CLICK 'N SHOP INC.
425 Loop Rd., Ste. 14
Chicago, IL 60060
March 1995
This business plan for a virtual reality application is an example of how state-of-theart technology can become the basis for a popular start-up business. It discusses the use of a virtual shopping kiosk that allows customers to connect via video teleconference to retailers whose products are displayed in the booth. The plan features considerations of strategy and technology as well as a comparative balance sheet and other financial details.
- EXECUTIVE SUMMARY
- BUSINESS DESCRIPTION
- THE MARKET
- MARKETING
- TECHNOLOGY/SYSTEM SUMMARY
- THE MANAGEMENT TEAM
- COMPETITION
- FUTURE PLANS
- SUMMARY
- FINANCIAL INFORMATION
Executive Summary
Click 'n Shop Inc. is a Delaware corporation which is looking to secure expansion capital to begin the roll out of its Point 'n Click Booths and to provide working capital to fully exploit the opportunities presented by using its proprietary technology to enable retailers to visually communicate with their customers using a videoconferencing connection.
The Company
Click 'n Shop Inc. (CSI) utilizes video compression technology (video teleconferencing) to create an alternative retail distribution channel which will enable America's premier retailers an opportunity to market and sell their products directly to consumers using tomorrow's "electronic superhighway" …today.
CSI will build, install and operate a series of Point 'n Click Booths (PCB). The PCB is an 18 square foot kiosk that permits a user to sit down and have a face-to-face conversation with any retailer equipped to receive videoconference calls. The PCB, in an effort to minimize risk, capitalizes on off-the-shelf proven technology and uses proprietary CSI software to create a point-of-sale location which can be used efficiently by a multitude of retailers.
The PCB is a complete marketing system which will be placed in high-traffic areas, such as airline lounges, hotel lobbies, superstores, office buildings, etc. The video monitor on the front of the unit is used to draw customers to the PCB by advertising retailer's products on the screen. Once inside the PCB, the customer encounters an electronic browsing screen that enables him to use interactive touch-screens to preview retailer's products and generate manufacturer's discount coupons.
While browsing retailer's product offerings, the customer can press "connect" at any point they have a question or would like to place an order. For example, a customer who is interacting with the system regarding a Hawaiian vacation and has a question would touch the "connect" button on the monitor. At that instant, the PCB establishes an automatic two-way live videoconference directly between the customer and the retailer. This customer would be instantly connected to the American Express Travelways Travel Center, where an AMEX travel expert would assist the customer in making a selection.
This new retailing concept provides a hybrid environment in which today's sophisticated customers can easily manipulate information in concert with assistance from a sales expert to efficiently make a purchase decision. Both the customer and sales person can simultaneously view the product information screen and each other, thus enabling the sales person to add both visual and audio input into the sales process, while at the same time maintaining a human element. The end result of this innovative process is a fresh retailing climate which will facilitate the goals of both the consumer and the retailer.
From the customer's viewpoint, the PCB is indeed a virtual mall. While standing in one spot, the customer can contact, talk to, discuss with, and shop from literally hundreds of retailers selling every different kind of product and/or service, and the customer is always in control of the shopping and selection process. The PCB has created exactly what today's consumers are looking for–a convenient, high information sales process that still maintains the "human touch."
To retailers, the PCB represents a tremendous opportunity to add hundreds of new distribution outlets without incurring the hard costs of building stores, carrying inventory, and staffing stores with salespeople. A retail tenant in the PCB has combined the best of both "store" and "non-store" distribution–the ability of an "expert" salesperson to provide information to the consumer and "close" the sale, as well as the benefits of minimal inventory and staffing costs which enable the retailer to price their products more competitively.
To CSI and its investors, the PCB represents an immediate application of technology to take advantage of, and profit from, the American retailer's stated desire to "sell outside of their walls." The introduction of the PCB will position CSI as the first company to advocate and market the use of video conferencing in a direct business to consumer application. By being in front of the "electronic tidal wave," CSI will be positioned to profit handsomely as the nations first "virtual landlords."
