Clothing Swap Saas-Based Platform: Business Plan, Financial Model & Pitch Deck – Case Study
Clothing Swap Saas-Based Platform: Business Plan, Financial Model & Pitch Deck – Case Study
Background
This case study is about a company that comes with the idea of swapping in which they provide a platform where clothing stores, younger and lower-income people swap their apparel. The clothing swap platforms idea is based on reuse, less waste social behavior in people.
The client aims to promote CO2 reduction efforts by facilitating and making clothing swaps attractive and easier and giving them a longer life. Our client’s initial target market is Denmark, and they plan to expand it to other states of Europe. However, the focus is on young, fashion-conscious, and lower-income customers.
Our client wanted us to prepare a detailed financial model, Business plan, and pitch deck to facilitate the investment funding process. The sections below explain what challenges this project faced and how our team developed a strategic plan. Moreover, a fantastic pitch deck was prepared to facilitate the round of investor presentations.
Challenges
Our client’s clothing swap platform has different features, categories, and costs, forming the revenue model’s basis. One of the challenges was developing a dynamic structure to calculate the revenue so that the pricing could be adjusted and narrowed down to the best possible scenario. Moreover, analyzing the sales strategy that targets specific customers within the market segment. Further, utilizing a direct sales approach was critical in finalizing the pricing strategy.
To overcome the above challenge, it was necessary to analyze different customer segments and prepare a complete profile. This was a big task considering the multiple categories and services involved in the application, each requiring individual attention. Our team needed to do the research to identify the age group of customers and the marketing strategy.
The clothing swap SaaS-based business model required investments to cover its early development costs and other expenses. Hence building an optimal and customized financial model that evaluates each segment of the business to calculate total investment requirements was essential. Moreover, the calculation of investment returns was also required to give the client an estimate of what they could offer their investors.
Since our client was dealing with multiple revenue channels and marketing strategies, we needed to identify the profitable channels. In addition, we were required to determine which channel brought the most customers.
Solutions
Our team conducted in-depth research to formulate customer profiling, in which we evaluated the churn rate and customer loyalty of each revenue and subscriptions plan in the financial model. We analyzed that young customers easily switch to other brands and platforms; therefore, we prepared a detailed marketing plan to attract young customers and strategies to sustain them for a long-term perspective.
The oak business consultant did detailed research and analysis of market pricing and provided a structure to identify the most competitive pricing for the client’s clothing swap platform while maintaining its profitability. Further, it helped to develop the marketing strategy of targeted specific customers of our clients.
Through our market research, we finalized the pricing model of channels. Furthermore, we identified which category and channel create the most profit and bring the maximum number of customers. However, we determined how these categories could be profitable, help to expand the customer base and identify ideal channels for different types of revenue.
Our team also evaluated the average price-sale ratio and average transaction per user as per market research to reach more accurate projections of the revenue and cost of different categories of products.
Through our market research, we finalized the pricing model of channels and identified which category and channel generate the most profit and bring the maximum customers. However, we determined how these categories could be profitable, help to expand the customer base and identify suitable channels for different types of revenue.
Business Highlights
Our Client’s business model is an incredible fashionable swapping platform where you can easily exchange your wardrobe with other users, giving you new items to wear without extra cost. In the financial model, the Oak business consultant prepared forecasts for subscription levels with different fees, the number of deliveries per customer & transactions, and the segmentation of customers for the SaaS model.
In addition, based on multiple payment options, we evaluated a detailed payable and receivable schedule so that it helps and can track cash flow along with profitability. Our team forecasted revenue and cost for different categories on a monthly and yearly basis and applied relevant logic based on the business model.
Competitors
We identified five major competitors in the industry and prepared a comparative analysis to explain each competitor’s features of their products and pricing strategies. The competitors not only provide their services in second-hand apparel but also in interior and furniture. The industry is gradually enhancing its number of services. The oak business consultant highlights the competitive edge to attract customers.
