Second Life Gifts

FEASIBILITY PLAN

Table of Contents

1. Executive Summary A. Statement of Purpose. Second Life Gifts will provide affordable ecofriendly products comprised of recycled materials that will be handmade by disadvantaged artisans in third world and developing countries. Second Life Gifts will strive to provide its global customer base with an option in gift giving that helps at risk individuals while being environmentally friendly. B. Description of Business Second Life Gifts will be structured as a for profit, limited liability company (LLC) and will be considered a small business under the North American Industry Classification System (NAICS) code 45322 (gifts, novelties, and souvenirs). The U.S. based company will be owned and operated by Allison MacDonald - CEO and Founder, in addition to 4 other partners. Second Life Gifts will employ a limited number of full
and part time equivalents, based on anticipated product demand. The management team will be comprised of the 4 other partners and will be responsible for the majority of the day-to-day operations of the company. In an effort to keep startup costs low, the owners will conduct operations on a part-time basis, until the business is in a position to provide income. Even though the products will be made overseas, it is important to note that the company is a U.S. based company and will employ Americans in management, administration, and in distribution, appealing to a small number of the Buy American consumers. The products will initially be sold online and at farmers markets and will be operated out of a secure home office, in Washington, D.C. As operations expand, Second Life Gifts will procure a secure storage facility to store additional inventory during the third year of operations. Second Life Gifts is an attractive company given its expected year-end financial statement that shows zero liabilities ($0 accounts payable, $0 short-term debt, and $0 long-term debt) during its startup; based on the expected paid in capital. The business model also makes use of the owners’ home office, realizing savings in utility costs and making use of the security-monitoring device already installed. The company will be in a good position to leverage additional sources of funding to expand its operations due to its low startup costs, anticipated good credit rating, and projected sales volume in the first year of operations. Additionally, as operations continue and economies of scale is realized, the net profit margin is expected to increase as the cost associated with making the goods decrease and sales prices strategically increase. The forecasted sales for fiscal year (FY) 2014 are $33,150, $72,000 in FY215, and $133,000 in FY2016. This shows a 46% and 54% increase in revenue in years FY15 and FY16, respectively. As such, Second Life Gifts anticipates that it will reach its breakeven point within a few months. The research conducted in this plan, shows that the Second Life Gifts business is not only feasible but it is likely to be a very profitable company over time. Green products are going mainstream and Second Life Gifts will be in a good position to continue to increase its profitability over time. in 2006, one in five Americans claimed to never buy green products; and in 2008 only 10% of those surveyed made such claims. (Consumers Plan…, 2008) As part of its long-term growth strategy, Second Life Gifts will plan to procure a brick and mortar storefront to appeal to a greater number of consumers to include the growing green baby boomer population. According the Better Business Bureau, “[s]ocially conscious shopping goals drive 54 percent of older Americans according to a recent survey by AARP. This means more than 40 million baby boomers are also "green boomers" who say they are more likely to purchase environmentally friendly products and use services from companies that are socially responsible. C. Product Second Life Gifts, LLC products will consist of jewelry, personal accessories, home décor, tabletop products (tablecloths, coasters, etc.), baskets, global treasures, personal care, stationary and toys. Second Life Gifts will provide customers with quality, ecofriendly products such as serving bowls made out of pine needles from Nicaragua, bracelets made out of grass from Africa, repurposed barn wood made into a new table from Europe, and recycled banners made into bags. The products will appeal to consumers interested in social responsibility and will be targeted towards college-educated consumers between the ages of 25 and 44. In addition to going green, products made by Second Life Gifts will have a direct affect on the quality of life of individuals that make the products, and their families.
2. Market Data (Environmental Scan) A. Target Market Demographics
Understanding the demographics of the ecofriendly consumer helps entrepreneurs survey the potential market and focus on potential prospects. Second Life Gifts seeks to cater to both the traditional "brick and mortar" and online consumer. In addition, its target buyers will be eco-conscious and interested in products that are environmentally friendly and foster social responsibility. An initial market survey conducted in 2011 by Green Market Research found that college-educated consumers between the ages of 25-44 are the individuals that should be the primary focus of Second Life Gifts marketing strategy (Scott, 2011). This section will detail the why marketing to these population targets will prove to be most profitable for Second Life Gifts by exploring demographics of the green consumer, growth of the green movement, ecofriendly consumer behavior, online consumer behavior, ideal shop locations, and the female dominated retail market. The International Institute of Sustainable Development (IISD) found demographic characteristics of the green consumer includes young adults that may be influenced by their young children; women, often making purchases on behalf of men; and individuals with excess income to spend. These consumers are also educated and have an understanding of claims for environmental and ecological safeguarding (Ryan, 2006). The IISD also found that consumers 60 years of age or older were least likely to purchase green products - not surprisingly, since the percentage of consumer purchases in this population generally decreases (2012). However, in Toronto, an ICOM survey of over 6,000 people showed that persons over the age of 55 buy the greenest products for the home and they do it as a way to give back to the community and the world, as almost to improve their legacy. A similar study done with the AARP showed very similar results. Other studies show a different motivation; consumers who are concerned about the environment and practice ecofriendly behavior purchase green products (Diamantopoulos, Schlegelmilch, Sinkovics, and Bohlen, 2003). Fraj and Martinez also found that consumers who seek self-improvement and challenges are often aware of environmental problems and have an "ecologically sensitive lifestyle" (2006).
Studies, in 2008, conducted by Mintel, a market research company that has been researching the green movement for a number of years found more than one-third of adults claim to regularly purchase green products. This is a significant increase from 16 months prior to the study, when only 12% of respondents regularly purchased green products (Consumers Plan…, 2008). Furthermore, the number of individuals who had never purchased green products has significantly decreased. Notably, in 2006, one in five Americans claimed to never buy green products; and in 2008 only 10% of those surveyed made such claims. (Consumers Plan…, 2008) This indicates that the green movement is rapidly transitioning from a trend to a more mainstream movement. Thus, the green consumer is one that retailers that Second Life Gifts should actively attract. Another indication of growth and interest in environmental and socially responsible products is eBay’s launch of a new online marketplace for such products. A new start up (World of Good) in the San Francisco Bay area looks to become the online marketplace of such like-minded companies. These organizations are shifting the emphasis from reducing environmentally and socially harmful acts to those increasing environmental and social benefits (Scott, 2011). International market opportunities are also on the rise. In a 2010 Study from the Australian Food and Grocery Council, 84% of shoppers interviewed are concerned about the impact of their purchasing decisions on the world, and 50% of shoppers claimed to know something about the environmental reputation of the companies they buy from. Though this is more grocery focused, it is widely believed that people who purchase organic and sustainable foods also make similar decisions in their other purchases (AFGC Green Shopper, 2010).
