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Net-a-Bargain

Net-a-Bargain is a “money saving” digital business, launching in January 2014.

We identified a lucrative opportunity caused by the global economic downturn within the retail coupon market.

This market is worth an estimated £30bn in the UK alone. JP Morgan estimates that there are 200 voucher code sites in the UK, 500 in the US and a massive 2,000 in China. Although there are some well-established companies in this highly competitive market, the market is very fragmented and no single company offers a complete money saving solution. This represents an attractive opportunity for us. We stand to make an estimated £326K in the first year alone.

Net-a-Bargain shall mainly generate revenue through affiliate commission & advertising We will also generate revenue through paid product placements on the website, App and community assets.

Our clients our people described as the “squeezed middle”, who work but find it difficult to make their earnings go far enough. A problem that is compounded by the stagnation in wages increases.

We aim to attract, engage, convert and retain customers by building and leveraging social media communities and also by taking advantage of opportunities we identified in both paid and natural search.

Net-a-Bargain aims to be the single largest online resource offering money saving advice & devices (i.e. coupons, vouchers, ‘money off’ deals) to its members.

This document illustrates how we intend to achieve this.

Executive Summary

According to Enders Analysis, the retail coupon market is worth £30bn in the UK alone. It is an even larger market in the US worth $280bn (£173bn) a year.

This is a growing market. A recent study by Forrester Research, found that the frequency of use of online voucher codes is increasing. Some other findings from the study included: Overall, 66% of UK online voucher code users indicated that they were likely to use more voucher codes in the next year versus only 8% who said that they would be unlikely to do so. In addition, 42% of all online voucher code users and 50% of those under the age of 32 said that they expected to use voucher codes on 25% or more of all their online purchases.

Besides Forrester’s findings, the retail industry itself is very upbeat about the use and value of coupons as demonstrated by the following quotes:

Market Opportunity

“We’re up 23% against last year on our affiliate program spending. Voucher code use was massive for us last year, and it’s going to be even bigger for us this year” Digital marketing manager, multichannel retailer

“Our use of voucher codes has grown tremendously in the past year or two, and we expect it to continue growing for the foreseeable future” Affiliate marketing manager, multichannel retailer

The trend for people searching for deals online can be illustrated with Google Trends data for terms like vouchers, coupons and voucher codes

Searches for voucher codes and related terms began increasing from 2007 onwards

Market Opportunity

According to Adwords there are approximately 246,000 monthly searches for the term voucher codes and the competition is medium

Similarly there are a wide range of related keywords with substantial search volume (some examples right), for example opportunities such as vouchercodes which has 33,100 monthly searches and low competition

There are also opportunities to optimize the site and appear in the SERPs for long tail search queries for which there is very little competition:

Market Opportunity: Paid Search and Natural Search

The Money Saving Market: Highly competitive market High growth rate over the last few years Many established companies already offering

deals and discount offers

The market is very fragmented and there is no single company that offers a complete solution that includes the best money saving advice and tools

Competitive Environment

Group A

Cash Backe.g. Quidco

Voucher Codese.g. VoucherCloud

• (+) Offer a very wide variety of deals• (+) Have over 2m monthly visitors to their website• (+) High visibility on multiple app platforms and

across social media• (-) Their offering is limited to deals/vouchers

Money Saving Tips e.g. Money Saving Expert

• (+) Brilliant money-saving advice platform• (+) Loyal and significant community• (+) Good reputation in the market• (-) Viewed mainly as an information source, and

not as a ‘deals’ website

Spot Deals:e.g. Groupon• (+) The market leading coupon and deals website

with over 42.6 million active customers• (-) Offer a limited variety of deals• (-) Low customer retention rate• (-) Sustaining severe profit losses

Price Comparisone.g. Price Runner

Diners Clube.g. Tester Club

=>

Net-a-Bargain

Competitive Environment

Defensibility

• Contracts with financial experts who write for us• Contracts with review websites• No one else currently support merchants with loyalty and

customer retention tools• We offer a mixture of peer and expert reviews on deals

Competitive Advantage

• The single largest source for all your money saving needs.• Making saving money simple and helping members enjoy

great bargains.• Support for customers – through peer-to-peer and expert

reviews.• Support for merchants selling vouchers – through

customer loyalty and retention planning tools.

