Packaging and Shipping Business Plan
AuctionShipper is a start-up packaging and shipping organization that caters to online auctions such as eBay and offers regular shipping services to walk-in customers. AuctionShipper is a reasonably priced, environmentally sensitive, and convenient service provider.
AuctionShipper’s keys to success are providing a market-needed service by offering reasonably priced packaging and shipping services, ensuring maximum convenience for customers, and implementing strict financial controls.
AuctionShipper targets three customer segments: new eBay users, advanced eBay users, and all other customers. Each group has different reasons for using AuctionShipper and will be targeted accordingly. The number of potential customers for new eBay users is 11,216 with a growth rate of 15%, while advanced users have 8,097 potential customers with a growth rate of 9% per year. All other customers have a growth rate of 7% and 23,221 potential customers.
AuctionShipper faces two types of competition: mom and pop shops that offer packaging and shipping as an additional service and franchise operations specializing in packaging and shipping. Mom and pop shops typically offer shipping as an auxiliary service, while franchise operations have higher priced shipping options appealing to customers who value convenience and are willing to pay for it.
AuctionShipper’s leader, Jack Paacker, is a seasoned entrepreneur who started his first business in college. His experience and MBA education will contribute to the success of AuctionShipper. AuctionShipper expects to generate $185,000 in revenue in year two, increasing to $285,000 in year three.
1.1 Objectives:
– Become the premier auction shipping service.
– Reach profitability within two years.
– Achieve 15% market penetration by year three.
1.2 Mission:
AuctionShipper’s mission is to become the premier auction shipping service by offering reasonable prices, fast and environmentally sound service, and maintaining 100% customer satisfaction.
1.3 Keys to Success:
– Provide a market-needed service.
– Maximize convenience.
– Implement strict financial controls.
AuctionShipper is a Detroit-based shipper specializing in auction-based shipping services for eBay users. They offer convenient, inexpensive, and environmentally sound shipping service. By using recycled shipping materials, AuctionShipper is able to offer competitive prices that undercut other services.
2.1 Start-up Summary:
To start the business, AuctionShipper will need:
– Cash register
– Fax machine
– Computer system with printer, broadband Internet connection, bar code scanner, and software
– Three 5"x20" counter tops
– Neon sign
– Office and packing supplies.
Start-up Funding
Start-up Expenses to Fund: $6,275
Start-up Assets to Fund: $63,725
Total Funding Required: $70,000
Assets
Non-cash Assets from Start-up: $4,000
Cash Requirements from Start-up: $59,725
Additional Cash Raised: $0
Cash Balance on Starting Date: $59,725
Total Assets: $63,725
Liabilities and Capital
Liabilities
Current Borrowing: $0
Long-term Liabilities: $0
Accounts Payable (Outstanding Bills): $0
Other Current Liabilities (interest-free): $0
Total Liabilities: $0
Capital
Planned Investment
Investor 1: $30,000
Investor 2: $40,000
Additional Investment Requirement: $0
Total Planned Investment: $70,000
Loss at Start-up (Start-up Expenses): ($6,275)
Total Capital: $63,725
Total Capital and Liabilities: $63,725
Total Funding: $70,000
Start-up Requirements
Start-up Expenses
Legal: $1,000
Stationery etc.: $250
Brochures: $200
Consultants: $2,000
Insurance: $125
Rent: $700
Expensed Equipment: $2,000
Total Start-up Expenses: $6,275
Start-up Assets
Cash Required: $59,725
Other Current Assets: $0
Long-term Assets: $4,000
Total Assets: $63,725
Total Requirements: $70,000
Company Ownership
AuctionShipper is a sole proprietorship owned by John Paacker.
Services
AuctionShipper offers shipping services, similar to MailBoxes Plus, but geared for auction-based transactions. AuctionShipper will only use recycled shipping materials for packaging. This decreases packaging costs as all materials are free, collected from nearby retailers. It also aligns with AuctionShipper’s business philosophy of being environmentally sustainable. By using only recycled materials, AuctionShipper reduces waste and reuses materials.
The services are primarily focused on auction transactions where customers drop off items for packaging and shipping. This is ideal for auction products without original boxes and for keeping packaging and shipping costs low. Fast service for packaging and shipping incentivizes customers to sell more items on eBay. AuctionShipper also serves non-auction customers.
To enhance convenience, customers are offered a key chain based bar code that contains payment information and shipping preferences. The only required information is the shipping address, which is scanned into the computer using the bar code. This system enables fast service.
Customers can choose between USPS, UPS, and Fed Ex for shipping services.
Market Analysis Summary
AuctionShipper targets two market segments: new eBay users and advanced eBayers. eBay has created its own market with millions of users buying and selling items online, providing a wide range of opportunities.
AuctionShipper serves new eBay users by providing convenient packaging services, helping them transition into online selling. For advanced users, AuctionShipper offers a cost-effective solution that saves time on packaging, allowing them to sell more items. AuctionShipper also serves non-auction customers.
The auction shipping market is vast, with millions of active eBay users and most transactions requiring shipping services. This presents a significant market opportunity.
Market Segmentation
1. New eBay users: These are online auction users who are new to selling. They value a service that packages their sold items, making it easier to become an online auction seller.
2. Advanced online sellers: This segment consists of active eBay sellers. Offering affordable and convenient packaging and shipping services appeals to sellers who want to increase the number of items they sell on eBay without spending time on packaging. Many seasoned sellers are willing to pay for packaging services.
3. Others: This category includes non-auction customers who need to ship packages. They may be sending items to friends or businesses or returning mail order purchases. These customers have similar demographics to Mail Boxes Plus customers but may prioritize cost or environmental considerations.
