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Business Plan Overview for American Certified.
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1
American CertifiedYour One Stop Shop for American Products™
Business Deck September 2014Marvin Weinberger, CEO
AmericanCertified.com | September 2014 | Confidential v3.6
View Promotional Video
AmericanCertified.com | September 2014 | Confidential v3.6 2
Overview• Our Mission
• Empower consumers to shop their values and buy American• Build real loyalty and word of mouth
• The Business• AmericanCertified.com Store
• World’s largest Amazon Affiliate, 1.3 million products (with 5 million more in the pipeline)• To be promoted across flagship site and dozens of specialty stores and boutiques
• Proprietary search algorithm and mining tech selects millions of products, more than any other Amazon Affiliate• Makes money through 8.5% commissions paid by Amazon (with future expansion direct to 3P providers)• Crucial differentiator – cross links with unique content from Directory
• Directory of American Makers• Targeting 300,000 Makers, of all types and sizes, producing American products
• 9,556 currently registered (most pending Certification)• 130 Certification Badges (from Veteran owned and Made in Philadelphia to carbon neutral)• Growth opportunity: advertising, grants and sponsorships (not shown in financial projections, which include B2C only)
• Longer term: Pop-Up Regional Showcases, RFQ services and B2B procurement-assistance
• Essential Facts• 18 months to develop, launched May 15, 2014; team of 7 (full time and passionate)• Monthly cash burn of roughly $35,000; $500,000 invested to date• Seeking investment of $1.5 million primarily to fund customer acquisition and to grow the Directory
• Estimated maximum negative cash (cumulative negative EBIT) of $893,711 to break even
AmericanCertified.com | September 2014 | Confidential v3.6 3
Meet American CertifiedWe take the work out of buying American™
• Problem• 81% of Americans prefer - and will pay extra for - products made in America,
but no easy, convenient way to identify and buy USA made products• 41% who try to buy US products can’t even find options (Consumer Reports)
• Solution: AmericanCertified.com• Already world’s largest “Made in USA” superstore of 1.3MM+ products• Curated products with trusted prices, checkout, and fulfillment by Amazon• Enables consumers to buy based on heart-felt beliefs
AmericanCertified.com | September 2014 | Confidential v3.6 4
AC is at the Intersection of 3 Consumer Trends• Empower consumers with the information they need to shop their
individual interests; build real loyalty!• Buy American
• Universal Appeal - important to 81% of Americans (especially older and conservative)• Primary motivation is to support American Worker. Also product quality, patriotism,
environment, economy, and overseas working conditions• Buy Local
• Universal Appeal – 70% willing to pay more (A.T. Kearney)
• Microcosm of the Buy American movement• Socially Conscious Spending
• 35% willing to spend more for social beliefs, trends younger and liberal (Nielsen)
• Range of motivating concerns, especially environmental sustainability
AmericanCertified.com | September 2014 | Confidential v3.6 5
Market Size (Buy American only)
• Core Potential Customers• Universe consists of 196 million American online shoppers (eMarketer)• Per our surveys, 81% will spend more for American. 4.8% will pay 25%+ extra
• 196 million x 4.8% = 9.4 million Core Potential Consumers (“the true believers”)
• Discounted Expenditure Estimates• American consumers spend a yearly average of $1,207 online (Forrester)
• Discount 67% - to $400 - for selective unavailability of desirable USA product choices• Though most consumer goods purchased domestically are in fact still made in the USA• AC achieves profitability with Customers spending a weighted average of $112/year
• Estimated Market Size• 9.4MM Core Potential Consumers x $400 annual estimated spend = $3.76B
6AmericanCertified.com | September 2014 | Confidential v3.6
We Make Buying USA Easy
AmericanCertified.com | September 2014 | Confidential v3.6 7
USA Content Certification Process
1. Listed Based on Maker’s published documentation
2. RegisteredMaker completes the application and takes ownership of listing
3. VerifiedMaker completes a formal verification letter (example on this slide), then issued an official company seal for their website(below)
AmericanCertified.com | September 2014 | Confidential v3.6 8
AmericanCertified.com | September 2014 | Confidential v3.6 9
Major Takeaways• Behavior
• Average session duration 2+ minutes with 6+ pages viewed/session• Returning visitors already at 15.9% with no retention marketing or email• Certain demographics (e.g. Republican women, male tool-buyers) outperform• Conversion starting at 1.25% of all website visits
• Paid Traffic • Good CPC ($0.25) on $5,000 ad spend, with CTR of 1.54%
• Organic• 4,000+ visits/month from SEO, haven’t yet scratched the surface• Affinity aids WOM. 47% of Americans will pay 10%-25%+ more for US Made
AmericanCertified.com | September 2014 | Confidential v3.6 10
Scientific Improvement – Build, Measure, Learn• CPA (Cost Per Visit and Conversion)