By evaluating consumer behavior, one can determine if green consumers would purchase ecofriendly clothing and gifts. "A person 's attitudes, which influence behavior, are built from past experiences, current concerns, information, and social pressure." Therefore, understanding consumers ' environmental concerns and ecofriendly behavior is essential to understanding both attitudes toward [ecofriendly products] and purchasing decisions. Just as there are fashion-forward consumers, there also might be consumers who prefer [green products] (Hae, 2011). Just as acceptance of a fashion product is largely determined by changes in fashion, an ecofriendly purchase is related to ecofriendly behavior. Thus, the combination of research on ecofriendly and fashion-oriented behaviors will further help in market segmentation (Hae, 2011). The Nielsen Company conducted a study In March 2010 to examine the behaviors and preferences of online consumers. The study found 50 percent of North Americans frequently made purchases from online-only stores. Globally, one-third of online consumers prefer Internet shopping at online-only retailers (such as Amazon.com), while 20 percent of respondents preferred sites that also have traditional "brick and mortar" stores. With 73 percent of global online consumers spending up to 10 percent of their monthly spending online, there is a tremendous opportunity for growth in online retail (Global Trends…, 2010). These numbers suggest that Second Life Gifts could gain a substantial portion of the market by offering its products via an online website, in addition to a local brick and mortar store. Many online consumers use search engines, like Google to locate on-line shopping destinations. Scott’s market survey provided insight for building an effective web-based business through a search engine optimization study of Google’s web keyword rankings. After investigating more than 220 words, the survey highlighted the 12 best including “green gifts” and “ecofriendly products”. It indicated that most keywords are trending steady or higher over the course of the study. This indicates an online store, in conjunction with a small niche brick and mortar store in the correct neighborhoods, could prove profitable (Scott, 2011).
To find the correct neighborhoods for a retail store, a cursory market survey was conducted. The following neighborhoods were evaluated, Old Town Alexandria (Virginia), Georgetown (Washington DC), SOHO (New York), Tribeca (New York) and Brooklyn (New York). These areas were selected based on demographics and retail hub status (Schroeder, 2007). For instance, Old Town Alexandria “features 28 unique shops showcasing one-of-a-kind items and hard-to-find brands” while maintaining its “small-town appeal” (About the Boutique District, 2012 and Leaman, 2008). Its population matches well with Second Life Gifts’ target market; seven of the nation’s ten most affluent counties are in the DC metro area (Morello and Melnick, 2012). However, it was decided internally to start with an online presence to raise awareness and capital before moving into these pricey markets. In December 2009, a Technology Marketing Corporation news report, entitled 30 Top Online Shopping Trends, showed that 63 percent of online shoppers are women. Furthermore, mothers are the fastest online shopping demographic. As previously stated, a significant number of these mothers are interested in purchasing ecofriendly products after being influenced by their children. Thus, it is important to note, green consumption is not completely altruistic, but also includes the benefits it provides to the individual and/or his/her family (Top 30…, 2009). The Mintel research company states consumers want to know the benefits for themselves and their families including the cost savings now and later down the road. (“Consumers Plan…”, 2008) Female consumers are often responsible for the family budget and purchase of home goods, including decorative accessories and furnishings. Because of the female dominated retail market, Second Life Gifts looks to cater to women by providing affordable options through convenient venues, including an online retail website and eventually will expand to local brick and mortar shops. B. Social Values of the Target Market
Social
When exploring a new business venture, it is important to survey the social landscape to identify factors that may affect consumer behavior. According to Bonini, Mendonca, and Oppenheim, the incorporation of social dimensions into decision-making can help businesses avoid risks and seize opportunities (2006). To better understand the social environment surrounding Second Life Gifts, an analysis of corporate social responsibilities, consumer patriotism, and social media in the retail industry is beneficial.
Corporate Social Responsibility Corporate Social Responsibility (CSR) is important for consumers when considering which products or brands to purchase. (Rizkallah, 2011). Consumers want to know where products come from, what they are made of and if there are any environmental concerns surrounding its usage or resultant from its development. There are a plethora of articles on the Internet about sweatshops, unfair labor practices, products that are harmful, those that affect global warming, and the like. A recent example comes to mind, Apple’s Foxconn factory in China violating wage and overtime regulations. The public’s perception of a company’s CSR practices is as important as the policy. Nearly 60 percent of consumers say a company has earned their business because it supports good causes (Dizik, 2012). Since the primary mission of most businesses is to profit, it is important to capture the value of CSR by informing the consumers about the company’s CSR initiatives. To further analyze CSR, an evaluation of its regulations, services and solutions, and effects on Second Life Gifts is conducted. Because it is not practical to enforce such a wide-ranging regulation, there is no specific federal law that establishes adequate CSR practices. However, some states and local authorities have legislated CSR. Additionally, some larger companies, like Wal-Mart, are offering to partner directly with the government to promote regulatory initiatives and avoid government bureaucracy and red tape. There are an increasing number of services offered to companies to help implement and sustain the best CSR practices. Organizations with CSR policies tend to have loyal employees and customers, which adds value to the organization’s bottom line. However, CSR does not automatically add value; stakeholders have to be informed. To that end, companies want to “…raise their social profile” which is prompting external sources to develop solutions for companies. (Kang, 2007). There are myriad websites and services geared towards corporate responsibility accountability, reporting, and standards such as the Fair Labor Association (FLA). The FLA maintains an international framework for workplace labor standards and code of conduct. Another example is The United Nations Conference on Trade and Development- International Standards of Accounting and Reporting (ISAR). These types of organizations can be used as benchmark tools to measure success and compliance among other measures. Since CSR policies can be beneficial or detrimental to Second Life Gifts, it should explore social media, regulations and service tools to leverage the value of including CSR in its business model. Companies’ actions are increasingly more transparent and consumes are highly connected to social media such as Facebook, Twitter, blogs, and the like. This combination makes CSR increasingly more important; an action deemed unethical has the capacity to be quickly amplified, even if it’s not accurate. A company could be ruined or it could bolster its profits due to those factors (Bhattacharya and Sen, 2012). Moreover, it is important for Second Life Gifts to determine the needs of those affected by CSR (McWilliams and Z, 2012). It is also important to maintain a competitive advantage, as some organizations are not engaged in CSR at all. (Williams & Aguilera, 2012) This is especially true on a global scale. A balance must be struck between profitability and fostering CSR initiatives. CSR is not a fad and is expected by the customers. (Erin, 2012) Given the nature of the product, Second Life Gifts is in a position to sustain its CSR initiative on a long-term basis by continuing to use recycled products and employing at risk populations. Utilizing CSR is a viable strategy for Second Life Gifts going forward that will enhance its awareness, value, and ultimately its bottom line.
Consumer Patriotism As a result of the recent economic recession and the subsequent hangover, a faction of American consumers has developed a patriotic attitude towards the purchase of retail goods. This “Buy American” movement, which has gained traction from the release of books, news reports, and websites, hopes to revitalize the American economy and stimulate domestic employment by encouraging the purchase of American-made goods (Price, 2011). According to Diane Sawyer, who launched the ABC World News series, “Made in America,” “if every American spent an extra $3.33 on U.S.-made goods, it would create almost 10,000 new jobs” in the United States (Price, 2011). Consumers are willing to pay more for American-made goods; in the furniture industry, for example, consumers will spend 5-10 percent more for an American-made piece (Focus on…, 2011). If the movement continues to grow, the success of Second Life Gifts may be jeopardized. Because most of Second Life Gifts’ products will be handmade in developing countries, it is unlikely that “Buy American” consumers will support the store. Instead, this group will look to help those in need at home before supporting those abroad. The “Buy American” movement, while growing, is still small. There are many American consumers that will not hesitate when buying imported goods. Some do so to save money while others dispute the merits of the “Buy American” movement. According to Ikenson, the U.S. economy has grown along with imports, and the trend away from many American-made goods is a result of a globalized economy in which Americans manufacture higher value products than in the past (2011). To successfully market to both sides of the “Buy American” debate, Second Life Gifts must emphasize its American management and ownership (to cater to those in the “Buy American” camp) and the high value and authenticity of its products (to influence those consumers that are more indifferent towards the origin o