Market Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 CAGR
Potential Customers Growth
New Users 15% 11,216 12,898 14,833 17,058 19,617 15.00%
Advanced Users 9% 8,097 8,826 9,620 10,486 11,430 9.00%
Others 9% 23,221 25,311 27,589 30,072 32,778 9.00%
Total 10.68% 42,534 47,035 52,042 57,616 63,825 10.68%
4.2 Target Market Segment Strategy
AuctionShipper will use a grassroots approach to segmenting the market. It will be active in the user groups and bulletin boards within the eBay community. By being active on these communication systems, AuctionShipper will generate awareness among potential customers. AuctionShipper will also segment its customers through local advertising aimed at beginner users who are less active on bulletin boards.
4.3 Service Business Analysis
The packaging/shipping industry is composed of mom/pop stores and franchises. Mom and pop stores often offer additional services beyond shipping, while franchises like Mail Boxes Plus and MailBox, Etc. offer general packaging and shipping services. Currently, there is no other organization that focuses specifically on auction-specific packaging and shipping.
4.3.1 Competition and Buying Patterns
The competition comes in two forms:
1. Mom and pop stores: These stores typically have another line of business and offer shipping as a value-added service.
2. Franchises: These stores primarily offer packaging and shipping services, along with additional services such as fax service and private mailboxes.
Buying patterns are based on convenience, including packaging services in addition to shipping and hours of operation. Price is a factor to some degree, but most businesses charge a premium. AuctionShipper believes customers will become more price sensitive when a significantly cheaper option becomes available.
Strategy and Implementation Summary
AuctionShipper’s strategy is to become visible to targeted customers. It has a competitive edge in terms of price and environmental sensitivity and will strive to gain new eBay users customers by leveraging these advantages. Exploiting the environmental aspect has marketing potential and aligns with economic reasons for being environmentally conscious. The key to the sales strategy is getting customers to try out AuctionShipper’s services, as there is a high likelihood of conversion to long-term customers. AuctionShipper is confident in achieving this goal due to its excellent prices and customer service.
5.1 Competitive Edge
AuctionShipper has two competitive edges:
1. Convenience: This encompasses convenient hours of operation, location, and overall experience in terms of the packaging and shipping process.
2. Environmental sensitivity: AuctionShipper can use 100% recycled materials, which is rare in the industry. Appearance is more important than professionalism, as customers prioritize reducing waste in landfills over brand new packaging.
AuctionShipper will employ a multi-pronged marketing approach:
– Location: A convenient, prominent location to capture walk-by-traffic.
– Participation in bulletin boards/user groups specific to auctions: This will develop awareness of AuctionShipper’s services.
– Advertisements in the city newspaper: While less targeted, this will effectively reach potential customers.
5.3 Sales Strategy
The sales strategy is based on converting first-time customers into regular customers. To achieve this, AuctionShipper prioritizes 100% customer satisfaction and awareness of competitors’ services. It is more cost-effective to retain current customers than attract new ones.
5.3.1 Sales Forecast
AuctionShipper expects slow sales in the first four months due to being a start-up business and the learning curve for new eBay users customers. First-year sales revenue is forecasted at $120,000, with year three revenue projected to reach $284,000.
Sales Forecast
| Sales Forecast | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | |||
| New Users | $36,494 | $55,986 | $86,030 |
| Advanced | $70,180 | $107,665 | $165,443 |
| Others | $14,036 | $21,533 | $33,089 |
| Total Sales | $120,710 | $185,184 | $284,562 |
| Direct Cost of Sales | Year 1 | Year 2 | Year 3 |
| New Users | $18,247 | $27,993 | $43,015 |
| Advanced | $60,355 | $10,767 | $16,544 |
| Others | $2,294 | $92,592 | $142,281 |
| Subtotal Direct Cost of Sales | $80,896 | $131,351 | $201,840 |
5.4 Milestones
- Completion of business plan
- Secure building lease
- Profitability
- Sales in excess of $200,000
Milestones
Milestone Start Date End Date Budget Manager Department
Completion of business plan 1/1/2003 1/15/2003 $0 John Marketing
Secure building lease 1/1/2003 2/1/2003 $0 John Operations
Profitability 1/1/2003 9/30/2003 $0 John Financial
Sales in excess of $200k 1/1/2003 6/1/2005 $0 John Sales
Totals $0
Web Plan Summary
AuctionShipper will have a website to disseminate information about the company and its services. It will be a useful source of information.
Website Marketing Strategy
AuctionShipper will market the website by:
– Communicating the URL in sales and marketing literature.
– Submitting AuctionShipper’s URL and common search terms to major search engines.
Development Requirements
The website will be developed using college computer science students who are willing to work below-market wages.
Management Summary
John Packer received his Bachelor of Arts from Ann Arbor College, where he participated in the entrepreneur program and received a grant to market a notebook called the Black Board Notetaker. After school, John concentrated on developing this business, but it did not generate sufficient profit. He then decided to earn his MBA from the University of Michigan, where he learned skills that would be useful for starting a new eBay users business. While on eBay, John realized there was value in providing a convenient, inexpensive packaging and shipping service, leading to the development of this business plan.
Personnel Plan
Initially, John will be the only employee to reduce costs and become familiar with all aspects of the business. Soon, he will hire two part-time employees.
Personnel Plan Year 1 Year 2 Year 3
John $30,000 $32,000 $37,000
Part-time employees $16,500 $24,000 $28,000
Total People 3 3 3
Total Payroll $46,500 $56,000 $65,000
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