By Lisa Cedrone
Online sales sounds so easy: pick a product or a service, develop a website with a shopping cart, and customers will show up and buy. After all, almost 90 percent of U.S. adults have Internet access today, right?1 But it’s not really that simple, and those who decide to plunge into the world of e-commerce without a solid plan are likely to find themselves adrift in a vast sea of uncertainty, rather than sailing in the currents of profitable online sales channels.
Why? The reasons are myriad. Just for starters, it’s initially extremely difficult to get website traffic without an investment in pay-per-click advertising. Next, competition is stiff in many categories, and “almost no online startup can survive in the face of significant, established competition,” points out Armando Roggio in the article “8 Reasons Why Ecommerce Businesses Fail.”2 Sure, it’s possible to open a store with just a few hundred dollars, but inventory can be expensive and lead times can keep cash tied up. “New e-commerce companies can get into trouble when they don’t have enough cash to keep operating,” adds Roggio. “An example of this is when an entrepreneur invests all his cash in inventory and there is no money for marketing—so sales don’t rise and the business is stagnant.”
The bottom line: Every e-commerce startup needs a solid business plan to improve the odds of success with online sales. It’s a formal statement of business goals and a structured plan for reaching them. This business plan should draw on a wide range of knowledge from different disciplines including finance, human resource management (if applicable), supply chain management, operations/manufacturing and marketing, among others.3 According to the U.S. Small Business Administration, it can be helpful to view this business plan as a collection of subsections that should contain, at a minimum4:
- Executive Summary: Usually written last but appearing first in a business plan, the Executive Summary briefly describes where your company is, where you want to take it, and why your business idea will be successful. It also is used as a marketing tool to grab potential investors’ interest.
- Company Vision and Background: This high-level review of the different elements of your business includes the marketplace needs that you are trying to satisfy and how your products and services meet those needs. It also includes customer segments and competitive advantages.
- Mission Statement: This clear, memorable and concise statement defines what the company does and what it represents philosophically. Less is more in this case, and a one-sentence statement that is inspiring should be the goal.
- Market Analysis: An evaluation of the company’s target market and its distinguishing characteristics, the competitors in your space, pricing and possible market share that can be garnered is critical for success.
- Marketing Plan: This includes, but is not limited to, a strategy for promotions, advertising, public relations and printed materials that may help drive business online, such as brochures. This plan should continuously evolve and consider growth objectives over time.
- Operations/Manufacturing Plan: It’s important to include a supply chain outline for how products and/or services will be developed, sourced and/or manufactured and delivered to customers. Timelines should be included, as well as information about research and development and intellectual property (patents, for example).
- Financial Plan: After analyzing the market and setting clear objectives, financial projections should be developed. If you have creditors, most likely they will require projections for the next five years and each year’s documents should include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, you should supply monthly or quarterly projections.
INTO ACTION
For our case study, The BhakTee Life’s startup, we will look at the areas Company Vision and Background, Mission Statement, Market Analysis, Operations/Manufacturing Plan, and Financial Plan. The Marketing Plan will be the focus of next month’s article.
Company Vision and Background
The BhakTee Life is dedicated to promoting conscious living by creating custom tee shirt designs with spiritual and humor themes, printed on high-quality cottons and cotton blends. The word bhakti is a Sanskrit word that means devotion to a personal god or to spiritual ideas, and the name BhakTee is a play on the Sanskrit word. Through the use of slogans and images, our vision is to help people remember that we are spiritual beings having a human experience, and that personal devotion is what allows the opportunity for spiritual growth and clarity.
The BhakTee Life, LLC, is a new company, trademarked in 2016. Each design is a co-creative effort by the owner, Christy Perry, and the graphic designer, Lisa Cedrone. Together they bring over 40 years of practice from their spiritual studies, and both have extensive experience in retail and the apparel industry.
What distinctly separates The BhakTee Life from other tee shirt companies is the originality of the slogans and the designs, and the manner in which they are created. Christy and Lisa work together to design each image around the words, infusing each new design with their own personal energy and passion for sharing a positive message. The brand is about being positive, and also having a sense of humor, remembering that if nothing else, life should be fun.
The target customer niche for The BhakTee Life is spiritually minded people—those who have been on the spiritual path for some time, and those just beginning their journeys. People wear tee shirts because they like to wear something that represents who they are. Our customers wear our tee shirts not only because they like our designs and slogans, but because they love the fit, and the soft, comfy feel of the shirts. This is what creates repeat customers, as well as new customers because they know they are consistently buying high-quality, mindfully inspired items that will last.