Social Media
Another trend affecting the social landscape is the rise of social media. In recent years, social media has exploded as a means for people to not only connect with friends and family, but also with businesses. This is especially true in the retail industry. A recent study conducted by Jones Lang LeSalle Retail concludes the usage of digital and social media has become essential for retailers (Social and Digital…, 2010). The integration of social media into retail business, however, cannot be solely transactional; instead, “social layers” should be added to the shopping experience (Baker, 2012). Retailers must engage customers, not talk at them. “The overwhelming reality is that social media is increasing across all generations, and the rules have changed.” Businesses “can now solicit customer feedback and interact with consumers directly and in ‘real time’” (Social and Digital…, 2010). Additionally, social media can be used to cultivate human resources, distribute marketing materials, conduct contests, release new product offerings, promote corporate missions, provide behind the scenes perspectives, and reveal corporate personality. All of this adds up to an improved customer experience and relationship. This improvement can be seen on a large scale. With social media, companies have the opportunity to reach more consumers than ever. Currently, 50 percent of the population is using Facebook, 37 percent is using Twitter, and 20 percent is using LinkedIn (Williams, D., 2012). Initially, the retail gift market was slow to catch on to the importance of social media, but according to the 2012 Gifts and Decorative Accessories Social Media at Retail survey, 74 percent of gift retailers are currently using social media. Of this 74 percent, 99 percent use Facebook, 43 percent follow Twitter, 34 percent are on LinkedIn and 33 percent post content on Pinterest. Gift retailers are seeing results from social media usage. Of those surveyed, 44 percent reported more in-store traffic as a result of their social media initiatives, 33 percent reported increased sales, and 40 percent reported an increase in customer loyalty. These results are strong, but not every company is successful. Some of the difficulties gift retailers experience while trying to use social media include struggling to find relevant material to post, finding time to dedicate to social media, and managing the costs associated with the start-up and maintenance of a social media portfolio. To avoid these difficulties, Second Life Gifts should develop a plan before attempting to use social media. Successful corporate social media users give social media responsibilities to a passionate and knowledgeable employee, consistently post engaging social media updates, and diversify away from content which amounts to social media advertisements (Nickell, 2012). Given the popularity of social media among consumers and the effective usage by competitors, for Second Life Gifts to compete effectively in the retail gift market, it is imperative for the company to integrate social media into its strategy. C. Competition and Competitive Edge
When conducting an environmental scan, it is important to study the market’s competition. There are many competitors in the gift market, but only the most relevant are examined, including: A Show of Hands, Bucket List Boutique, Eco-artware.com, Gaiam, Inc., Grassroots Environmental Products, Greenheart Shop, Greenhome,com: The Environmental Store, Lush Cosmetics, Me to We Store, Organic Lifestyle, Ten Thousand Villages, The Lucky Knot, and Truly-Life.
A Show of Hands is a locally owned shop in Alexandria, Virginia that sells a diverse range of artwork and crafts by local artists. A Show of Hands shop has been in business since 2005 and is known for its one-of-a-kind jewelry pieces. All items for sale at A Show of Hands are taken on consignment. A Show of Hands shop currently has greater than 200 artists selling their pieces within their business including both well-known artists and artists that are just entering the market (A Show of Hands: Locally Made Craft and Artwork, 2012). A Show of Hands shop is an indirect competitor of Second Life Gifts within the Alexandria, Virginia market.
The Bucket List Boutique would also be an indirect competitor of Second Life Gifts when it opens a shop in either the Old Town Alexandria area or in Georgetown, Washington D.C. The Bucket List Boutique is located in Old Town Alexandria and opened for business in September 2012. This boutique is an assortment of vintage-style/vintage-inspired gift items, jewelry, women’s apparel, greeting cards, linens, children’s toys, home accessories, and furniture (Curcio, 2012). The Bucket list has new items entering the store weekly and stocks both new and used vintage items. In keeping with the theme of the boutique, “The Bucket List,” the owners of the boutique encourage all customers to fill out forms saying what’s on their bucket list and once a month the owners will pick out their favorite and award a gift certificate to the winning customer. All of the customer’s bucket list answers are published on Facebook (Curcio, 2012).
Eco-artware.com is a “web-based gallery of unique, well-made and environmentally friendly gifts” and has been in business since 1999. Eco-artware.com offers environmentally friendly gifts for all occasions. Items for sale include jewelry, accessories, home décor, recycled stationary, office accessories, first generation ecofriendly items (i.e. rip stop nylon reusable shopping bags), and can create custom business awards/promotions made from recycled/reused materials. Eco-artware.com has been recognized and featured by Time magazine, Good Housekeeping magazine, and The Wall Street Journal for its commitment to the use of green products (About Us, Eco-artware, 2012). The Eco-artware.com online shop is a direct competitor of the Second Life Gifts online boutique sales.
Gaiam, Inc was founded in the United States in 1988 and is a “provider of information, goods, and services to customers who value the environment, a sustainable economy, healthy lifestyles, alternative healthcare, and personal development” (About Gaiam, 2012). Gaiam sells its products online, as well as, in retail stores such as Target and Barnes and Noble. Gaiam’s products include home goods, clothing, yoga, media, wellness, and other fitness. Gaiam aims to offer the “highest quality branded products and services available, many of which are exclusively produced for Gaiam.” Gaiam’s marketing strategy has been developed through research, customer input, attending global industry trade shows, and working with vendors and industry leaders on product development (About Gaiam, 2012). Gaiam, Inc.’s online shop and product distribution of well-known products to large retailers, such as Target, is a direct competitor of the Second Life Gifts online boutique and retail store sales.
Grassroots Environmental Products is a Toronto-based business, which sells organic, sustainable, and low impact products to its customers from its two stores. Grassroots Environmental Products also has an online shop, which would be a direct competitor of Second Life Gifts online store. Grassroots online products include face/body care, home décor, games and toys, stationary and paper goods, furniture, household cleaners, food, and electronics. Grassroots Environmental Products are pioneers in bringing people to sustainable ecofriendly products and guiding people toward environmental awareness and responsibilities (Grassroots Environmental Products, 2012). Grassroots Environmental Products offers carbon neutral shipping and uses all packing materials from suppliers or use recyclable/biodegradable materials in shipping processes (Grassroots Environmental Products, 2012). Grassroots Environmental Products online shop is a direct competitor of the Second Life Gifts online boutique sales.
The Greenheart Shop is an online eco-fair trade, non-profit shop and has a shop based out of Chicago, which sells eco fair trade products made by artisans from around the world. The Greenheart shop follows the guidelines of Fair Trade. The Greenheart shop only sells products that are made using sustainable materials and methods and have the motto of “fair to producers, and good to the earth.” The Greenheart shop carries a large variety of goods, which include handbags, home décor, jewelry, fair trade toys, gourmet foods, cookbooks, and cruelty-free leather items (Green at Heart 2012). Greenheart Shop is a direct competitor of the Second Life Gifts online boutique sales.
