Business Model Canvas for New E-Commerce Fashion Store in Canada

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The Business Model Canvas

Key Partners

Key partners for the application-based e-commerce fashion store are:

Professional tailors – will create the product according to the customer’s wishes.
Fashion adviser – will review the prospective designs sent by the customers and offer ideas for improvement.
Programming specialist – will create the 3-D application and improve it over time.
Transportation company – will deliver the finished product to the client.
Website hosting service – will host our site for the clients to visit.

Key suppliers:

Textiles suppliers.
Tailoring instruments suppliers.

Partners perform the following key activities:

Make the product.
Deliver the product to the customer – Work with the customer to ensure quality performance.

Key Activities

Key activities for this fashion business model involve:

Making the product.
Delivering the product to the customer.
Interaction with customer to tailor the product according to their wishes.

Key Resources

Key resources required to make the product are textiles and tailoring instruments for the tailors.

Key resources required for our distribution channels, customer relations and services are adequate programming software, a website, and social media.

Value Proposition

The fashion store sells apparel designed by the customers themselves. Clients upload photos to the online application, model, modify apparel, and design components of the clothing. Users can choose different types of collars, styles, fabrics, patterns and more. After the designing process, clients will be provided with a 3D visualization of the final product. The application streamlines this process by simplifying, abstracting concepts that is presented to the end-user, and removes the technical barriers of entry for clients.

Customer Relationships

The company will establish several kinds of relationships with the customers, which are:

Personal service – each customer will be treated individually.
Counseling – a fashion adviser will provide assistance with prospective designs.
Retail services – Online community (via social media outlets).

Channels

The primary channel through which the store is going to reach to the customers is going to be through the dedicated internet shop. Additional channels involve social media outlets like Facebook, Twitter, Instagram, etc.

Customer Segments

This product targets young Canadian fashion lovers that wish to create their own designs but lack the expertise to understand the components, materials, and technique involved in the process of creating clothing.

As the proposed product is available online and not restricted to physical store locations, the entire Canadian population are potential clients. Clients can include businesses, individuals purchasing for themselves or individuals purchasing for others.

The age group the company is aiming for (but not limited to) is between 14 to 30 years.

Cost Structure

The most important cost in the e-commerce fashion store are:

Costs for materials.
Payments to the parties involved in the production cycle.
Delivery costs.
Advertising and brand-building expenses.
Website and software-related costs.

The most expensive key resources are:

Textiles and tools – without them we won’t be able to make the product.
Programming software – a sophisticated and highly-customizable interactive software is usually expensive.

The most expensive key activities are:

Payments for the parties involved in the production cycle – these include tailors, managers, quality control team etc.
Transportation – small individual deliveries all over Canada can be expensive.

Revenue Streams

Customers would be willing to pay for articles of clothing that are customized, stylized, and tailored to their own preference, rather than choosing between mass-produced clothes with no individuality to them. Currently, our customers are purchasing clothes in local retail and online stores, where they have little to no options at customization. One can hire a persona tailor, but it is very expensive and increases the value of the product by several times.

The three primary ways of paying for the products currently used are:

Direct payments.
Payments via a credit card.
Payment upon delivery.

Most customers are satisfied with these methods of payment. It is estimated that revenue would be equally split between payments via a credit card and payments upon delivery. Some customers are wary of online shopping and would prefer paying once their merchandise is delivered to them.

Total Addressable Market

The Canadian population is estimated around 35,5 million people (Population, 2016), out of which 19.4 million are considered to be labor-worthy, according to the Canadian statistical surveys for 2016 (Labour, 2016). Total income per family varies between 65,000 to 100,000 Canadian dollars, with a median total income established at 75,000 (Median family income, 2016). This means that despite the relatively small population when compared to other markets, the Canadian customers are wealthy and are willing to spend money on clothes, accessories, and other merchandise (Economy, 2016). An average family spends around 4% of their yearly income on clothes and footwear, which amounts to 43.6 billion Canadian dollars per year (Fashion industry statistics Canada, 2014). A lot of money is spent during holidays. According to The Globe and Mail, an average Canadian family spends around 1,800 dollars during the holidays (Marotte, 2013).

Due to these factors, Canada has a wide chain of wholesale and retail fashion companies, estimating at around 25,000 individual businesses. The domestic market size of the industry specializing in producing clothes and footwear is around 68 billion dollars. The market size for textile industry is even more than that – 108 billion dollars as of 2014 (Fashion industry statistics Canada, 2014). There is no more recent data present. However, the differences are not expected to be very high.

