Our visuals always represent a fun, quirky, and energetic display of pop

colors and clean lines that distinguish our brands from the competition. The Milla by Mail brand

is about more than our assortment; its also about the lifestyle image we offer our customer and

the escape from her busy schedule that she can experience through our website, catalog, and

events.

Price

Selling price per unit: $98.00 (average)

Cost of goods sold: $45.00 (average)

Gross profit (contribution margin) per unit: $53.00

Place

Milla by Mail is currently headquartered in the Laurence A. Baiada Center for Entrepreneurship in

Technology in Philadelphia. This business incubator provides the company with free office space, as well

as computers and other equipment and mentoring. We are projecting that this space will be available until

May of 2007.

Promotion

Launching Milla by Mail

Our launch marketing strategy was to test the market and build a customer base by launching online

(millabymail.com) in the spring of 2005 and then launch a printed catalog in the fall of 2006.


25


26/40


First, we built a mailing list by advertising the launch of the website on postcards at the Alpha Kappa

Alpha sorority, Inc. (a national service organization) regional conference and had attendees sign-up on the

MBM splash page to be notified of the official launch. Since the launch, MBM has reached new

customers through our Trunk Show tour, an event where MBM showcases a fashion show at different

venues in different cities, including Dylans Candy in New York; after the show customers place orderson merchandise, which is later mailed to their homes. Utilizing this web-launching strategy, Milla by

Mail will grow almost twice as fast as its catalog competitors.

In fiscal year 2005, we have begun to focus our marketing efforts on partnerships with other companyies

that will generate leads. Through commission-based programs and revenue shares, we will be able to

market to prospects via other companies subscribers. MBM will build our affiliate program by setting up

representatives on campuses to promote the brand.

Advertising:The Circulation PlanA circulation plan is built for every mailing. MBM sends out monthly promotions to its existingmembership base. All e-mails that are circulated to the list are tracked and produce statics on conversion

rate, open rate, and bounce rate. The companys goal is to circulate information or promotions to as manymarket segments as possible per month. Once rented mailing lists are selected, a unique source code(numeric identifier) will be assigned to each list. The circulation plan will be used to forecast percentageresponse, average order value (AOV), and sales per look book anticipated from each list. The look bookwill be distributed twice in year one and will increase to three books in year two. Milla by Mail hasachieved 10,000 unique hits per month on millabymail.com by the end of 2003.

Purchasing Mailing Lists: The Millard Group

Purchasing mailing lists has been a successful strategy for building a customer base in the mail order

industry. Milla by Mail plans to use the Millard Group to purchase customer lists. The company is leader

in the direct response industry with over 25 years experience in list brokerage, list management,

alternative media, customized marketing services, and Internet services. The Millard group works with

blue chip clients who are the top catalog and magazine titles in the country, such as Lands End, L.L.Bean, Chadwicks of Boston, Newport News, and Brookstone.

Milla by Mail has chosen this company particularly because it representsLucky magazine. Filled with the

latest fashions, accessories, beauty products, and more,Lucky delivers todays hottest finds with on-the-

spot buying information from website addresses, to retail store locations, to catalog toll-free numbers. The

Lucky reader base is a perfect place to find potential Milla by Mail customers. We are anticipating a 2

percent or higher response from this list. The cost to purchase the list is $79$89 per thousand with a

5,000 minimum purchase quantity.

MBM employs the following strategies to maintain a relationship with our current members and

purchasers:

sending product-driven e-mails with special offers on a bi-weekly basis to encourage members to

purchase

launching an e-newsletter that offers up-to-the minute fashion information, tips, and trends

sending a birthday cards to members every month that has a special offer for them to treat

themselves to a birthday gift


26


27/40


Partnerships

MBM will develop partnerships with websites like styleforfree.com and stylebakery.com, which are

fashion websites that give retailers the opportunity to showcase special offers, promotions, or

merchandise for a minimal fee. There is also an opportunity to develop relationships with other boutiques,

fashion information sites, or other industry sites for list exchanges.