Overview

• Offers its members a combination of the best money saving tips, discounted offers and user generated deals

• Facilitates social sharing of content

Net-a-Bargain takes a fragmented market place and brings together the best money saving advice and tools (i.e. vouchers, coupons etc) for its members.

• In order to facilitate the growth of the business, we will need a live database for merchandise, transactional data and customer data, etc.

• The front end of the website will need to be as fast as our competitors. Page load times are key for maintaining conversion rates. User experience (UX) is a top priority.

• Our mobile product, the mobile website and mobile app will be developed with the desktop site. • We will also make use of web crawlers that will scrape selected websites for our desired information.• We are asking for an initial investment of £274,437.

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Initial Start Up Costs

The Cost of Developing the Business Revenue Model

Assuming the business begins trading on 1st January 2014, we aim to generate 100,000 unique visits in month 1. We expect to be able to grow monthly visits by 5% per month. Initially we estimate a conversion rate of 15%, topping out at 20% by month 6.

We assume an average order value of £50 per conversion. Our revenue comes from a commission of retailer GMV. We will use affiliate networks and negotiate affiliate deals with retails themselves. During the first 13 months we will grow our average commission rate from 15% to 20%.

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Project 13 Month Revenue and Commission Rate

Monthly Revenue Sum of AVG Commission

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Projected 13 Month Conversions and Conversion RateMonthly Conversions AVG Conversion Rate

Our projected revenue is calculated as visits x average conversion rate x average order value. Projected revenue is initially £112,500 in month 1 and increases to £359,171 by month 13. During this 13 month period, our revenue will total £3,243,846.

Revenue ModelAffiliate Revenue Model

Our projected 13 month revenue will be driven by the number of site visits. We will grow our monthly visits with PPC and display advertising. Our monthly PPC and display spend will average 76% of revenue. Month 1 marketing spend will be £87,188, increasing to £265,103 by month 13.During this period, expect our CPC to increase from £0.39 to £3.88 and our CPA to increase from £3.88 to £7.75.

We expect to be able to hire one new employee every four months. By month 14, we should be able to raise our average salary to £40,000 from £18,000

• With an initial investment of £274,437, we expect to be profitable as early as month 11, if our aforementioned financial targets are met and if we divert our net take to reducing our debt.

• Our net take is calculated as revenue – marketing spend – employee costs – operating costs.

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Projected Profitability by MonthNet Take Profit

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Projected 13 Month Combined Spend

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Projected 13 Month PPC and Display Spend

PPC Spend Display Spend

Marketing Spend

Profitability Target

Primary Audience Secondary Audience

DefinitionPeople described as ‘the

squeezed middle’ or low to middle income group (LMI).

Bargain hunters falling into the upper-middle and middle

income bracket (i.e. AB consumers).

Consist of: 10.1 million adults and 5.8 million households

Wealthier, but very budget conscious shoppers

One third of the working age population Skilled professionals

Average household income = £20,500 after tax

Earn less than the median wage, but more

than the bottom 10%

Net-a-Bargain Customers

Our customers are savvy shopperslooking to save money

Their NeedsTo make their money go further

Our PropositionThe one-stop shop for saving moneyonline

What Influences ThemWord of mouth, reviews and peerrecommendations

Marketing and Sales Strategy1. Situation• About 500 competitors, a few with a strong presence• Very fragmented market place• None offering all money saving devices in one places• Main players – Hotukdeals, Vouchercodes,

Moneysavingexpert, Groupon, etc Net-a-Bargain:• A start-up• No brand presence, website or any other digital assets

2. Objectives:Vision – Become the number 1 destination online for UK shoppers who want to save money on their shopping and other expenses. Mission – Bring money saving information & resources under one roof making it easier, faster & simpler for customers to save money online or offline.