Greenhome.com: The Environmental Store is an online ecofriendly store based in California that was established in 1999. This online ecofriendly store has a large product base, carrying over 200 suppliers, for both homes and business and has an excellent reputation. The company’s mission is to “green the world, one person (and one business) at a time.” Greenhome has held the number one spot on the Google search engine for green home, green products, environmental products, and environmental store for a decade. Greenhome has received endorsements from Environmental Defense and the Earth Charter. The Greenhome.com’s founders also received recognition in the past when selected by NBC’s Today Show and Fox News to appear on the first television segments on going green (Greenhome.com: The Environmental Store, 2012). Greenhome.com is a direct competitor of the Second Life Gifts online boutique sales. Lush Cosmetics Company is an international organic and ecofriendly cosmetic company that has a retail store located in the Georgetown area of Washington, DC. Lush cosmetics also have a website for online shopping as well. Lush sells bath, shower, hair, face, body, and perfume items on the website and in the local Georgetown store. According to Lush cosmetics, the core of the company’s philosophy is “based on the highest levels of ethical standards with the lowest possible impact on the environment. Sustainability is a company-wide priority that follows through our products, from our hands to yours,” and Lush is committed to becoming more sustainable as the company grows (Lush cosmetics, 2012). All of Lush’s products are biodegradable and the products or product ingredients are not tested on animals. The Lush Cosmetics Company does not engage with any third-party suppliers that test any materials on animals (Lush cosmetics, 2012). Lush uses as little packaging as possible on all products and when possible will use no packaging at all. When packaging is needed for cosmetic or bath products, Lush uses only reused, recycled, or composted materials (Lush cosmetics, 2012). The Lush Cosmetics boutique in the Georgetown neighborhood of Washington, DC is an indirect competitor of Second Life Gifts. Me to We is an organization that was founded by Craig and Marc Kielburger to “help transform consumers into socially conscious world changers, one transaction at a time” (Me to We, 2012). Me to We is an online store that offers high quality sustainable and sweatshop-free clothing, hand crafted jewelry and accessories, books and media to socially conscious consumers. The Me to We Store/organization runs on a business model that is “ethically, environmentally responsible, and sustainable” (Me to We, 2012). Half of the profit from Me to We products goes directly to the company’s charity partner, Free the Children, and the other half of the profit is reinvested in to the social enterprise (Me to We, 2012). Of note, the Me to We store has an actual physical location in Toronto, Canada. The Me to We store online is a direct competitor of the Second Life Gifts online boutique sales. Organic Lifestyle is an online store, which was established in 2006, that sells ecofriendly gifts, home goods, and other products. Organic lifestyle directly sources from organizations, which they have met personally and believe to be ethically and socially responsible and utilize a social entrepreneur business model, which supports local and global communities (Organic Lifestyle, 2012). Organic Lifestyle is committed to fair trade, fair prices, ethical sourcing of materials and products, supporting local producers and local communities, and against chemical pesticides (Organic Lifestyle, 2012). The Organic Lifestyle online store is a direct competitor of the Second Life Gifts online boutique sales. Ten Thousand Villages is a fair trade retailer with an online shop and a local store in Old Town Alexandria, Virginia off of King Street. Ten Thousand Villages has been present in the northern Virginia market in Old Town Alexandria since 1994. Ten Thousand Villages is a non-profit fair trade organization in North America which sells products made by artisans from developing countries and helping the artisans earn an income through selling their products and stories through long-term, fair trading relationships. Ten Thousand Villages sells socially responsible and ecofriendly gifts/home goods. “Ten Thousand Villages is now a global network of more than 130 artisan groups in 37 countries and sells products in more than 150 retail outlets throughout the United States” (Ten Thousand Villages, 2012). The Ten Thousand Villages online store and local boutique store in Old Town Alexandria, Virginia is a direct competitor of the Second Life Gifts online sales and local boutique sales. The Lucky Knot is a new family owned boutique that recently opened on King Street in Old Town Alexandria, which sells designer jewelry, accessories, and clothing. The Lucky Knot will feature designers such as Vineyard Vines, Vera Bradley, Jude Connally, and Lilly Pulitzer (Kinzer, 2012). This boutique’s target market is not the ecofriendly/green consumer, but would be an indirect competitor of Second Life Gifts if Second Life Gifts decides to open a local shop in Old Town Alexandria. Truly-Life is a small company that makes ecofriendly skin care products and gifts in Alexandria, Virginia. All of the ecofriendly skincare products and gifts are sold on Truly-Life’s online store, in Old Town Alexandria and the District of Columbia’s Palisades farmer’s markets, several local boutique shops in Alexandria, Arlington, and Vienna, and the Whole Foods market in Alexandria, Virginia. Truly-Life’s products are made with all U. S. natural ingredients, handmade from garden herbs, use biodegradable packaging, provide bicycle deliveries for all local orders, and recycle all of their materials (About, truly-life - small, green, local, 2012).
Competitive Edge
The environment is favorable for Second Life Gifts considering competitors, consumer expectations, going green initiatives, target market, and social trends. Second Life products are part of a growing desire for environmentally conscious consumers. There are many competitors in the green product category, but it is a growing concept with favorable entry options. The increase in purchasing green products is moving from trend to the mainstream. Consumer expectations now require products to be environmentally friendly and sold by good corporate citizens. Additionally, many Americans have a giving spirit and are willing to purchase a product to make a difference in the life of those in need. There are, however some drawbacks, challenges, and risks associated with these products. One of the significant challenges is the “Buy American” trend, which is movement that encourages consumers to purchase only American-made products. Fortunately, this represents a small number of consumers, and Second Life Gifts will create domestic employment including management, administrative, marketing, and distribution positions. The market is ripe for the opportunity for Second Life to enter this growing field. Second Life is a strong prospect that is sustainable and likely to be very profitable.
3. Marketing Plan A. Product
There is an increasing awareness and concern regarding the environment amongst Americans. "More people are making their homes energy efficient, buying more fuel efficient cars, focusing more on recycling, and buying products that are healthier and less harmful to society and the environment." This trend had led to a boom of independent businesses marketing to green consumers. Numerous independent businesses focusing on green products have emerged within the retail business sector. Second Life Gifts, LLC will be a retailer of socially responsible and ecofriendly gifts and home goods. Second Life Gifts will strive to provide the consumer a novel way to offer viable gifts and decorate their home. The unique items that will be presented by the retailer will not be garish or intrusive or disruptive, but are certainly beyond the common and ordinary. Second Life Gifts unique pieces will be mostly recycled or repurposed, given a "second life" to be a distinctive piece to be admired. The company will specialize in the sale of a variety of ecofriendly, or green items such as women 's accessories (i.e. jewelry, wallets, bags and purses), decorative home furnishings, paper goods, and children 's toy. Second Life Gifts will also a company focused on social responsibility. It strongly believes in the preservation of the environment, as well as humanity. For this reason, the majority of goods sold at Second life Gifts will be handcrafted products created by at risk individuals in developing countries. The sale of these items will directly impact and improve the quality of life of these individuals and their families. The following environmental scan will provide a detailed analysis of the target market, social environment, and competition in the ecofriendly retail marketplace.