SWOT Analysis
We prepared the SWOT analysis to explain this clothing swap company’s business model’s strengths, weaknesses, opportunities, and threats. We have found that the company offers competitive prices. In addition, Gen Y and Z are brand disloyal; they easily attract and divert to other brands. Another weak point is the company charged small markup on each delivery compared to our competitors.
The company had several opportunities to get partnerships and sell sustainable brands to its users. Furthermore, the industry is growing, competition is becoming rigid, and users are seeking other platforms, which is a significant threat to our client.
Market
Our market research identified that the average person in Denmark buys 16 kg of clothes annually. 80% of clothes that get thrown away are 20% used, which means they can be used more, but because they have become old-fashioned or, in some cases, the size changes, they don’t value them, and people do what the trend asks them.
Growth drivers
In this section, second-hand clothes are expected to claim 2nd most significant share of the market. Further, the top 3 exponential growth sectors are second-hand, rental, and subscription. On the other hand, mid-price specialty and value chains are expected to lose market share. Finally, we have mentioned a detailed overview of growth drivers, including data from 2009 to 2029, and show the expected nine-fold growth in the retail sale of second-hand clothes.
Our team prepared the market research for the client’s Saas-based clothing swap platform, and we identified that European countries offer the most opportunities for recycling fashion. Our research found that almost (35%) of Europeans claim to have used second-hand clothes. The European countries, including Italy, Germany, the United Kingdom, Poland, Belgium, France, Netherlands, and Portugal, have the potential to grow.
Marketing Strategy
Our Team formulates a marketing strategy for our client to increase the awareness of the reusability of apparel to the targeted audience. In the marketing plan for this clothing swap platform, our team prepared the marketing strategy based on Social media marketing, Influencer marketing, Google Ads, codes and discounts strategy, algorithm, hammer strategy, and retargeting users.
Financial Highlights
Input Assumption
The oak business consultant prepared the detailed input assumptions model per our client’s required business model. In this sheet, we include the revenue assumption of each category, investments based on owners & private. Furthermore, developed other essential assumptions and schedules which help to formulate each area of business and financial model of our client’s Saas-based.
Revenue Analysis
In the growing industry and an ideal business environment with excellent marketing strategies, we have forecasted each segment of the revenue model, including the no. of visitors, subscribers, new subscribers, customers who hire stylists, and revenue from White Label Licence SaaS.
Financial Statements
We forecast our client’s financial statements and explain five years of profit & loss, balance sheet, and cash flow statements. As per the model, the company will get better returns from its four years, and the net profit margin shows an increment trend.
Breakeven analysis
The oak business consultant financial experts develop the breakeven analysis and revealed that our client would achieve its breakeven in 3rd year. The contribution margin would show the increment trend from year 2 to year 5. Furthermore, the variable and fixed costs will be at their highest in year 5.
Company valuation
The Oak business consultants use the Discounted Cash Flow Method to forecast the company valuation. We estimated the Company’s Net Present Value and the terminal value of this clothing swap company. This value was then used to estimate the Minimum Equity Share %’ to be offered to the investors. This is a significant value when going for investment rounds. Moreover, the investors also want to know the returns; hence we estimated the equity share to forecasted Free Cash Flows.
Pitch Deck
Our experts prepared a pitch deck to pitch the idea to any number of targeted audiences and attract investors. We mentioned the business model, financial plan, and the overview of the company valuation and the industry’s market size. Furthermore, by investing in this Saas-based company, we included the subscription plan to show investors the best returns.
Conclusion
The digital clothing swap platform has a lot of potential growth in European countries and exchanging apparel. Further, clothes are becoming a trend in the European market. The financial, business model and pitch deck help our clients compete in the market, operate efficiently, and attract investors.
Oak Business Consultant makes businesses stand out and perform exceptionally well. We go through a deep analysis of market research and financial forecasting. Furthermore, we consider every aspect of the company to give clients a critical viewpoint in developing their business success journey.