Strategy
The July 26, 1993 cover of Business Week declared "Retailing will Never Be the Same." The cover story deals with the merging of entertainment, telecommunications and electronics into the "electronic superhighway." Major conglomerates have aired television commercials explaining the benefits of 500 channels and interactive TV. Emerging technologies, like Virtual Reality, are beginning to make their way into real-world business applications. From an investment standpoint, it seems clear that the electronic tidal wave is coming, and those best positioned when it hits will benefit the most.
CSI has the opportunity to be enormously successful in its endeavor, due primarily to its unique approach to implementing its products and services. The continuous onslaught of such technological developments as hand-held computers, interactive TV, and the video dial tone are changing the way American consumers shop. The electronic superhighway is creating a new digital pipeline that will directly connect retailers with consumers.
The corporate giants are all jockeying to build the consumer end of this pipeline. While these elephants fight for the rights to equip every American household with interactive consumer shopping capabilities, CSI believes that minimal effort has been expended towards developing the retail end of this pipeline. Even if millions of American households were equipped with interactive TV's today, most retailers in most industries are incapable of distributing their products via an electronic format.
America's most powerful retailers have recognized that in order to gain market share and thrive in the future, they must be positioned to market their products and services using this new technology. There is tremendous media attention being focused on the coming "electronic superhighway." CSI will enable business to take advantage of retailing's future today. In developing the PCB, CSI has recognized that today's retailers and telemarketers do not have the hardware, software, or training necessary to sell their products through electronic and video formats. Therefore, CSI has designed and built the Retailer's Point 'n Click Desktop (RPCD). The RPCD is a combination of state-of-the-art, yet off the shelf, hardware components and a US Patent Pending unit that is connected and operated by CSI's proprietary software and companies in the country to offer the necessary technology to convert any company in any industry into a video/virtual retailer, filling the untapped end of the pipeline.
CSI believes that the home consumer market will ultimately be the most lucrative. CSI also believes its strategic positioning is the best fit for the current state of affairs in the electronics industry. In the short term, CSI will build and operate PCB's all around the country, providing a real, practical application of the associated technologies during the years it will take for the corporate conglomerates to implement the grand scheme that enables every household to shop interactively. In the long term, regardless of who (Cable TV, Cellular, Telco, etc.) ultimately prevails, when home shopping becomes a reality, CSI will market the RPCD, and will equip the retail end of the pipeline to feed the product-hungry consumer end. CSI will be profiting from the new method of retailing via its virtual malls long before the home consumer market becomes reality.
Status
CSI completed the development and construction of the first Point 'n Click Shopping Center (PCSC) and began the initial live revenue generating application in February 1994, to prove the concept and shorten the learning curve required for future PCSCs. With the information gathered during the beta test, CSI has developed the PCB) which will allow consumers a smaller footprint, in which they can have a more private interaction with the retailer.
CSI currently has Danmark International (a $500 million in sales electronics cataloger) and American Express Travelways as the first two anchor tenants slated for the 20 PCB roll-out scheduled for May 1995. The PCB roll-out will be concentrated in two fantastic consumer markets; Minneapolis/St. Paul and Houston. The initial locations include the Northwest Airlines Frequent Flyer Lounges, The Hyatt Hotel lobbies in each city, Rice University and several premier office towers.
CSI is also engaged in discussions with several other major retailers that have expressed an interest in the PCB, including Best Buy (a retailer of home electronics), Dayton's (Department Stores), NordicTrak (a retailer of home exercise equipment) and Sky Mall (Department Stores). Moreover, Recycle to New, Inc. (an international clothing recycler) has placed an order for the first Private Network PCB to be delivered in May 1995.
Financial Requirements
Click 'n Shop Inc. has completed the successful development and installation of the nation's first Point 'n Click Shopping Center. Due to the initial positive reactions from shoppers at the Bob's Grocery PCSC (an overwhelming 89.6% responded that they will shop this way in the future), CSI intends to implement its business plan with the systematic proliferation of PCBs around the country.
CSI expects to raise $2.5 million to initiate the operating phase of this revolutionary retailing concept. With 50 corporate owned PCBs slated for 1995 and an additional 7 Private Network PCBs targeted for 1995, the Company will have the inertia to capitalize on its preeminent position as the nation's first virtual landlord. The body and financial projections of this business plan detail the exciting opportunity presented by this innovative company. With the videoconferencing industry expected to grow to over $7 billion by 1998, CSI and its investors are well positioned to capitalize on this burgeoning market.