Secondly, MBM will develop relationships with companies that our customers identify with and perceive

as valuable to their lifestyle. These companies include, but are not limited to, Maybeline, Lancme,

Sephora, and Hard Candy. The registered partners will provide products or information surrounding their

brand to MBM for customers in exchange for inserts in our packages every time an order ships.

PublicityBuilding a good relationship with the media has been essential to the growth of the company. Milla by

Mail has been featured in the following media:

NBCtelevision

Entrepreneurmagazine

In Style magazine

Lucky magazine

the San Jose Mercury News and other local publications.

We are developing our national public relations campaign. In November of 2005, Milla by Mail was

mentioned inIn Style magazine in the article 68 Fab Web Sites. From the 22-word mention, Milla by

Mail generated over 100 orders and 500 new members. National press has definitely been an effective

method of promotion, and we are planning to build more relationships in this arena.

Product Placement

We will notify stylists, costumers, and product-placement professional about Milla by Mail. Theseindividuals are constantly looking for new merchandise for their clients, who often appear on TV or in

magazines or other media. Loaning merchandise to such individuals in exchange for credit will help build

awareness about the company.

Philanthropy

Cause-Related Marketing

Milla by Mail plans to host or partner on events that will develop cause-related marketing. One campaignthat we have developed is called Pink Chocolate. This campaign will encourage customers to shop

Milla by Mail in support of Breast Cancer Awareness Month.

MBM will also partner with womens organizations, non-profit organizations, and other professional

organizations by having them participate in events, attend events, or participate in special programs. We

will offer group members special discounts to purchase from Milla by Mail.


27


28/40


Competition

The Milla by Mail Direct competitors are Girlshop.com, Ravin Style, Anthropologie, and Shop Bop.

Girlshop

Girlshop was started in 1998 by Laura Eisman; offers clothing and

accessories from up-and-coming fashion designerssome handmade,

some limited editions, and some exclusive to Girlshop. Within Girlshop,

each designer has a boutique where you can browse and read about each

item. Girlshop also has additional features, including messenger service for

local New York customers, tell a friend, trend alert e-mail, Top 10, as seen

in magazines, and a registry. In 2003, Girlshop introduced two additional

brands, Guyshop and Totshop.

Ravin StyleThe majority of the products are created by emerging designers. RavinStyle is centered on three characters: Ravin, Jackie and Lela. Eachcharacter has her style and distributes advice accordingly. The entire site ishand-picked by the girls, with commentary about trends, new ideas, andwhat flatters different body types. Features include stories about how towear the outfits, as seen in magazines, new items list, and a newsletter.

Anthropologie

Anthropologie began as a retailer in 1992 by Urban Outfitters, Inc. The

idea was to offer an experience full of uniqueness that would appeal to the

customer that was tired of the traditional retail operations. The first

Anthropologie store opened in Wayne, Pennsylvania on October 31, 1992.The company began an expansion program in 1994 and opened several

more stores across the country. The Anthropologie Catalog and website

was introduced in 1998. Anthropologies president is Glen Shenk.

Shop Bop

Shop Bop carries well-known designers. Features include wish list, whatsnew this week, and whats hot. The owners describe Shopbop.com as aplace where boutique edge meets department store selection. Its wherefashions taken seriously but without being over-the-top serious aboutfashion. Its where the seasons must-have products sit alongside the latestmust-know designers. Its where thousands of women come every month

for that one perfect item, for a complete seasons wardrobe, and foreverything in between. Shop Bops president is Bob Lamey.


28

Features

Messenger service

Tell a friend

Registry

Membership

Trend alerts

As seen in ma s

Features

Shop by body type

New items list

Newsletter

As seen in mags

Features

Catalog

Brick & Mortar

Tell a friend

Wish list

Features

Tell a friend

Wish list
http://www.girlshop.com/shop/girls/registry/myregistry.asphttp://www.girlshop.com/shop/girls/registry/myregistry.asp