B. Product Competitive Advantage Second Life Gifts will be a unique company that will sell ecofriendly products made by disadvantaged artisans in developing and third world countries. This approach will appeal to the hearts of Americans that are willing to pay a little more to purchase a product to make a difference in the life of those in need. Second Life Gifts will sell quality products at affordable prices, and each item will be a unique handmade item for gift giving and home décor. The business model is patterned after Ten Thousand Villages, Second Life Gifts biggest competitor, which grew from operating out of a car in 1946 to over 300 retail stores to date. What is unique about Second Life Gifts, is that it will be able to capitalize on the efforts of Ten Thousand Villages and take a different business approach. Ten Thousand Villages a nonprofit charitable organization. Second Life Gifts will be a for profit company with greater flexibility and low barriers to entry. With the greening initiatives expected to grow, Second Life Gifts plans to capture a significant part of the market. C. Promotional Strategy Initially Second Life Gifts, LLC.’s sales will be Internet based. Second Life Gifts will develop a retail sales website. Second Life Gifts will begin reaching out to potential consumers through targeted Google advertising and search engine words and through developing marketing and manufacturer advertisements. Second Life Gifts, LLC will be easily found through the use of targeted search engine words such as “green gifts” and “ecofriendly products.” Second Life Gifts, LLC will also sell retail products through Amazon.com and eBay that are highly traveled sites by consumers.
Currently, there are two trade shows a year that eventually Second Life Gifts LLC hopes to attend in the future. One trade show is located in New York City in January and the other trade show is in Boston in April. Second Life Gifts will be able to observe, collect data, and get the “insider scoop” on new products and distributors. Second Life Gifts, LLC will consider utilizing local craft fairs and farmers markets as an inexpensive marketing and exposure tool when first entering into the local markets.
Cost Benefit Analysis of Promotional Strategy
1. Development of Retail Website (one time start-up fee) - $1,500.00
2. Computer, Printer, Accessories - $1,200.00
3. Website Maintenance (cost over 3 years) - $350.00
4. Pre-opening Advertising Costs - $500.00
5. Marketing & Promotion (cost over 3 years) - $7000.00
6. Total Revenue (over 3 years) - $238,150.00
7. Net Profit over 3 years - $ 50,216.00 D. Pricing Strategy Second Life Gifts, LLC is using competitive pricing as its pricing strategy. Second Lift Gifts, LLC wants to be competitive in its pricing of the ecofriendly hand crafted goods within the online shopping market initially. Second Life Gifts, LLC’s online competitors include Eco-artware.com, Gaiam, Inc., Grassroots Environmental Products, Greenheart Shop, Greenhome.com, and The Environmental Store, Me to We Shop, Organic Lifestyle, Ten Thousand Villages, and Truly-Life. Second Life Gifts, LLC focused being competitive in pricing within the online store first and will re-assess the status of competitive pricing before extending the business to the local market places of Georgetown and Old Towne Alexandria when and if it is able to expand beyond the online market. Second Life Gifts, LLC based the initial pricing based on the online products of Ten Thousand Villages online products. Ten Thousand Villages offers similar product lines of ecofriendly hand crafted products from at risk individuals in developing countries and would be Second Life Gifts, LLC biggest competitor in the online market and eventually in the local market. Second Life Gifts, LLC’s estimated direct cost for FY2014 is $14,586, $31,680 in FY2015, and $58,520 in FY2016. The direct costs include the purchase price, shipping cost, customs and repacking cost, and the commission to be paid to Amazon.com. These calculations can be referenced in the Sales Forecast Appendix of this report. The cost of goods sold (COGS) for Second Life Gifts, LLC does has been adjusted by taking 15% commission for Amazon.com and Ebay, where Second Life Gifts, LLC will be sold, for 80% of all goods sold. This is reflected in the financial section of this report. Total Sales for Second Life Gifts, LLC is illustrated in the Sales Forecast Appendix of this report. The forecasted sales for FY2014 are $33,150, $72,000 in FY215, and $133,000 in FY2016. The indirect and direct operating costs are considered in the Profit and Loss Statement. The Profit and Loss Statement reveals that Second Life Gifts, LLC will begin to see a net profit in FY2015. Second Life Gifts, LLC will have a forecasted net profit margin of -18%, 20% and 23% respectively for the first three fiscal years based on the sales forecast.
4. Implementation Plan A. Personnel/Management Team i. Management Team. Allison MacDonald - CEO/Founder, a recent graduate of the George Washington University MBA program. Allison has an extensive background in sales and marketing in the healthcare industry. During her career span, she developed a keen sense of corporate and social responsibility. Desiring to decrease her ecological footprint and better humanity by helping to improve the quality of life of others, the concept which became Second Life Gifts; a distributor of socially responsible and ecofriendly gifts and home goods. It strives to give consumers another option in gift giving and home decor. Tridib Borkakoty - Chief of Finance will be responsible for all budgeting and financial reporting to include project and indirect planning. He will also be responsible for all cash, investment, and asset management. Jimmy Johnson - Chief of Operations will be responsible for the review and approval of adequate plans for the control of planned outputs, budget spending, labor efficiency, customer service and order entry efficiency. He will also be responsible for the review and approval of major projects requiring functional changes, including the opening of Second Life Gifts, LLC flagship store. Hillary Scott - will serve as Chief Marketing Officer.
Her capabilities in Internet based sales and promotion make her an exceptional candidate for the position. She will be responsible for the creation, management, execution of all marketing strategies for Second Life, LLC. She will also lead and manage Direct Marketing, Public Relations, and Online Marketing. She will be responsible for the development of unique value proposition, business partnerships; conduct and analyze market research to determine competitiveness. Nikki Stewart and Carla Tompkins - will serve as the sales team for the corporation. Primary responsibilities will include all sales, as well as maintenance and oversight of the company 's procurement policies and procedures to ensure compliance with all federal, state/local, and commercial contract laws and regulations. Nikki and Carla will be responsible for securing contractual partners with small import companies that work with communities in developing countries and at risk groups to develop products natural to their environment. ii.
Staff Given the small size of Second Life Gifts, initially, staff will be limited. Members of the management team will be responsible for many of the day-to-day duties required in their respective departments. In addition, one part time employee will be hired to process orders and prepare shipping for 15-20 hours/per week. The hours of operation will vary based upon order volume. The use of part-time employees will allow the company to contain salary and employee cost such as health benefits and other employee related taxes. B. Operations
In its first year of operation, Second Life Gifts will operate in Northwest Washington DC, in a home-based office setting. The site will also serve as the storage center for items to be sold . Use of a home office eliminates most of the utility costs, including fees for security monitoring systems. Procurement of a rental space is planned for the third year of operation. C Legal Issues
Ownership
Second Life Gifts will be registered as an LLC in Washington DC, jointly owned by the CEO and members of executive management team. These individuals also serve as the main investors.
A federal taxpayer ID as well as business licensure will be obtained for operation in the District of Columbia at a total cost of $300. Additional permits and licensure will be necessary when Second Life Gifts opens a brick and mortar store in subsequent years.
5. Critical Risks Assessment/Barriers to Entry (SWOT Analysis) A. Strengths B. Weaknesses C. Opportunities D. Threats
Strengths
Unique gift offerings - Second Life Gifts unique pieces are mostly recycled or repurposed, given a "second life" to be a distinctive piece to be admired. The company specializes in the sale of a variety of ecofriendly, or green items such as women 's accessories (i.e. jewelry, wallets, bags and purses), decorative home furnishings, paper goods, and children 's toy.
Strong sense of corporate and social responsibility - Second Life Gifts, LLC understands corporations exist in a symbiotic relationship with their environments , where their exchange with the larger environment determines to a large extent how well they do in their profit seeking endeavors. Second Life gifts, LLC realizes consumers want to know where products come from, what they are made of and if there are any environmental concerns surrounding its usage or resultant from its development
Retail sales through highly regarded sites - Second Life Gifts, LLC will easily be located through the use of targeted search engine words such as “green gifts” and “ecofriendly products on highly regarded sites Amazon.com and eBay.
Weaknesses
Initial lack of brick and mortar presence - Second Life Gifts caters to the "green" consumer. Market analysis shows these individuals are usually college-educated, between the ages of 25-44, and participate in online shopping. However, further analysis also shows that individuals that primarily purchase from storefront shops, such as persons 60 and older, are interested in Second Life offerings as well.
Goods produced by small remote groups - while the costs sold at Second Life will be unique, the limited supply available from using such small vendors may make it difficult to keep up with high demand volume.
Opportunities
Internet/web sales - web based sales provide Second Life Gifts a means to providing services to numerous consumers outside of the locality of its home-based office. This allows for the potential for quick growth and expansion if projected sales revenue is achieved within the first two years.
Market expansion - Second Life Gifts anticipates it will be able to open its first store in subsequent years, based on demand and profitability of the company.
Threats
Competition in online market - other ecofriendly online distributors. Second Life Gifts, LLC’s online competitors include Eco-artware.com, Gaiam, Inc., Grassroots Environmental Products, Greenheart Shop, Greenhome.com, and The Environmental Store, Me to We Shop, Organic Lifestyle, Ten Thousand Villages, and Truly-Life.
Competition in local market - Currently, Ten Thousand Villages offers similar product lines of ecofriendly hand crafted products from at risk individuals in developing countries and would be Second Life Gifts, LLC biggest competitor in the online market and eventually in the local market.

