We decided to enter the
market with a multichannel strategy. We would have traditional retail shops and
a website to sell our products. We only had three products when we launched.
Each came in three sizes and three scents which was 27 skus. This meant we couldn’t
have full retail shops but needed to rent boutique spaces or stores within a
We wanted to have a sales
assistant in each store and needed 15 stores to cover the bulk of the market in
the capital city, which is 45% of the volume of our retail sales. We built a traditional
website which accept credit cards and direct payments by mobile.
We aimed for 60% online sales
and 40% in store. Our costs, however, were 70% in-store. They were higher due
to rent and labor costs. The average transaction value online was higher than
in the store because people bought the larger sizes. We figured that people
tried it in store and then bought online. The mix of sales by channel was
We projected the profit
and cash from the first three months data and it could never make a profit. The
stores consistently lost money. We signed three years leases and each store
requires our own sales staff. The more stores we open the more we will lose.