29/40


Milla by

Mail Girlshop Ravin Style Anthropologie Shop Bop

Returns 14 days 14 days 14 days anytime 21 daysCustomerService

phone/e-mail

phone/e-mail phone/e-mail phone/e-mail phone/e-mail

Distribution web web webweb/catalog/brick &

mortar web

Price Point Comparison

Milla byMail

Girlshop RavinStyle

Anthropologie Shop Bop

Jackets 68238 26518 117350 78218 88-599CareerPants

130 50180 78198

Skirts 49140 51319 40196 68298 49-360Dresses 5894 38455 80270 159298 36-448

Knit Tops 4065 46196 34-98 44-291CasualPants

7098 24248 80-297

Sweaters 180218 88311 88198 44.95-198 73-297Tops/Blouse

s46140 31288

Mill by Mails Competitive Advantage

Milla by Mail sets itself apart from the competition by carrying a variety of merchandise that includes

well-known brands, up-and-coming designers, and our private label brand Milladistributed

exclusively via the website and catalog. All items can be purchased as separates or merchandised back to

other items.

Milla by Mails distinctive competencies are:

the merchandise

the personal expertise of the company founder, Jamila Payne

the shopping experience that is offered to customers

Our buying philosophy is to bring together the best of whats available in fashion every season.Our

merchandise is separates-driven so that our customers can put together looks that represent their personal

style. Our merchandise transcends geographic looks. We attract women from as far west as Washington

and as far east as Spain. It is more important for us to provide a narrower selection of specialized items

than to provide a wide assortment. Many online retailers sell designer merchandise that is discounted.

MBM sells high-quality boutique merchandise that is from a combination of sources including well-

known designer brands, up-and-coming designers.


29


30/40


Milla by Mail brings Jamila Paynes fashion experience to the customers by providing trend information,

tips, and fashion articles through a monthly newsletter. The MBM customer is looking not only for stylish

clothing and valuable fashion information but also for a memorable fashion experience.

We are creating a user environment on the website where customers can manage their own accounts and

share shopping experiences with other customers via our get the look feature. On the get the look

page customers can ask questions about their fashion problems, and their answers will be posted on the

site. There also will be a section on the page to post a photo of a customer in merchandise that they

purchased.

When a customer shops Milla by Mail, she embarks on a journey of self-discovery, and she leaves with a

different look every time. Milla by Mail creates a special place for customers by focusing on the lifestyle

of busy women. We complement the presentation of clothing with lifestyle images that represent the

Milla by Mail shopper.

MBM plans to use the following short-term (in progress) and long-term (future implementation) tactics to

acquire new customers:

Short-Term Tactics

Registering with search engines and directories

Milla by Mail will be registered with search engines so that if a potential customer is looking for the

website the search engine makes us easy to find. Although it is not in the marketing budget to pay the fees

associated with being at the top of a search list, we still feel that it is valuable to register (free) and be

included in the search database.

Sending monthly e-mails to MBMmembers

Customers who are registered with Milla by Mail (there are currently over 400 people registered asmembers) have opted into monthly e-mails. This marketing media will capture the attention of prospects

who have signed up but not yet purchased and drive them to the website. Customers will soon be able to

request a copy of the Milla by Mail catalog on the website. This will assist in building an in-house

database for the initial mailing.

Corporate sales

In the corporate program, partnerships with companies will allow their employees to receive discounts on

merchandise. The Milla by Mail team will send e-mails or postcards to inform employees about the

program. MBM will target companies new-hire employees. Milla by Mail will offer the employee the

opportunity to purchase a $300.00 gift certificate worth $370.00 or $500.00 gift certificate with a

purchase value of $600.00 called the Work Starter Kit.

Long-Term Tactics

Partnership events with magazines

Milla by Mail plans to have a sweepstakes contest with a magazine. Potential partners are currently being

investigated. These contests have proven to be successful for competitors such as girlshop.com and

bluefly.com. There is also an opportunity to do revenue-share programs with magazinesMBM will

receive free ad space in exchange for a percentage of the revenues that are generated from the ad. All ads


30


31/40


will have a promotion code attached that readers will use at checkout. The promotion code will offer a

gift or special discount to encourage readers to use it. The promotion code will also allow MBM to track

the sales that are being generated due to the ads.