6. Financial Plan A. Capital Formation Plan i Sources and Applications of Funding

FY2014
FY2015
FY2016
Owners investment
Equity investment
$20,000
$0
$0
Owner investment
Equity investment
$0
$10,000
$0
Total Amount Received
$20,000
$10,000
$0

Sources of Funds
All owners together will invest $20,000 at the beginning. Each owner will have equal investment. Additional $10,000 will be invested at the beginning of the 2nd financial year.
Use of Funds

FY2014
FY2015
FY2016
Owners investment
Equity investment
$20,000
$0
$0
Owner investment
Equity investment
$0
$10,000
$0
Total Amount Received
$20,000
$10,000
$0

Sources of Funds
All owners together will invest $20,000 at the beginning. Each owner will have equal investment. Additional $10,000 will be invested at the beginning of the 2nd financial year.
Use of Funds
This fund will be used for all expenses including start-up and operational expenses and also to purchase our inventory.. ii Capital Equipment List
Our business is modeled as an online retail outlet. We will not require any capital equipment at the start-up. Further expansion or diversification of our business may require purchase of capital equipment in the future.

iii. Start-Up Costs
1. Legal Consultation fee
2. Office Supplies
3. License fees
4. Computer and accessories
5. Website Development with e-commerce features
6. Accounting Software
7. Liability Insurance premium
8. Initial inventory
9. Pre-launch Marketing expenses
10.Tools for packaging
Rental Expense: We have not considered rent for the first year as we plan to operate from our basement, which can be used as storage as well. By using the basement most of the utility costs including fees for security monitoring system will be avoided. We intend to move to a rental place from the third year when our business grows.
Website will be developed in India to reduce cost.
Budget (Start-up cost and Operating Expenses)
Expenses by Month

Start-up costs and Operating Expenses

FY2014
FY2015
FY2016
Operating Expenses

Salary
$8,800
$9,888
$17,385
Employee Related Expenses
$0
$0
$0
Legal Consultation
$1,200
$0
$0
License Fees
$300
$0
$0
Professional Liability Insurance
$1,650
$1,800
$1,800
Office supplies
$1,800
$1,800
$1,800
Accounting Software
$300
$0
$0
Computer, Printer and accessories
$1,200
$0
$0
Website Development
$1,500
$0
$0
Tools for Packaging
$200
$0
$0
Pre-Opening Advertising
$500
$0
$0
Marketing & Promotion
$2,200
$2,400
$2,400
Phone / Internet fees
$935
$1,020
$1,020
Rent
$0
$0
$6,000
Website Maintenance
$110
$120
$120
Utilities
$500
$1,800
$1,800
Workmen 's Compensation Contribution
$1,200
$1,200
$1,200
Tax Consultation fee
$300
$300
$300
Travel and Transportation
$1,200
$1,200
$1,200
Miscellaneous Business Expenses
$600
$900
$1,200
Total Operating Expenses
$24,495
$22,428
$36,225

B. Balance Sheet
As of Period 's End
FY2014
FY2015
FY2016
Cash
$615
$16,553
$44,444
Accounts Receivable
$2,040
$3,006
$5,548
Inventory
$11,414
$18,734
$18,714
Total Current Assets
$14,069
$38,293
$68,706

Long-Term Assets
$0
$0
$0
Accumulated Depreciation
$0
$0
$0
Total Long-Term Assets
$0
$0
$0

Total Assets
$14,069
$38,293
$68,706

Accounts Payable
$0
$0
$0
Sales Taxes Payable
$0
$0
$0
Short-Term Debt
$0
$0
$0
Total Current Liabilities
$0
$0
$0

Long-Term Debt
$0
$0
$0

Total Liabilities
$0
$0
$0

Paid-In Capital
$20,000
$30,000
$30,000
Retained Earnings
$0
($5,931)
$8,293
Earnings
($5,931)
$14,224
$30,413
Total Owner 's Equity
$14,069
$38,293
$68,706

Total Liabilities & Equity
$14,069
$38,293
$68,706

About the Balance Sheet
All partners agreed to retain the earnings from this business to increase owner’s equity. The cash in hand and loans from bank will help financing our business expansion plans in the future.

C. Income Projections I Yearly Summary
Financial Highlights by Year

Net Profit (or Loss) by Year

Sales Forecast

FY2014
FY2015
FY2016
Unit Sales
975
2,000
3,500
Price Per Unit
$34.00
$36.00
$38.00
Total Sales
$33,150
$72,000
$133,000
Direct Cost Per Unit
$14.96
$15.84
$16.72
Total Direct Cost
$14,586
$31,680
$58,520
Gross Margin
$18,564
$40,320
$74,480
Gross Margin %
56%
56%
56%

ii Detail By Month
Sales by Month

About the Sales Forecast
We have approximately increased the selling price by 5% in each 2nd and 3rd financial year. It is also possible that we will be able to reduce the cost of our inventory by 5% - 10% , thereby, further increasing our profit margin.

FY2014
Jun '13
Jul '13
Aug '13
Sep '13
Oct '13
Nov '13
Dec '13
Jan '14
Feb '14
Mar '14
Apr '14
May '14
Unit Sales
0
0
50
75
75
100
125
100
100
110
120
120
Price Per Unit
$0.00
$0.00
$34.00
$34.00
$34.00
$34.00
$34.00
$34.00
$34.00
$34.00
$34.00
$34.00
Total Sales
$0
$0
$1,700
$2,550
$2,550
$3,400
$4,250
$3,400
$3,400
$3,740
$4,080
$4,080
Direct Cost Per Unit
$0.00
$0.00
$14.96
$14.96
$14.96
$14.96
$14.96
$14.96
$14.96
$14.96
$14.96
$14.96
Total Direct Cost
$0
$0
$748
$1,122
$1,122
$1,496
$1,870
$1,496
$1,496
$1,646
$1,795
$1,795
Gross Margin
$0
$0
$952
$1,428
$1,428
$1,904
$2,380
$1,904
$1,904
$2,094
$2,285
$2,285
Gross Margin %
0%
0%
56%
56%
56%
56%
56%
56%
56%
56%
56%
56%

iii Notes of Explanation
Profit and Loss statement

FY2014
FY2015
FY2016
Revenue
$33,150
$72,000
$133,000

Direct Cost
$14,586
$31,680
$58,520

Gross Margin
$18,564
$40,320
$74,480
Gross Margin %
56%
56%
56%
Operating Expenses

Salary
$8,800
$9,888
$17,385
Employee Related Expenses
$0
$0
$0
Legal Consultation
$1,200
$0
$0
License Fees
$300
$0
$0
Professional Liability Insurance
$1,650
$1,800
$1,800
Office supplies
$1,800
$1,800
$1,800
Accounting Software
$300
$0
$0
Computer, Printer and accessories
$1,200
$0
$0
Website Development
$1,500
$0
$0
Tools for Packaging
$200
$0
$0
Pre-Opening Advertising
$500
$0
$0
Marketing & Promotion
$2,200
$2,400
$2,400
Phone / Internet fees
$935
$1,020
$1,020
Rent
$0
$0
$6,000
Website Maintenance
$110
$120
$120
Utilities
$500
$1,800
$1,800
Workmen 's Compensation Contribution
$1,200
$1,200
$1,200
Tax Consultation fee
$300
$300
$300
Travel and Transportation
$1,200
$1,200
$1,200
Miscellaneous Business Expenses
$600
$900
$1,200
Total Operating Expenses
$24,495
$22,428
$36,225