Mission Statement
The BhakTee Life is devoted to creating clothing that raises the consciousness of the planet by sharing slogans and designs that awaken the spirit, inspire the soul, and bring joy to our lives.
Market Analysis
The U.S. apparel market is the largest in the world, according to Statista9, and in 2015 the market was valued at approximately $343 billion. More specifically, when it comes to e-commerce, the tee shirt sector is by far the largest in the online apparel arena, accounting for $2.9 billion in 2014, according to Counselor10, a magazine for the promotional products industry. No matter how big, however, the online tee shirt market is extremely competitive.
Within this market, the best strategy is to have a strong brand and niche market. For The BhakTee Life, that is tee shirt consumers who are spiritual/metaphysical in the middle- to high-income brackets.
While a Google search of “spiritual t-shirts,” delivers 1,400,000 results, there are no similar standout spiritual tee shirt companies when you Google “spiritual t-shirts.” That suggests that there is an opportunity to build a channel in this market and make The BhakTee Life the leading brand in spiritual tee shirts.
Top competitors include:
Life is Good at www.lifeisgood.com
- Leader in the tee shirt market; more than $100 million apparel business.
- Influential brand founded by two brothers with a philosophy to focus on the good in life. Semi-spiritual message.
- Online shirts are sold through corporate website.
- Life Is Good tee shirts, hats, and other items are sold by 4,500 retail stores nationwide, and the company offers co-branded greeting cards and stationery with Hallmark, a line of gourmet coffee with J.M. Smucker, and dog accessories with Planet Dog, all promoting positive thoughts.11
- The company doesn’t advertise; it started a foundation to put on festivals to benefit kids overcoming violence, poverty and illness. This is how the Life Is Good brand promotes. 11
- Full price tee shirts at $25 to $30, but many sale items are offered at up to 40 percent off.
Enlightened Clothing Company at www.enlightenclothingcompany.com
- Clothing, jewelry and other items incorporating sacred geometry.
- Very busy designs with a “grungy” theme/look.
- Younger target audience.
- Average price range on shirts $9.99 up to $25 for tee shirts.
Etsy marketplace at www.etsy.com
- As a collective, the Etsy marketplace has thousands of spiritually oriented tee shirts available that will compete with The BhakTee Life.
- Average price $15-$25.
- No solid brand presence is noticeable through searching “spiritual tee shirts” within the marketplace.
- Many shirts feature bad graphic design.
Operations/Manufacturing Plan
The BhakTee Life is located in Sarasota, Florida, and currently is developing a two-pronged manufacturing supply chain: 1. Using a local printer and 2. Using a drop ship printer.
Shirt Design: All designs are produced collaboratively using a mass customization model. Owner Christy Perry creates slogans and graphic artist Lisa Cedrone conceptualizes the designs using a combination of purchased royalty-free stock art, custom art and typography. Using some stock art allows the company to quickly create designs with minimal investment in art and design time. Lisa prepares all art for printing and supplies it to a local printer or an on-demand direct-to-garment drop shipping company.
Local Printer: Establishing a relationship with a local printer allows the company to produce small runs based on sales projections for local events and venues, which can help drive business to the online shop. To use this model, designs prepared for printing are sent to this company, proofs are sent back to The BhakTee Life and, upon proof approval, the printing is completed. Typically, it takes one to two weeks to create a design and choose the style of the shirt, and then another two to three days to get the proofs once the design is sent to the printer and a deposit payment is made. Once the proofs are accepted, it takes a week, sometimes less, to receive the finished product.
Additionally, when top-sellers are identified using the print-on-demand method of manufacturing, large quantities can be produced more cost effectively with screen printing. Having a local supply chain for top sellers can be later translated easily to the Etsy selling model, which has specifications for hand-crafted supply chain models, if we decide later to sell via this channel and hold/ship inventory. Mass producing for Amazon.com and using Amazon’s fulfillment centers is another option that will be explored as the company grows.
Direct-to-Garment (DTG) On-demand Printer: Using a DTG on-demand printer allows The BhakTee Life to print single shirts based on individual orders using unlimited colors—without investing in any inventory. This process also allows for highly detailed designs/artwork. Prices are higher per unit and there are no volume discounts, as with screenprinting; however, there is no risk involved.
To use this model, shirt designs are uploaded to the DTG website and mockups are created through a shirt generator. This application also prepares a print file. We set up the shirt manufacturer, shirt style, shirt color and size range, as well as the shipping options, and then automatically link it to the Shopify shopping cart and website. When a customer orders a shirt, it is printed and drop shipped in approximately three days with our company branding.