31


32/40


Financing Request: Capital to Launch National Catalog

Amount Requested: $50,000

The most important factor in the launch of Milla by Mail was the ability to secure financing. The

startup capital was provided through the owners contribution of $3,000 and a $15,000 low-

interest loan from a family member. Start-up capital was used for:

design and development of the website

inventory

office supplies

travel expenses

professional fees

cash for operations

The primary source of revenue for the company has been sales from the website. The companyseeks $50,000 in capital to support the launch of a national catalog in fall 2006.

It is anticipated that sales from the catalog will exceed revenues from the website once the

catalog launches. Milla by Mail Direct had revenues of $20,000 in year one (MayDec) and is

projecting revenues of $100,000 in year two.

Revenue Model

Currently MBM revenue is driven primarily from online sales, the Trunk Show Tour events,

and in-office sales. We anticipate several new revenue opportunities for Milla by Mail. First, we

have decided to create a new event entitled The Fashion Trunk Show. The format of our

original trunk show events has been guests partaking in complimentary hors douevres and

cocktails for an hour, followed by a fashion show of MBM-only merchandise, and, after the

show, guests place orders on merchandise that is later shipped to them.

Going forward we will host three of the new events, which are on a larger scale. In the new

format we open up the merchandise presentation to 38 plus designers and a larger number of

guests. We will also change the event title from The Milla by Mail Trunk Show Tour to Milla

by Mail presents The Fashion Trunk Show. Revenue will come from tables rented by the

designers, a ticket price for the customers, and corporate sponsorships. Below is a chart that

illustrates the increased number of revenue streams created by the new event format.

Trunk Show ComparisonEvent Features(with ability to

generaterevenue)

MBM-OnlyTrunk Show

MBM FashionTrunk Show

Past PotentialRevenue

CurrentPotentialRevenue

FeaturedDesigners or

1 40+ 0 $8000


32


33/40


BoutiquesGuest

Attendance50100 500800 $0$300 $6000

$9600Companies that

GiveSponsorship

13 510 Product/Food

Donation

$7500

15,000


33


34/40


Secondly, MBM will introduce a newsletter and sell advertising space primarily to fashion and beauty

companies or vendors that would like access to the MBM membership base. The newsletter will

help with establishing the company as a resource for fashion information. Milla by Mail can send

the newsletter to its current membership base that has opted into monthly e-mails along with

attendees of the trunk show events. We are anticipating the launch of the newsletter in August2004.


34


35/40


Business Financial Statements

Please see attached financial statements (Excel files):

Income statements

Cash flow statements

Balance sheet

Financial Ratios

Year 1 Year 2 Year 3

Debt Ratio .41 .05 .10

Debt-to-Equity Ratio .68 .06 .01

Return on Investment 135% 573% 943%

Return on Sales 119% 31% 35%

Quick Ratio 2.47 18.53 89.19

Current Ratio 2.47 18.53 89.19

Working Capital $22,000 $173,478 $390,315

Break-Even AnalysisAverage unit of sale = $98.00

Break-Even, Year 1: 1,040 units per year, 87 units per month

Year 1 Total Revenue = $20,398Average units sold in Year 1 = $20,398/$98 = 208 units

Year 1 Gross Profit = $5,338

Year 1 Gross Profit per Unit = $25.66

Break-Even, Year 2: $170,508 (fixed costs)/$69.58 (gross profit per unit) = 2,450 units per

year, 204 units per month

Year 2 Total Revenue = $326,482

Average units sold in Year 2 = 3,331

Year 2 Gross Profit = $231,782Year 2 Gross Profit per Unit = $69.58

Break-Even, Year 3: $142,408 (fixed costs)/$64.38 (gross profit per unit) = 2,211 units per

year, 184 units per month

Year 3 Total Revenue = $487,600


35


36/40


Average units sold in Year 3 = 4,975

Year 3 Gross Profit = $320,300

Year 3 Gross Profit per Unit = $64.38


36


37/40


Growth and Exit Strategies

(1) Expand marketing and catalog circulation internationally in spring 2004

(2) Open retail store in 2005

(3) Open four additional stores by 2008(4) Employee stock offering

(5) Sell to a national or international company


37


38/40


Appendix: Financial Assumptions

Credit Card Processing

The expenses in this category are directly related to the costs associated with the monthly cost ofaccepting credit cards. This cost includes a lease purchase fee for the merchant license ($24.95 per month)

and a monthly statement fee ($10.00). Visa, MasterCard, and Discover all charge 2.3 percent discount

rate and $.30 per transaction to have the ability to accept funds from their cards. All credit cards require a