Key Business Objectives:• Create brand awareness• Create subscriber base• Build communities on social networks• Engage with users on mobile devices

Goals:• Reinforce brand message through online advertising• Grow visitor numbers to website• Build fan base on Social Media sites• Generate subscribers on website• Grow app downloads and awareness• Create & grow subscriber base• Build & Grow revenue

Marketing and Sales Strategy 3. Strategy:3.1 Strategy: target segmentsTargeting people based on The Resolution Foundation definition:

“The Squeezed Middle” “None-Squeezed Middle” – other bargain hunters (savvy internet

shoppers) 3.2 Strategy: value propositionBrand positioning: One-stop shop for online savings, offering relevant, accurate, up-to-date listings of money saving devices and advices.

Being innovative, making it faster, easier & simpler to save money online, offering a massive variety of saving devices, customers can always find what they are after. Product: All money saving devices – coupons, vouchers, etc.Pricing: Members register free, coupons listed free, paid for placement, featured products paid forPlace: Website, Social Media forums, App.

3. Strategy:3.3 Strategy: content marketing New website, new blog, new online communities – Facebook Page, Twitter channel,

G+, Pinterest 2 blog posts each week sharing other money saving tips, useful information Develop 4 infographics and videos about saving money online, economic impact of

the economic downturn and how to survive it. Daily posts on social media platforms with fresh useful/helpful content. 3.4 Strategy: communications strategyPriority acquisition channels: Paid Search Advertising - Google AdWords & Yahoo!/Bing search advertising Paid Display Advertising – use display advertising to raise brand awareness, featuring

lucrative offers Quickly build Email list and send regular emails based on member preferences Build social media community memberships – Facebook fans, Twitter followers, G+

members, by posting regularly. Priority retention activities: Monthly newsletters to members featuring the month’s best offers and general

monthly saving tips Daily hot offers on all social communities and other relevant money saving

information. Encouraging members to rate offers, share offers and recommend deals to others

Marketing and Sales Strategy 4. Tactics:Reach: SEO focusing on long tail keywords, “where there is little competition and

ability to rank fast in the search engine result pages (SERPs) PPC (Pay per click) focusing on keywords with little or no competition. Leverage cheap traffic from display networks to raise brand awareness

and entice them with irresistible offers. Build and leverage online communities – Facebook pages, Twitter feed,

G+ community, Pinterest board.

Act: New regional landing pages Build & develop crawler/scrapper Refine onsite search facility

Convert: New member free gift offered via email, triggered by online sign-up

Engage:• Monthly newsletter, tailored by customer preferences• Make Facebook, Twitter, G+ & Pinterest pages active, by posting regular

informative and useful content.

5. Actions: (site, app, communities building activities, etc)

Within 90 days launch website, app, create online communities and start online advertising• Q1: Fine tune web crawler/scrapper, focus on SEO efforts• Q2: Start trialling regional offerings• Q3. Sign affiliate deals with partner companies• Q4. Launch of “Festive Season” Campaign

6. Control: (Review performance through measurement and analysis)

• Q1: Setup measurement & tracking for weekly review and improvement

• Q2: Q1 results review• Q3: Launch conversion rate optimisation (CRO) campaigns – user

testing, etc.• Q4: Implement results from CRO campaigns.

Net-a-Bargain offers a lot in terms of investment –

Not only is the company founded on a clear consumer insight, it is based upon new consumer behaviour (deal searching and voucher using) that has grown up during this current period of recession. Whilst some elements of the recession have lifted, others, including how wealthy people feel, have not improved. Therefore, for the foreseeable future, this behaviour is commonplace and entrenched into how many of us shop.

Our company revenue stream is secure and profitability is planned to be £326,889 in our first year. We have begun from the position of a lean start up to minimize costs and maximize profit, crucial to the viability of the company as an investment.

The company is the first in the marketplace to offer this comprehensive money saving service. Therefore we can take a strong position in the field and steal consumers from other less-comprehensive websites.

We feel that by investing in Net-a-Bargain you would be investing in a future-proofed, stable and lean business that would expose you to current behavioural trends, whilst maximising your profit.

Why is this a good investment?

Thank you

Princely Bibi | Layla Brook | Julian Tozer | Elena BostanSophie Christiansen | Sarah-jane Thomas | Adrian Ng