Operating Income
($5,931)
$17,892
$38,255

Interest Incurred
$0
$0
$0
Depreciation and Amortization
$0
$0
$0
Income Taxes
$0
$3,668
$7,842
Total Expenses
$39,081
$57,776
$102,587
Net Profit
($5,931)
$14,224
$30,413
Net Profit / Sales
(18%)
20%
23%

About the Profit and Loss Statement
We expect to loose approximately $6000.00 during our operation in the first year. The loss is mostly due to one time start up expenses. Our company will also need few months to grow the market to sell enough goods for break-even.
Direct cost calculation of products
Assumptions: 80% of all goods will be sold at Amazon and eBay at 15% sales commission. Rest 20% will be sold though own website.
Average Selling Price=$34.14
Average Cost=$10.93 (See appendix for detailed direct cost calculations)
Average Sales Commission=$4.10
(80% of all sales through Amazon at 15% commission)
Cost of Goods Sold (COGS) =$15.03
COGS as % = 44%. Cash Flow Projections
Cash Flow Statement

FY2014
FY2015
FY2016
Operations

Net Profit
($5,931)
$14,224
$30,413
Depreciation and Amortization
$0
$0
$0
Change in Accounts Receivable
($2,040)
($966)
($2,542)
Change in Inventory
($11,414)
($7,320)
$20
Change in Accounts Payable
$0
$0
$0
Change in Sales Taxes Payable
$0
$0
$0
Net Cash Flow from Operations
($19,385)
$5,938
$27,891
Investing & Financing

Assets Purchased or Sold
$0
$0
$0
Investments Received
$20,000
$10,000
$0
Change in Short-Term Debt
$0
$0
$0
Change in Long-Term Debt
$0
$0
$0
Net Cash Flow from Investing & Financing
$20,000
$10,000
$0
Cash at Beginning of Period
$0
$615
$16,553
Net Change in Cash
$615
$15,938
$27,891
Cash at End of Period
$615
$16,553
$44,444

E. Cash Flow Projections i Detail By Month

Cash Flow by Year

ii Notes of Explanation
Cash Flow Assumptions

Cash Inflow

% of Sales on Credit
100%
Avg Collection Period (Days)
15
Cash Outflow

% of Purchases on Credit
0%
Inventory

Months to Keep on Hand
3
Minimum Inventory Purchase
$6,500

About the Cash Flow Assumptions
As a new buyer, we are not in a position to get credit on inventory purchases. However we may get good discount for making cash purchase of our inventory.
For selling our goods, we assume a maximum of 15 days lag time to get the online credit card payments.
7. Growth Strategy. Initially most sales will occur on our website with targeted Google ad words, marketing and manufacturer ads. Local craft fairs and farmers markets will be utilized for inexpensive marketing and exposure. Second Life Gifts also plans to open brick and mortar stores in targeted neighborhoods that meet our specific demographic. To further our growth after 2016, however, we will have to implement an internal growth strategy. This will allow us to grow at a steady, incremental pace and most importantly, maintain our organizational culture. Our strategy will be focused on 2 fronts; expanding our product line through new product development and a market penetration strategy. Our product development strategy will be based on extensive data mining from primary research, such as customer feedback. We will make customer feedback an integral part of our sales and product development process. Every sales representative will keep a list of all the products customers’ request, the date they are requested, and the intended use for the product. When our product development employees start thinking about items or new lines, that list will be the first place they go. Based on the number of requests and the intended use of the product, we can anticipate which new products customers desire the most, and know we will have a sale waiting to happen. To ensure the new product’s desirability by our customers we will conduct a concept test. The initial phase of the test will consist of focus groups. We will provide limited quantities of our new product to focus groups, made up of past customers and industry experts, to solicit their feedback in the form of a survey. At a minimum, the survey will ask the focus group members to list 3 things they like about the concept product, 3 things that could be better and any potential red flags that could jeopardize the viability of the product. We will incorporate the feedback we receive to refine the new product. In the next phase, we will sell limited quantities of the new product online. If the product is selling at a rate that we find acceptable, we will then increase production and bring it to our retail stores. Our initial target market focuses mainly on college-educated consumers between the ages of 25-44 that are environmentally conscious. With the current trend of consumers of all age groups becoming increasingly eco-conscious, we believe we can expand our target market in the near future (3-5 years). The key, however, is to ensure that our prices remain competitive because although consumers are becoming more environmentally conscious, studies show they are not willing to pay a premium for ecofriendly products. Our goal during market expansion will be to find a target market that is large enough to support our new products but small enough to avoid attracting larger competitors until we have established a loyal and reliable consumer base. Determining the attractiveness of our expanded target market required extensive research from a wide variety of sources. First, phone calls were made to 10 local (Washington DC Metro Area) jewelry, clothing and home goods stores to inquire about any ecofriendly gifts that are currently on their shelves and their consumer’s interest for such items.
Store Name
Location
Contact
Items Sold
Home Rule
U Street
[phone]
Home décor (kitchen and bath) – very few ecofriendly items.
Table Top
Dupont Circle
[phone]
Home décor and jewelry – ecofriendly furniture and cookware.
A. Drauglis Woodworker & Furnituremaker
Langdon Park
[phone]
Eco- friendly furniture.
Patagonia
Georgetown
[phone]
Clothing made of ecofriendly materials.
Tugooh Toys
Georgetown
[phone]
Ecofriendly toys.
Crate & Barrel
Arlington
[phone]
Ecofriendly furniture. Many imported items from overseas.
The Gift Shop in The Herb Cottage
Wisconsin Ave.
[phone]
Ecofriendly jewelry and home décor.
Hill’s Kitchen
Capitol Hill
[phone]
Ecofriendly kitchen cleaning supplies and utensils
Secondi
Dupont Circle
[phone]
Ecofriendly clothing for women
Wake-Up Little Suzie
Cleveland Park
[phone]
Some children’s clothing made from organic materials. Selection limited. While none of the store managers (for obvious reasons) would disclose sales information or operating data, our dialogue with them revealed a general consensus that “ecofriendly” is a popular buzzword that helps to close sales. It also revealed that local consumers are willing to pay a premium for these products, despite national data showing otherwise. Next, we utilized search engines to analyze consumer trends regarding the ecofriendly products we sell. We found while consumers are willing to pay up to a 15% premium for ecofriendly items in certain cases, but when they were asked whether environmental friendliness, price, or quality is most important when buying particular products, only one in four or fewer consumers say eco-friendliness is the most important. In regards to the most lucrative product we sell, furniture, only 11% replied that eco-friendliness is the most important factor, while 51% responded with quality as the most important factor. Lastly, we studied changing demographics and consumer values, to determine which target market we should focus on to expand our base. While public perception may not portray the Baby Boomer generation as an ideal target for ecofriendly product, according the Better Business Bureau, “Socially conscious shopping goals drive 54 percent of older Americans according to a recent survey by AARP. This means more than 40 million baby boomers are also "green boomers" who say they are more likely to purchase environmentally friendly products and use services from companies that are socially responsible. Older Americans also make up the most affluent segment of the U.S. population and have the most discretionary income – $24,000 a year per household – according to The Conference Board.” This target market is also attractive because they represent the fastest growing segment in the area. According to the Associate Press, “In nearly every local jurisdiction and in the District of Columbia, those ages 55 to 64 make up the fastest-growing population group - growing anywhere from twice to five times the average growth rate over the last decade, according to Census Bureau data released Thursday”. We choose an internal growth strategy because the niche consumer base we target is crucial to our success. External growth strategies such as franchising, or licensing our brand, may be viewed as “selling out” or becoming corporate. To appease our consumer base, maintain our organizational culture, and avoid any negative perception about the direction of our company, we believe incremental internal growth will be the most effective strategy. Both our product expansion and market penetration strategies show promise and will be cost effective. Barring any unforeseen circumstances, we believe that our growth strategy is conservative and feasible.
8. APPENDIX
A. Products and Prices of Second Life Gifts, LLC

