stanislav rost justin ashton sherife abdel messih
TRANSCRIPT
Stanislav RostJustin AshtonSherife Abdel Messih
Apparel Retail Market Facts Average US consumer spends
~$250/year online on apparel (30% annual growth)
Apparel retailers / designers spend >$1.2B annually on market research
US Retailers spend tens of millions more on excess inventory / management costs
Stylus narrows the gap between apparel retailers and consumers
Vision
Bridge the gap between fashion retailers, designers, manufacturers and consumers
Convert fashion-aware to fashionable customers
Provide fashion democracy, direct feedback to the industry
Channel the power of a fashion social network towards online purchases, quality market research
Stylus For End-Users
Fashion-oriented social network Upload your own photos, label your apparel Get peer and expert review of your style,
suggestions for new clothes Any suggestion is annotated with photos,
links to buy Photomagazine of attractive new fashions Earn authority, capabilities, and priority in
giveaways with participation and friend invites
Stylus For the Industry
Integrate your clothing database into discussions, one click away from impulse purchase
Targeted advertisements based on user profiles
Worldwide exposure and word-of-mouth advertisement
High-quality market research and pricing estimation Demographics, geographic coverage,
confidence
CompetitionOnline Fashion
Retailers
Fashion Magazines
Discussion Forums
Style Advice Websites
Social Networks
Marketing Research
Firms
Stylus
Focused on Fashion Fashion Ads Purchase Merchandise Fashion Articles, Art and Photos
Offers Style Advice General
General/Personal
(no tech. support)
General Personal
(withtechnology
support)
Intelligent Clothing Search
(classes)
(classes + similarity-
based)
Collecting Market Research
(history
of purch.)
(expensive
labor + small
sample sets)
(large
sample size + demogr. diversity)
IP Potential
Projected Revenue Streams
Ads Affiliate Apparel Sales
- Banner - Large, brand-name retailers
- Featured content - 3.5% avg. commission
- Fashion Integrator Tool
Market Research Direct Apparel Sales- Automated report delivery - Featured small designers
- $1K/per item minimum - 10% fee commissionStylus’ model includes no inventory costs
* Commission is the cut taken from partner apparel distributors/retailers
Market
Social Network (SN) Users
Fashion Conscious Consumers
Pew Research (US)
• 75% teens are SN users
• 30% 20-35 yr old SN users*
• 50% SN users check once/day
Woods and Poole (US)
• 26% of all in the target demographic are fashion-conscious
US Fashion Conscious/SN users = 26% * 30M SN users = 8M users
* Very conservative estimate, no exact data available for entire age range
Target Demographic: 15-35 year olds, fashion conscious, social network users
Market cont.
2008 Online Apparel sales to hit $12B (Jupiter) As of Jan 2006, people spent $243/year on clothing
purchases online. Fastest growing online segment (25-30% CAGR)
Our total apparel market 8M consumers (5% commission) spending $243/year $97M annual market for apparel sales on Stylus
In 2004, $1.2B was spent on apparel market research Goal is to capture >2.5% by year 5, earning
>$30M/year
Assumptions on growth
Took middle of the road growth projection
Bounded at 5M users$1K/item under market researchAverage apparel sale of $80/year/user
Revenue Projections
Operating Expenses
Cash Flow
Cash flow positive in Year 3rd Qtr, FY3
Cash Flow by Month
$(2,000,000)
$-
$2,000,000
$4,000,000
$6,000,000
1 5 9 13 17 21 25 29 33 37 41 45 49
Month beginning Series A (month 6)
Average quarterly cash burn rate:Year 1: $145KYear 2: $390KYear 3: $277K
Marketing Primary goal in first 3 years is to grow the SN
user base Target demographic is 15-35 fashion conscious, SN users Create online buzz through ads in SNs, fashion forums,
groups Beta launch parties in key cities Target college campuses heavily in first 2 years
Industry trade shows Demonstrate power of showcasing new designs on Stylus Create excitment among up and coming designers
Market Research Start by letting select partner retailers (Guess, Gap) use our
functionality for free First target retailers / designers with huge research budgets
Goal: Highest quality website / easy interface that will attract users
Competitive Advantages
Lower cost market research Unique domain-specific search, review tools Inherent switching costs of SN users Involved and committed user base Deep integration with the fashion industry
Team
Justin Ashton, Acting CEOMBA Candidate, MIT Sloan School of ManagementAir Force Intelligence, 6 yearsElectrical Engineering Background
Stan Rost, CTOPhD Candidate, MIT CSAILComputer Networks & Systems
Sherife Abdel Messih, VP Business DevBachelor Degree Candidate, MIT Mechanical Engineering/International Development
The Offering
$600 thousand seed round Series A: $9 million
$7 million: operating expenses $1 million: marketing / Biz Dev
expenses $600 thousand: legal and patent
expenses $1 million: unforeseen expenses
Summary
Goal:
Provide quantum leap into Web 2.0 for designers
Become technological cornerstone of the industry
Offer one-stop-shop for fashion / apparel consumers