Financial Plan
Currently, the owner of The BhakTee Life, Christy Perry, is funding the company through personal finances and a line of credit via a credit card. At this time, Christy is able to return profits from sales back into the company for further development.
Human resources: For the startup period, Christy and Lisa do not require any return on investment for their time, so there are no employee expenses in-house.
Marketing budget: The initial marketing budget will be $100 per month. After three months, it’s projected that profits will fund the marketing budget and it will grow up to $500 per month by the end of the first year of operation.
Inventory costs: Minimal inventory will be kept for the first year, not to exceed $500 at any one time.
Shopping cart monthly fee: $26 per month.
Screenprinting Local Company
- Average price for a screenprinted colored tee shirt is $10.54 for a short sleeve, single color, two-sided print. For a short sleeve, two-color, two-sided printed white tee, the cost begins at $11.96,and goes to $13.17 for a long-sleeved shirt of the same design.
- There are additional costs per order in the screenprinting process. When one color is used, the initial setup fee is $25.00. Each additional color is another $5.00. The screen setup fee is $12 for each screen (representing a single color) needed. Also, when printing on colored tee shirts, an undertone of white is required to make the chosen screenprint color “pop” and stand out on the colored tee shirt. So even if only using one color for a design, you will still require two screens to achieve the undertone effect.
Digital Direct to Garment Printing Local Company
- Digital printed long-sleeve tee shirts with screenprinted logos on the opposite side begin at $19.87.
- One-sided digitally printed short-sleeve tees begin at $13.65.
- Shipping is $5.00 for the first shirt and $.75 for each additional shirt.
Digital Direct to Garment Online Pricing
- Wholesale prices will range from $13-$25 with one-sided printing.
- Printing the logo on the opposite side will add $5 per shirt.
- Shipping is $5.00 for first shirt and $.75 for each additional shirt.
Shirt pricing: Retail shirt prices will range from $25 to $45 during the startup period of the company. Prices will be consistent regardless of drop shipping or shipping from Christy’s house.
Stay tuned for more on marketing next month.
References
1. “13% of Americans don’t use the internet. Who are they?” by Monica Anderson and Andrew Perrin, September 7, 2016, Pew Research Center, online article at http://www.pewresearch.org/fact-tank/2016/09/07/some-americans-dont-use-the-internet-who-are-they/
2. “8 Reasons Why Ecommerce Businesses Fail” by Armando Roggio, November 7, 2014, Practical Ecommerce, online article at http://www.practicalecommerce.com/articles/75484-8-Reasons-Why-Ecommerce-Businesses-Fail
3. Business Plan Definition, Wikipedia, online definition at https://en.wikipedia.org/wiki/Business_plan
4. “Write Your Business Plan,” U.S. Small Business Administration, online guide at https://www.sba.gov/starting-business/write-your-business-plan
5. “50 Example Mission Statements,” Top Nonprofits website, online list at https://topnonprofits.com/examples/nonprofit-mission-statements/
6. “How to Write an eCommerce Business Plan for Your Startup” by Sameer Reddy, selfstartr.com, online article at https://selfstartr.com/ecommerce-business-plan/
7. “Small Business Ideas: How to Start an Online T-Shirt Business,” YouTube Video at https://youtu.be/Z0yhS_sJkMk
8. “What Is Spiritual Branding?” by Jonathan Greye, September 27, 2016, Spiritual Biz Magazine, online article at http://www.spiritualbizmagazine.com/what-is-spiritual-branding/
9. “Statistics and Facts on the Apparel Market in the U.S.” Statista portal analysis at https://www.statista.com/topics/965/apparel-market-in-the-us/
10. “SOI 2015 – T-Shirts Rule Online Sales,” by Shane Dale, Counselor magazine online, July 15, 2015, online article at http://www.asicentral.com/magazines/counselor/Research/content.aspx?id=2089
11. “Life is good in the T-shirt business,” by Dinah Eng, May 01, 2014, Fortune, online article at http://fortune.com/2014/05/01/life-is-good-in-the-t-shirt-business/
Lisa Cedrone is the editor of Transformation Magazine and a freelance editor, writer, and graphic designer working primarily in the spiritual and alternative healing communities. Prior to establishing her Sarasota, FL-based freelance business in 2008, Lisa spent 20 years as an editor/editor-in-chief for two of the Top 10 business to-
business publishers in the United States, serving the apparel manufacturing and residential construction/building markets. Her company, DragonFly Nation, offers a wide range of creative services, with an emphasis on cost-effective, turnkey editorial and design projects for both print and web. Contact her at lisa@suncoasttransformation.com or visit DragonFlyNation.com