Individual Business Plan Centered on an Online Jewelry Store

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With an increasing number of young people searching for ways to fulfill their fashion and beauty needs, the jewelry industry has a bright future. The periodic increase in market demand in jewelry has resulted in the industry growing by 5% per year. Despite the difficult economic conditions in other markets, the pace of growth in this industry has risen in relation to its dynamics. Such growths are attributed to the aggressive nature of players in this industry coupled with the high levels of alertness they embrace in responding to the growing needs of their customers. Online sale of jewelry has been adopted by different companies as a way of increasing their customer niches by ensuring that they reach wider global markets. In these systems, customers are allowed to make purchases at their comfort zones with deliveries being made to suit their needs.

Business Objectives

The operations of SMAW Jewels will be guided by the following objectives:

To create products and services which go beyond the expectations of our customers based on our quality, design and customer service.

To introduce a minimum of six brands into the market on a yearly basis.

To develop a merchandizing unit that is sustainable in selling, sterling silverware, assorted leather goods, crystals, fragrances, stationaries as well as timepieces aimed at meeting the needs of an outgoing woman.

SMAW Jewels shall be a sole proprietor business dealing in online sales of a wider range of jeweler products. The business shall deal in selling jewelry, sterling silverware, assorted leather goods, crystals, fragrances, stationaries as well as timepieces. The business shall be headquartered in Washington D.C. with subsidiaries in Texas, Las Vegas and Miami. Through its branches, the business shall undertake the activities of product designing, manufacturing, assembly and retailing.

While branded jewelry makes up 20% of the overall market for global jewelry, its demand continues to grow every year (Hsu et al. 2014 p. 3). This is attributed to the increasing rates of aggressiveness among companies in this segment and the adoption of online platforms used as channels for marketing and sale. SMAW Jewels shall deal in both branded and unbranded jewelry in its endeavors. In this case branded jewelry shall be sold with warranties, while the unbranded will not.

Description of Products and Services

SMAW Jewelry shall deal in selling jewelry, sterling silverware, assorted leather goods, crystals, fragrances, stationaries as well as timepieces. Jewelry will be customized and designed in such a way that they have the attributes of style and attraction targeting different categories of men and women based on their social classes. SMAW shall design its jewelry products from a range of metals and gemstones with the aim of meeting the needs of all market segments. The jewelry released in the organization’s outlets will be designed to meet the needs of customers in their casual, official, formal and business occasions. The arrays of jewelry will rings, earrings, necklaces and bracelets. In this case, customers shall make use of the company’s online marketing platform to make purchases of premade jewelry or make their requests for customization of pieces based on their interests and tastes onsite.

With the greatest target of customers being women, SMAW Jewelry shall create a segment dealing in the design and assembly of assorted leather products rhyming with its jewels. A greater emphasis will be put on diamond jewels. In this case, products such as purses, jewel holders, belts and handles will be assembled. The belts and handle products will be customized in such a way that some parts are made of different gemstones to give them an aesthetic appeal. The business shall partner with different fragrance companies to act as a retail outlet. While fragrances and stationary will not be considered as the key products of SMAW Jewels, they will play an attractive role to ensure that its customers get most of their products under one roof.

Some of the services provided by the organization shall include produce orientation, customization of designs and customer deliveries. The organization shall make use of different channels to communicate to its customers about its products as part of orientation. Fashion magazines and market demonstrations will be very useful in ensuring that these roles are effectively achieved. The company’s website will play a critical role in enabling customers to make orders.

Organizational Strategy

Product sourcing

Supplies for raw jewelry will be sourced from countries like China, India and Brazil. The company shall take advantage of pre-established connections and contacts in these economies to enable the purchase of gemstones and supplies of high quality. These contacts will not only be used in the provision of products at wholesale prices, but also in the provision of goods based on flexible terms of payment and credit arrangements. The less bulky supplies will be done by air. On the other hand, orders considered to be heavy and voluminous will be shipped based on Less than a Container Load (LCL) terms. All supplies and products will be housed in the stores of the business premise.

Management of Inventory

In order to run the business more effectively and efficiently, approximately $250,000 in inventory will be needed. This inventory will be split in the portions of $50,000 to be stored in the outlets of the organization and the headquarters. Employees will make use of bins in the organization and storage of jewel supplies with the final products being shelved in the outlets. Based on the magnitude of the business, spreadsheets and other specialized software will be used in controlling inventory.

Market Analysis

The greatest target for SMAW Jewels shall be women in Washington D.C, Texas, Las Vegas and Miami. The business shall bias its concentration on the production of products, targeting at professional women as well as those in need of ornaments for special wear in events like evening parties, weddings and fashion shows. This will be achieved through the organization’s production of fashion gemstone products. The four states chosen for the establishment of facilities enjoy a greater population of women and girls with the zeal for fashion and jewelry. On the other hand, Texas, Washington D.C and Las Vegas are considered the country’s most populated states comprising of risk takers and people of varied tastes.

Industry Analysis

For a long time now, jewelry has been looked at as bridal merchandise with the greatest consumers being drawn by events like engagements and weddings. As a matter of fact, this segment alone accounts for about 34% of the jewelry market. There is another segment which comprises of fashion jewelry and is made up of products like gold chains, rings, pins, earrings and bracelets. Other classes of products in this segment include giftware, watches and silver flatware. Diamond and loose diamond jewelry account for 45% of the market with its sales accounting for 46% of the total sales in this industry. Further, it is critical to note that gold jewelry account for 11% of the total sales in this industry, while jewelry drawn from colored gemstones accounts for 9% of the total sales. Jewelry retailers tend to sell their products at relatively higher prices based on the fact that they have the will of projecting an upscale image of their products. Further, the reason for such high prices in the retail sector could be attributed to the high expenses they incur in coming up with their high quality spaces of sales, expert sales personnel and furnishings (Guo., Xie and Liu, 2013).

