Business Models for Digital Economy

Covetella

SECTION B - GROUP 5

AYUSH | AYUSHI | DEEVA | DIPANSHU | MAITRI | NEELESH

 01

02

Agenda 03

04

05

06
Company Background 3-4

Sizing Up Issues and Branding 5

Amended Business Model 6

Competition and Opportunities 7-10

Business Model Canvas 11

Prospects for scaling international

expansion 12-18
Background
Premium rental apparel company based in Singapore
Target customer: Professional women in their 20s and 30s with
disposable income in hand
Promoter Carol Chen- Studied fashion, participated, and won in
many pageants. Worked in the fashion industry in LA and San
Francisco previously
Tried a few entrepreneurial stints before Covatella

The attractiveness of the business idea

Very expensive clothing Business Model

in Singapore Proven in other countries

Singapore's first online rental Deterrent

service for fashionable apparel Low interest as in Asian culture
Dilemma
The discrepancy between public belief and her company’s reality
How to match the company's revenue and scale with the brand
International expansion (majorly ASEAN countries) is to be pursued or not?

Entrepreneurship in Singapore
Good infrastructure, talented pool of people
Active interest in fostering entrepreneurship of Singaporean government
Issues in expanding outside the country due to stricter regulations outside

RANKING AS PER WORLD BANK

Rank 1: Easiest country in the world to do business
Rank 10: Easiest country to start a business

RANKING AS PER COMPASS

Rank 10: Best startup ecosystem
Rank 9: Market reach for businesses
Sizing up?
MAJOR CHALLENGES

Funds crunch: Personal Funds crunch:

Very
Inventory investment: Hiring
expensive rent
purchase Limited people

Events and Branding

Covetella brand was built through hosting and cross-promoting

events
A disproportionately large brand for its size
Positive media attention but branding so premium that projects
company selling expensive gowns or event company.
Brand awareness- Inaccurate, not relatable to the real target
audience
Amended Business Model
A shift in focus: It initially intended to provide a peer-to-peer rental
experience but being a fashion rental business, the customers preferred
experiencing the look and feel of the product.
Chen and Vanderfilt estimated that 95% of their customers came to the
showroom to try on dresses as opposed to ordering online
Covetella then worked to provide customers with an entire showroom
experience centered on a human touch to their customer interactions, with
Anastasia Vanderfilt acting as a personal stylist to each customer, taking
into account customer preferences and building customer relationships as
the most important resource.
While Chen concentrated on business strategy, operations, and marketing,
Vanderfilt was primarily concerned with developing customer relationships.
Covetella consisted of 70% of the dresses which it owned and 30% belonged
to the women who rented through the company.
The company realized that :
1. Customers wanted to try on dresses and have in-person showroom experience
2. Customers did not want to manage the logistics of shipping and laundering
Competition
Competitors mentioned in the case:

Rent a dress Style lease

Designer dresses Designer dresses and accessories
Shipping and Dry Cleaning included two back-up dresses
four-day rental
Shipping and Dry Cleaning included
Online presence

Rent the Label Style Theory

Online rentals Subscription model
four to eight day rentals 3 designer dresses per month for a
Back-up dress included flat fee
Insurance and Dry Cleaning Shipping and Dry Cleaning included

Blog shops
Inexpensive
"Good enough" clothes
More like fast fashion
Competition
Characteristics
Differentiation
Competitors are not direct as they don't have personal customer experience
They lack curation and service
Covetella offers a wider range and exclusive styles

Small market
Singapore is a limited market
All competitors are targeting the same customer base of women
Not appealing to investors

Although Covettela is renowned, it is not considered as a "home run" in the Singaporean market
Chen is not sure of the direction in which she wants to take the company, hence is unsure of external
funding
Opportunities
Within Singapore

For expansion:
Larger inventory size
More options for customers: Casual offerings
New product lines: menswear, winter-wear, maternity/ children wear
New business and subscription models
Logistical requirements

Pros: Cons:
Existing brand value Capital intensive logistics
Customer longevity Very high rental costs
2nd hand culture Increasing competition
Logistical requirements Might have to sacrifice premium
Consistent weather year-round service
Opportunities
Beyond Singapore

Investor Local Local Market

Interest Network Lang. size

Local Logistics Income Context

Culture & Infra Levels & Crime

For expansion:
Millennial population and wealth
By 2020, 60% of the Millennial population is expected to live in Asia
Digital adoption and smartphone use
More than 50% pop. of Asia uses smartphones
Every country is ASEAN is wildly different in terms of culture and traditions
Highly fragmented market with varied requirements for each country

Pros: Cons:
Emerging Millennial buyers (18-34 y/o) Difficult region to crack
Multiple markets Varied cultures, no unification
Online models leading to low costs Penetration across all or none
Business Model Canvas
Economic Stats. of Southeast Asian
Countries
Comparative Analysis

Scale: 1 - Very Poor ; 2 - Poor ; 3 - Moderate ; 4 - Good ; 5 - Very Good

International Expansion

Challenges in the expansion plans

Possibilities in the expansion plans

Factors to take the final decision
Singapore Outside

Market Size No Yes

Investor Interest No Yes

Personal Network Yes No

Revenue Growth Yes No

Profit Margins Yes No

So, according to our analysis staying in Singapore is the most feasible option
Focus should be kept on market penetration instead of international expansion
To solve the market size problem, it can enter the Menswear or other fashion
segments
Examine Covetella’s
potential to scale and
prospects for international
expansion.

Showroom Capacity Subscription

experience Consignment building model

Currently, Covetella As customer base Marketing, To increase the

has differentiated grows, larger inventory employees, rentals per
itself with customer needs will not be viable inventory , customer per
service and in- so online renting business year, it will help
person showroom consignments will be channels build a habit
experience scalable
10-20% of retail
value Price includes
shipping fee and
cleaning fee
Scaling the
business

Covetella owned:$100-
Covetella needs to convert its
400

Numbers Consignment: $400-

8000, $800
followers into its customers,
which it can do by expanding
target market and expanding
product offerings to the existing
customer base. Marketing
Aim: breakeven at efforts need to be channeled
1 or 2 rentals for towards increasing
2 or 3 times in 18
owned dresses
months rentals/customer/year, as
brand building is on point
 Expanding product
portfolio for existing
users
Accessories have higher margins
Round the year, all occasion needs
of women - bridal wear, couture
gowns, business formals

Expanding target
customer base Target
market
Men’s formal wear (e.g.
tuxedo and suit) rental
Households,
Costume rental
Corporate
Motion picture Executives,
wardrobe and costume Theaters,

Products & rental

Theatrical wardrobe
Students,
Movie

Market and costume rental producers

THANK YOU
See you next time