Total Serviceable Market and the Target Market

According to statistic taken for the year 2014, the turnover of retail of clothing is circa 22 billion dollars (Fashion industry statistics Canada, 2014). This is the serviceable market for our business. The footwear creation processes are very complicated. They require specialists, expensive materials, and equipment, which is why it is not advised to split the production into two different branches.

The amount of clothes purchases made on the internet have been steadily growing since the 2000s, and nowadays the revenues coming from online shopping industries in Canada are equivalent to those of classic retail stores (Retail sales, by industry, 2016). There is still potential for growth. The younger generations are, the more active users of online shops and services, whereas other age groups prefer conventional stores. Our site will primarily target an audience aged between 14 and 30, in order to maximize potential profits (Measuring e-commerce, 2012). However, the online application would be made to fit everybody, so that other potential customers are not overlooked.

Competitive Test Matrix

In order to assess the chances of our application-based e-commerce store that sells apparel designed by the customers themselves, we are going to compare the services offered by the store with the services provided by main competitors in clothing industry retail sector. Our competitors are online stores and standard retail stores. For better understanding of it, the information is presented in the form of a table:

Types of stores ———- Services provided by the store	Our store	Regular online store	Standard retail store
Premade clothes	Yes, our store will feature a collection of articles designed by us to offer to clients in case they are uncertain about their own ideas.	Yes. The majority of regular online stores features articles of clothing either designed and created by themselves or purchased from other distributors.	Yes. All standard retail stores serve as distribution points for companies that create articles of clothing.
Customization levels	High. Our store is designed to offer customers a very high level of customization for their articles of clothes, allowing them to create their own item practically from scratch. Users can choose different types of collars, styles, fabrics, patterns and more.	Low-medium. Depending on the online store, they may have a service that allows adding spray-paint emblems over clothes, typically T-shirts. Outside from that, there is very little customization – the customers have to choose between patterns and colors available.	Low. Aside from choosing between colors and patterns present on display or in storage, an average retail store can offer little in terms of customization.
Available selection	Irrelevant. Since our shop deals largely with items crafted according to a customer’s design, the shop has no need for holding a large selection of pre-made items on display and in storage.	Medium-high. Since online stores are not limited by display space, they are allowed to present all the articles they have in storage, to the customer.	Low-medium. Depends on the size of the store. Most stores are constrained by display spaces, as they do not have enough to display all the articles they hold in storage. Only the largest stores can afford that, as additional display space is expensive.
Product visualization	Medium. The site is going to feature an innovative 3D model of the clothing article the customer creates, which helps with visualization.	Low. Most online retailers cannot offer much in terms of visualization of the product, aside from photos and videos.	Very high. The greatest advantage of a retail store is that a customer is able to see, touch, and even try out an article of clothes before buying it.
Accessibility and delivery services	High. The internet site can be accessed from virtually anywhere. Delivery services are available to any customer in Canada.	High. Most online shops come equipped with a delivery service, much like ours.	Low-high. Depends on the shop. Most shops do not get involved with delivery services and focus on direct sales. Customer reach is limited to the shop’s location.
Counseling services	High. The site will employ a designer to review the articles created by the customers and will offer advice and constructive criticism in order to make sure the client is satisfied.	Low. While the majority of online shops feature consultants, they rarely can offer anything beyond basic information about the products.	High. The salespersons employed in retail shops are also capable of performing as consultants, offering feedback on customer choices and providing advice on what merchandise would fit them the most.
Prices	Vary. In general, our products will be more expensive than the standard premade articles due to the amount of customization our tailors will have to do. However, due to having a set range of possible modifications and standardization of production processes, our clothes would be cheaper than tailor-made custom clothes.	Vary. In general, products in online shops are cheaper due to no need to pay for display spaces.	Vary. When compared to online shops, standard retail stores offer products at a steeper price, due to the need to pay their salespersons and maintain the shop.

References

Economy. (2016).

Fashion industry statistics Canada. (2014). Web.

Labour. (2016).

Marotte, B. (2013). Canadians plan to spend an average $1,810 this holiday season. The Globe and Mail.

Measuring e-commerce in Canada. (2012).

Median family income by family type, by province and territory. (2016).

Population. (2016).

Retail sales, by industry. (2016).