The United States of America’s Department of Commerce estimates that the sales of jewelry grew at a compounded annual growth rate of 4.5% between 2010 and 2015. This increased the total sales of the industry to reach at $74.7 billion in 2015. Being the most mature market for jewelry products, the United States of America recorded a growth of 7% in the same year with China and India recording 6% and 3% in their rates of growth (Daurixz, Remy and Toctermann, 2014).

According to Guo, Xie and Liu (2013), the jewelry industry in the U.S has been shaped by trends like an increase in the demand for branded jewelry based on their distinctive designs high quality and increased levels of credibility. Further, the increasing numbers of jewelry shops in Asian economies have greatly shaped the way other markets consume jewelry. Lastly, Hsu et al (2014) note that the increased levels of focus on e-commerce by different jewelry stores has greatly accounted for the growth of this industry. The sales trends in this industry are highly seasonal. The holiday seasons between November and December account for the highest sales. However, the industry saw great changes since 2008 as the sales were evenly distributed throughout the year.

Market Size

The jewelry industry records annual revenue of $ 30 billion. With the services of over 27,500 specialty stores dealing in the sales of jewelry, the industry is highly fragmented with about half of the total sales being controlled by the top 50 chains (Guo, Xie and Liu, 2013).

Industry Participants

The key participants in this industry include Zales, Tiffany’s & Sterling Jewelers and Wal-Mart.

Key Sources of Competition

SMAW Jewels considers its key competitors as follows

Golden Land Jewelry - this is a business dealing in the sales of sterling silver earrings and pendants. It also sells sapphire and ruby gemstones between $5-00 to $ 3,000

Aria Collections- this company has kiosks opened in leading malls all over the country. It deals in young and old fashions of sterling silver pendants and gemstones. Its prices range from $20 to $100.

Piercing Pagoda- this is a very well established business and has been operational since 1969. They have been leaders in this segment for over 40 years. Further, the business boasts of a well set online presence.

SWOT Analysis

Strengths

Strong ties with suppliers in China, Brazil and India offering raw materials on credit arrangements with high levels of flexibility and response to special needs.

Highly knowledgeable staff with the ability of offering personalized customer services.

A great space for retail activities whose atmosphere is attractive and inviting.

The business shall maintain its overhead costs as low as possible by making direct purchases from India, China and Brazil and creating a majority of its products in house.

Weaknesses

The business may face the challenge of accessing additional capital for operation

Cyclical nature of revenue generation in the industry; most of the sales are made between, September and December.

Opportunities

High levels of income for the target market

Use of an online platform for sales and marketing

Threats

Established and emerging competitors

Increased cases of shoplifting

Sales of the business tied to the prevailing economic growths

Sales Forecast

The table below gives a synopsis of SMAW jewelry’s sales forecasts

Table1. Sales Forecast

Annual Sales Forecast

Year1

Year 2

Year 3

Sales

Outlet revenues

$150,000

$200,000

$340,000

Service and repair

$15,000

$20,000

$34,000

Total Sales

$165,000

$220,000

$374,000

Direct cost of sales

Jewelry and supplies

$25,500

$35,700

$ 40,500

Total Direct Cost of sales

$25,500

$35,700

$40,500

Personnel Plan

Being a sole business proprietor, the owner will be entitled to multiple responsibilities such as designing products, sales and handling orders. However, independent sales representatives in all stores will be incorporated in the other chains within eight months. In the first two years, the owner will not take a salary. However, his salary will start from $10,000 in the third year increasing to $60,000 over time.

Position

Year1

Year2

Year3

Proprietor

$0

$0

$10,000

Sales representatives

$12,000

$36,000

$36,000

Total personnel costs

$12,000

$36,000

$46,000

Financial Plan

The business’ profit and loss accounts will be used to reveal the extents of profitability while the balance sheet will be used to show the financial position of the company.

Profit and Loss Assumptions

Average sales price per unit is $ 120

Average sale per day; 3units

45% revenues in the 4th Quarter

30% of revenues in December

Costs of accounting; $350 for bookkeeping+ $500 for tax preparations

Bad debts; estimated at 5%

Miscellaneous 2.5%

Insurance; $ 550 per year

Permits and licenses; $150 annually

Rents: 45,000 per year

Assumptions for Balance Sheet

Startup +Up Capital

Outlets and display; $100,000

Beginning inventory; $250,000

PC based cash register; $3,500

Assumed annual growth rate; 5.5% for year 1 and 8% for year 2.

The key source of funds shall be the savings of the proprietor.

References

Dauriz, L., Remy, N. and Tochtermann, T., 2014. A multifaceted future: The jewelry industry in 2020. Retrieved on December, 4, p.2014.

Guo, H.Y., Xie, K.F. and Liu, H.W., 2013. The Application of Enamel Material in the Jewelry Industry. In Advanced Materials Research (Vol. 602, pp. 2031-2033). Trans Tech Publications.

Hsu, T., Lucas, A., Qiu, Z., Li, M. and Yu, Q., 2014. Exploring the Chinese Gem and Jewelry Industry. Gems & Gemology, 50(1), pp.2-29.

November 17, 2022
Category:

Life

Subcategory:

Lifestyle Hobby

Subject area:

Fashion People Interests

Number of pages

8

Number of words

2047

Downloads:

27

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