$25.00 monthly minimum in purchases. If the sum of a month of purchases is less than $25.00, the credit

card company will charge Milla by Mail $25.00. The $25.00 expense includes all the credit cards and is

not a per credit card fee. American Express will not be accepted.

Credit Card Calculation: The company expects 99 percent of the year one online orders to be purchased

via credit card. The other 1 percent of the orders will be mailed in with a money order.

Loan

The most important factor in the launch of Milla by Mail was the ability to secure financing. In year onethe company acquired $15,000 in debt to support the launch of the website and catalog. The catalog will

only print twice a year in year two.

Shipping and Handling Income

This is the income that is obtained from the customers to ship their orders. Every customer pays a

shipping and handling fee based on the total dollar amount of the order. Customers are required to pay an

extra shipping charge for expedited delivery.

Shipping and handling income is calculated based on the AOV x shipping price for the total order value x

the number of orders, i.e., Internet AOV in year one is $75.00 x shipping for a $75.00 order is $11.00 x

600 projected orders in year one = $6,600 in shipping and handling income. The cost of expedited

shipping is passed directly to the customer, so it is not included in the income calculation.

List Rental Income

This is income that is received in exchange for customers information. Customers must approve the

name rental before it is handed over to the broker.

Marketing

The expenses that are accounted for in this category are directly related to the costs associated with

promotions, publicity, or marketing campaigns. Milla by Mail does not plan to purchase any paid

advertisements. (please see marketing timeline for detailed information.)

Internet

The expenses that are accounted or in this category are directly related to the cost of maintaining the

website. That includes web, hosting, upgrades, domain name, web design, and development.

Fulfillment

This cost is directly related to any expenses that are incurred to get the customer her merchandise, i.e.,

shipping and mailing supplies. Fulfillment also includes the cost to ship the merchandise to the customer.


38


39/40


It is expected that the cost to ship the garment will usually cost $2.00 less than the shipping charged to the

customer. The cost of expedited shipping is passed directly to the customer, so it is not included as an

expense.

TravelThe expenses that are accounted for in this category are directly related to the costs associated with

traveling to trade shows for market weeks or other business meetings and industry conferences.

These costs will include, but are not limited to, gas, tolls, airfare, cab fare, hotel, train, and car

rental.

Production

Production shoots for the website occur every other month. The assortment of merchandise on the website

will change every four to six weeks. There are months were no production activity occurs and those

months have been left blank.

Printing and Mailing

Milla by Mail is anticipating the initial catalog mailing in August of 2003. There will be 30,000 catalogs

mailed in year one. In years two and three circulation will increase and catalogs will be mailed three times

a year. Milla by Mail will obtain a bulk mail permit. The cost of mailing catalogs and postcard campaigns

are based on bulk mail rates.

Office Supplies


administrative supplies needed for the office. These costs also include the purchase of business cards.

Professional Fees

Professional fees include the cost of industry subscriptions and consultations with legal and other

professionals. These fees also include licensing, public notice, and incorporation cost.

Insurance

The company insurance policy will protect the inventory in case of fire or other emergency.

Interest

The expenses that are accounted for in this category are directly related to the costs associated with the

interest that is paid on the $15,000 loan amount.

Taxes

Taxes are estimated as 20 percent of revenues.

PPE Purchases


purchasing plant, property, or equipment that can potentially be depreciated. The cost of leasing

computers on a monthly basis is also included in this category. The lease per computer is projected at

$35.00 per month.


39


40/40


Break Even

Our break-even point is the close with sales on 85 units per month (one item is a unit) for a total of 1010

units per year across channels. This is equivalent to 55 customers purchasing per month.

mil la by mail direct inc business plan

Documents