Jewelry
Price
Necklaces
Ranging from 20.00-100.00
Bracelets
Ranging from 20.00-50.00
Earrings
Ranging from 12.00-40.00
Rings
Ranging from 12.00 – 20.00

Personal accessories
Price
Luggage tag
10.00
Scarves
Ranging from 20.00-40.00
Handbags
Ranging from 40.00-100.00
Storage bag
Ranging from 40.00-100.00
Wallet
Ranging from 20.00-30.00
Coin purse
10.00
Winter Hats
20.00
Hats
20.00
Gloves
Ranging from 15.00-20.00
Headbands
12.00
Hair accessories
Ranging from 10.00 -15.00
Key chains
12.00

Home décor
Price
Picture frames
40.00
Wall hangings/art
Ranging from 40.00-60.00
Vases
40.00
Candles
8.00
Candleholders
40.00
Mirrors
Ranging from 50.00 – 150.00
Lamps
Ranging from 80.00 – 100.00
Lampshades
30.00
Furniture
Ranging from 80.00-300.00
Accent pieces
Ranging from 20.00-40.00
Rugs
Ranging from 40.00-300.00

Table Top Products
Price
Tableware
Ranging from 12.00-40.00
Bowls
20.00
Dishes
20.00
Cookware
20.00
Trays
Ranging from 10.00 – 50.00
Platters
Ranging from 10.00 – 125.00
Tablecloth
50.00
Runners
40.00
Napkins
6.00
Napkin rings
3.50
Placemats
8.00
Coasters
30.00
Trivets
20.00

Baskets
Price
Shopping basket
40.00
Picnic basket
40.00
Decorative basket
30.00
Kitchen basket
Ranging from 10.00-20.00

Global Treasures
Price
Paperweight
15.00
Sculptures
25.00
Collectibles
20.00
Clocks
30.00
Calendars
12.00
Bookends
40.00
Banks
20.00

Personal Care
Price
Robes
60.00
Soaps
5.00
Creams/lotions
20.00

Stationary
Price
Journals
20.00
Cards/greeting cards
4.00
Gift boxes
10.00

Toys
Price
Games
20.00
Puzzles
6.00-20.00

B. Direct Cost Calculation
Products
Price Range
Average Selling Price
Purchase Cost
Shipping Cost
Import duty 8.4%
Total Cost/Unit
Including Packaging Cost
Inventory/Units
Total Cost of Inventory

25%
8%
8.40% 10%

Necklaces
Ranging from 20.00-100.00
60.00
15.00
1.20
1.26
17.46
19.21
10.00
192.06
Bracelets
Ranging from 20.00-50.00
35.00
8.75
0.70
0.74
10.19
11.20
10.00
112.04
Earrings
Ranging from 12.00-40.00
26.00
6.50
0.52
0.55
7.57
8.32
10.00
83.23
Rings
Ranging from 12.00 – 20.00
16.00
4.00
0.32
0.34
4.66
5.12
10.00
51.22
Luggage tag
10
10.00
2.50
0.20
0.21
2.91
3.20
10.00
32.01
Scarves
Ranging from 20.00-40.00
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Handbags
Ranging from 40.00-100.00
70.00
17.50
1.40
1.47
20.37
22.41
10.00
224.07
Storage bag
Ranging from 40.00-100.00
70.00
17.50
1.40
1.47
20.37
22.41
10.00
224.07
Wallet
Ranging from 20.00-30.00
25.00
6.25
0.50
0.53
7.28
8.00
10.00
80.03
Coin purse
10
10.00
2.50
0.20
0.21
2.91
3.20
10.00
32.01
Winter Hats
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Hats
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Gloves
Ranging from 15.00-20.00
17.50
4.38
0.35
0.37
5.09
5.60
10.00
56.02
Headbands
12
12.00
3.00
0.24
0.25
3.49
3.84
10.00
38.41
Hair accessories
Ranging from 10.00 -15.00
12.50
3.13
0.25
0.26
3.64
4.00
10.00
40.01
Key chains
12
12.00
3.00
0.24
0.25
3.49
3.84
10.00
38.41
Picture frames
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Wall hangings/art
Ranging from 40.00-60.00
50.00
12.50
1.00
1.05
14.55
16.01
10.00
160.05
Vases
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Candles
8
8.00
2.00
0.16
0.17
2.33
2.56
10.00
25.61
Candleholders
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Mirrors
Ranging from 50.00 – 150.00
100.00
25.00
2.00
2.10
29.10
32.01
10.00
320.10
Lamps
Ranging from 80.00 – 100.00
90.00
22.50
1.80
1.89
26.19
28.81
10.00
288.09
Lampshades
30
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Furniture
Ranging from 80.00-300.00
190.00
47.50
3.80
3.99
55.29
60.82
10.00
608.19
Accent pieces
Ranging from 20.00-40.00
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Rugs
Ranging from 40.00-300.00
170.00
42.50
3.40
3.57
49.47
54.42
10.00
544.17
Tableware
Ranging from 12.00-40.00
26.00
6.50
0.52
0.55
7.57
8.32
10.00
83.23
Bowls
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Dishes
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Cookware
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Trays
Ranging from 10.00 – 50.00
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Platters
Ranging from 10.00 – 125.00
67.50
16.88
1.35
1.42
19.64
21.61
10.00
216.07
Tablecloth
50
50.00
12.50
1.00
1.05
14.55
16.01
10.00
160.05
Runners
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Napkins
6
6.00
1.50
0.12
0.13
1.75
1.92
10.00
19.21
Napkin rings
3.5
3.50
0.88
0.07
0.07
1.02
1.12
10.00
11.20
Placemats
8
8.00
2.00
0.16
0.17
2.33
2.56
10.00
25.61
Coasters
30
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Trivets
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Shopping basket
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Picnic basket
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Decorative basket
30
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Kitchen basket
Ranging from 10.00-20.00
15.00
3.75
0.30
0.32
4.37
4.80
10.00
48.02
Paperweight
15
15.00
3.75
0.30
0.32
4.37
4.80
10.00
48.02
Sculptures
25
25.00
6.25
0.50
0.53
7.28
8.00
10.00
80.03
Collectibles
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Clocks
30
30.00
7.50
0.60
0.63
8.73
9.60
10.00
96.03
Calendars
12
12.00
3.00
0.24
0.25
3.49
3.84
10.00
38.41
Bookends
40
40.00
10.00
0.80
0.84
11.64
12.80
10.00
128.04
Banks
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Robes
60
60.00
15.00
1.20
1.26
17.46
19.21
10.00
192.06
Soaps
5
5.00
1.25
0.10
0.11
1.46
1.60
10.00
16.01
Creams/lotions
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Journals
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Cards/greeting cards
4
4.00
1.00
0.08
0.08
1.16
1.28
10.00
12.80
Gift boxes
10
10.00
2.50
0.20
0.21
2.91
3.20
10.00
32.01
Games
20
20.00
5.00
0.40
0.42
5.82
6.40
10.00
64.02
Puzzles
6.00-20.00
13.00
3.25
0.26
0.27
3.78
4.16
10.00
41.61

Average Selling Price and Cost
34.14
8.53
0.68
0.72
9.93
10.93
590.00
6446.81

Average Cost
10.93

Average Sales Commission
4.10
(80% of all sales through Amazon and eBay at 15% commission)

COGS
15.03

COGS as %
44.02%

C. Product Examples
12

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