• Customize ads and landing pages, A/B test, hyper-target by demographic• Grow inventory selection (on track to 5+ million products)• Improve UX with wish lists, related items, emotional connection, search filters• Highlight crowd-pleasers on home page, e.g. ‘gifts’, ‘new’, ‘others are viewing’• Emphasize Amazon partnership to set expectations for checkout
• Traffic• Aggressive PR, SEO, link building, content marketing• Brand ambassadors and WOM incentives• Partnerships (e.g.: ID.me, Veterans Association, USAA, AARP)
AmericanCertified.com | September 2014 | Confidential v3.6 11
Financial NotesADVERTISING Year 1 Year 2 Year 3
Expenditures $ 150,000 $ 500,000 $ 1,200,000
Ad Cost per Visit $ 0.25 $ 0.45 $ 0.50
Conversion Rate 2.1% 3.9% 4.8%
CPA $ 12 $ 12 $ 10
Retention Rate 40% 40% 40%
New Continuing Customers 5,008 17,258 45,901
ORGANIC
Expenditures $ 240,000 $ 720,000 $ 1,440,000
Organic Cost per Visit $ 0.46 $ 0.22 $ 0.15
Conversion Rate 2.4% 3.9% 4.5%
CPA $ 19 $ 5 $ 3
Retention 40% 40% 40%
New Continuing Customers 5,122 52,547 167,817
BEHAVIOR
One-Time Customers (Never Buys Again) 25,323 174,511 561,258
New Continuing Customers 10,129 69,805 224,503
Churn (Annual % of Continuing Customers Lost) 66% 50% 33%
Average Revenue per Continuing Customer (Monthly) $ 33 $ 33 $ 33
Total Continuing Customer Base (End Of Year) 8,304 62,382 239,452
Blended CLV Total $ 178,744 $ 3,916,930 $ 20,546,660 0%
1%
2%
3%
4%
5%
6%
$0.00$0.05$0.10$0.15$0.20$0.25$0.30$0.35$0.40
1.0%
4.9%
0.14443727272727
3 Year Conversion + Organic CPV
CONVERSION ORGANIC CPV
AmericanCertified.com | September 2014 | Confidential v3.6 12
Financial Summary
Year 1 Year 2 Year 3 TOTAL
Sales
(Through Amazon) $ 2,573,066 $ 22,585,813 $ 89,776,712 $ 114,935,591
Cost of Goods(Amazon Fee)
$ 2,354,805 $ 20,666,019 $ 82,145,692 $ 105,166,515
Gross Profit $ 218,261 $ 1,919,794 $ 7,631,021 $ 9,769,076
Gross Profit margin 8.48% 8.50% 8.50% 8.50%
Sales & Marketing $ 390,000 $ 1,220,000 $ 2,640,000 $ 4,250,000
% of revenues 15.16% 5.40% 2.94% 3.70%
Development $ 192,000 $ 192,000 $ 240,000 $ 624,000
% of revenues 7.46% 0.85% 0.27% 0.54%
General, Admin, Hosting $ 305,520 $ 371,040 $ 463,272 $ 1,139,832
% of revenues 11.87% 1.64% 0.52% 0.99%
EBIT $ (669,259) $ 136,754 $ 4,287,749 $ 3,755,244
EBIT margin -26.01% 0.61% 4.78% 3.27%
Negative EBIT
(Cumulative) at Inflection Point
$ (893,711)
-$2,000,000-$1,000,000
$0$1,000,000$2,000,000$3,000,000$4,000,000$5,000,000
Break even on month
18 with
32,859 continuing
3 Year EBIT/Month+ Cumulative EBIT
EBIT/MonthCumulative EBIT
Company Confidential July 2014 13
Primary Risk Factors• Over-reliance on Amazon
• Will add value with our content• Need to cement relationship by making them real money
• But meanwhile, develop direct relationships with Maker vendors who will drop-ship• They can be our ‘exit’ strategy or shut us down
• Competition• Limited product selection• Provide neither value-added content nor enhanced search functionality • We have a significant edge in our proprietary data mining systems• The real ‘competitive’ challenge is to change user buying behavior
• Redirect buyers to our portal (and to make this a habit)• Encourage customers to Switch to American made alternatives• Upsell them to buy more in order to grow the market to everyone’s benefit
• Marketing• Maintain a complex (but consistent) marketing matrix targeting consumers with diverse interests
• ‘Riches are in the niches’• Cost-effectively attract and retain customers willing to spend serious money to Buy American
• Other• Recruit amazing people• Raise sufficient capital
AmericanCertified.com | September 2014 | Confidential v3.6 14
Competitive Edge• 7 skilled engineers and marketers with passion and experience (all FT)• On track to 5,500,000+ products.
• Already 155x larger than other USA Made stores
• 9,000+ American Makers in our directory• No charge to join directory. Makers earn bounties for linking back to AC.com• Potential for meaningful B2B revenue, e.g. procurement or advertising• Potential to go direct to 3P for higher margins
• Proprietary data mining and natural language search• Engineers recently launched the fully functional tech
AmericanCertified.com | September 2014 | Confidential v3.6 15
The Team• Management
• Marvin Weinberger, President• Inventor-in-Chief at Innovation Factory, Co-Founder Infonautics
• Ryan Draving, Chief Revenue Officer• Former CEO of Referable, Senior Methodologist at Philly Marketing Labs
• Chris Sammarco, Director of Technology• Former Technology Lead at HigherNext (acquired by ProctorU)
• Independent Advisors• Michael Maher, CEO at Benjamin’s Desk• Ned Moore, Co-Founder & CEO at Clutch• Brett Topche, Managing Director at MentorTech• Chris Cera, Co-founder at ArcWeb• Seun Olubodun, Founder at Duke & Winston
AmericanCertified.com | September 2014 | Confidential v3.6 16
Growth Opportunities (not reflected in financials)
• B2B• Helping manufacturers to network/source and contract with one another• B2B procurement-assistance (supplier diversity, sustainability, etc.)
• Increase margins by dealing direct with 3P providers• Replicate success across new affinities and verticals
• Be the HayNeedle ($350MM/year) of affinity shopping • E.g. Eco-Certified, All American Tools - “Riches in the Niches”
AmericanCertified.com | September 2014 | Confidential v3.6 17
The Round
• Developed tech with $500k personal money• Raising $1.5 million (rolling close) for customer acquisition
• Uses: Advertising, marketing, and conversion (UI/UX and targeting improvement)