440.000 €Post - Money
February 18, 2015
Buy It is a mobile marketing application, specialized in the fashion sector.
In recent years clothing brands have begun to develop online marketing strategies as a consequence of the intensive use of the mobile by their customers.
Until now, fashion brands are using their own channels to promote their campaigns and new collections through Emailing, web, own applications and social networks. The problem lies in the difficulty of accessing new qualified customers and associate that marketing expense with a measurable increase in sales.
From the point of view of the user, it is difficult to find out all the promotions that make their fashion brands of interest since each one uses its own channels. The use of an open and free platform that adds the content allows them to consult the information that interests them and to be useful to them in their purchase process.
Buy It seeks to be a complementary channel for promoting the content of the main fashion brands thanks to the possession of a qualified audience of potential buyers.
In the USA, there is a similar application, Shopular, with great success among the public and in investors who in 1.5 years has achieved 5 million downloads and is working with fashion brands such as Macy's and Khol's.
The companies of private clubs of sale and outlets online have reached their maturity phase and are focused to brands of average and high purchasing power and in products out of season. Buy It wants to focus on medium and low cost brands, promoting the seasonal contents, through the offers of the customers.
Tiendeo and Ofertia, specialized in the catalogs, show that companies like El Corte Inglés or Cortefiel are using this channel to promote their contents. On the other hand, they are not able to monetize fashion brands since they are not exclusive to that sector.
The case of the Acotex app, the Spanish textile association, shows that it is a process that must be controlled by a neutral third party, not by the brands themselves. There must be a company that specializes in capturing and segmenting a user base so that mobile marketing campaigns can be carried out correctly.
The intensive use of smartphones by users is making spending on mobile marketing growing at a rate of 20% per year in Spain, with 110 million investment in 2013, being 1% of the budget of companies. It is still far from the 2.8 billion that are being invested in the United Kingdom, where it represents 11% of the budget.
More than 60% of people who make purchases in the fashion sector have previously been informed online (RoPo effect).
In Spain, 4 million fashion catalogs are read every month through the Tiendeo platform. They are the second most popular catalogs after supermarkets.
According to conversations with potential clients, they are interested in using a mobile channel to advertise their offers, as long as their effectiveness can be measured, and the charge is associated with the effectiveness of the campaign.
The business model is based on charging customers for different marketing actions to the user base of the application. The client archetype are fashion brands, medium and large, that want to target a qualified audience. Validated forms of income are:
• Cost per Click (CPC) in offers and catalogs: 0.1-0.2 € for each user visiting the offer or catalog that the customer wants to promote.
• Sales commission: 10% on the purchase ticket of customers who went through the app.
• Push notifications: € 0.2 / notification to the user segment of interest.
• Cost per Impression (CPM): 5-10 € / 1000 impressions. Branding strategies for smaller brands based on the preferred positioning of your ads.
There is a multidisciplinary team of 7 people involved in the project, with experts in online marketing and programming:
• Arturo Alvarez Podhorecka, CEO and co-founder
• Rafael Martínez de Lucas, expert partner in online marketing http://en.linkedin.com/in/rafaelmartinezdelucas
• José Miguel Brocal, Android Developer
• Javier Vargas, backend programmer http://en.linkedin.com/in/javiervargascaro
• Jesus Valero, iOS programmer http://en.linkedin.com/in/jesusvalerogarcia
A PMV was launched in June 2014 to validate user interest. It has been proven that there is interest in the platform since there is a 45% retention of users, 10% open the app every day and 55% every week. In 7 months have seen more than 600k times the offers of the 80 brands that are taking offers in Spain.
The most important aspect of the project is the capture of the user base necessary to be a channel of value for the clients. This will be done online marketing strategies, sweepstakes, use of prescribers such as bloggers and youtubers in social networks and public relations. The goal is to get 800,000 downloads in 3 years at an average price of 0.2 € each.
In the last 3 months there have been different collaborations with video bloggers that have allowed 30,000 downloads at a cost of less than € 0.05 / download.
In order to carry out this project, the strategy is based on the financing with own resources during the first 2 years until the company is able to be autonomous. Two rounds of capital increase will be completed based on compliance with milestones and cash requirements. So far the promoter team has invested 21,000 euros.
In the first round 44,000 euros are needed to meet in 6 months the following milestones:
- Improve the application already developed and introduce new features.
- Achieve 60,000 more downloads with 25,000 retained users.
- Start invoicing by exploiting the different routes analyzed in the business plan.
The second round will be effective in month 8, with an amount of 100,000-200,000 euros. It is expected that it will allow the company to reach the point of equilibrium in order to achieve autonomy, to reach a volume of users that allows to have a strong negotiating power with the clients and to begin the internationalization. Due to the uncertainty of these estimates, an additional round may be necessary in the 2nd year.
Sales of approximately 700k euros are estimated for year 3. That added to a goodwill of 800k downloads allows to value the company in 3 millions in that year.
Due to the technological, financial and commercial risk that must be taken in the project, an estimated return of 80% per annum is required for the investment capital of the first round.
To meet these investment expectations, a pre-money value of 400,000 euros is set. 10% of the company is offered as consideration for the 44,000 euros of the first capital increase.
Award for the best idea App for Smartphone at the Madrid Fashion Week: http://blogs.estilo.elconfidencial.com/moda/ultimo-minuto-de-fashion-week-madrid/2015-02-07/samsung-entrega- the-awards-fashionbiz-2-0-awards-en-showroom-samsung-ego_704334 /