TOKYO
Running Head: TOKYO
Tokyo-on Business Plan
Runxian(Sunny) Du
Capstone 10.27
1. AUDIENCE OF THIS PRESENTATION
Starting an online retail eCommerce platform is capital-intensive. Thus, the company owner seeks to present the content of the business plan to financial institutions and potential investors. The business plan will be presented to Silicon Valley Bank, which is notable for extending financial credit to start-ups in the United States. Other digital banks like Rho and Mercury will be presented with a copy of the business plan as part of the documentation when applying for a loan. Ideally, considering different financial institutions in the loan application is important because it increases the probability of securing loans or grants for the business. In addition, the owner will approach angel investors, where company shares will be exchanged for capital. The owner will participate in local television shows like shark tank to pitch the ideas to potential investors willing to partner with Tokyo On by buying shares in exchange for capital.
2. EXECUTIVE SUMMARY
• Current situation
There is an influx of Asian communities in the United States. A majority of Asia people migrated to the United States to seek tertiary education. A recent study on Asian students showed that most experience “homesickness” and “miss” everyday things like food, accessories, and items unique to their country. Most young Asians coming or living in America do not have a one-stop shop where they can purchase Asian-themed goods or items online.
• Desired Outcome
The desired outcome of Tokyo On is to provide products that appeal to Asian consumers while, in time, diversifying to incorporate other goods and services needed by the targeted audience, which largely comprises Asian students and those in white-collar jobs between twenty-two to thirty-five years. Most competitors have specialized in providing a limited number of accessible online products or services to Asian consumers.
• Recommended Strategies (Opportunity)
The main strategy is to open an online shop where customers can make orders, and the company delivers within less than forty-eight hours. The business will function as an online retail store specializing in Asian-themed products.
• Funding Request
The owner of the company seeks to present the content of the business plan to financial institutions and potential investors. The business plan will be presented to Silicon Valley Bank, which is notable for extending financial credit to start-ups in the United States. Other digital banks like Rho and Mercury will be presented with a copy of the business plan as part of the documentation when applying for a loan. In addition, the owner will approach angel investors, where company shares will be exchanged for capital.
• Exit Strategy
Shareholders or investors with equity in the company can sell their shares if they wish to exit the company. All of the shares are preferential, meaning that in case of insolvency, the company will be sold and individual shareholders paid back based on the current value of their equity.
• Benefits for the investors/partners/company
The investors can earn based on their share capital. A high share in the business means that the shareholder will have more profits. More so, the company employs highly trained and experienced managers to run the company on behalf of the investors.
3. BUSINESS IDEA
3.1. Problem and Solution
There is an influx of Asian communities in the United States. A majority of Asia people migrated to the United States to seek tertiary education. A recent study on Asian students showed that most experience “homesickness” and “miss” everyday things like food, accessories, and items unique to their country. This experience has made many newly migrated Asians, especially students, consider important goods they require from back home. Importing is an expensive venture, especially if one is seeking to make purchases of small items or goods through existing online platforms. Thus, this business proposal seeks to fill this problem facing many young Asian students who have moved to the United States to study by providing an online shopping marketplace where Asian goods can be purchased cheaply and easily.
3.2. Product/Services Concept
The product/Services Concept is how a business positions its product in the market by using the defining characteristics of a product, such as a price, color, shape, distribution, and quality, among others. Tokyo On will position its product as appealing to Asian consumers while maintaining “a close eye” on the competition. In so doing, the company will avoid “marketing myopia”, a concept that Theodore Levitt defines as businesses that concentrate on their operations but fail to acknowledge the threat emanating from complementary competitions. Thus, Tokyo On product concept is providing products that appeal to Asian consumers while, in time, diversifying to incorporate other goods and services needed by the targeted audience. Most competitors have specialized in providing a limited number of accessible online products or services to Asian consumers. However, with the emancipated increase in population, Tokio is looking to expand its product and service portfolio in the future to enhance its product and service concept in a diverse manner similar to that of Amazon Corporation or Alibaba.
3.3. Scope and Target Market/Customer
The business targets the growing number of Asian students or other local and international students who are interred in Asian products. Specifically, the business targets Asian students or white-collar workers 22-32 years old with average estimated earnings of $40,000-$110,000. The targeted population has been noted to have higher spending power, meaning they have a high probability of purchasing goods from our website. This means that the young Asian community forms the basis of the core consumer base targeted by Tokyo On.
3.4. Point of Differentiation and Value Proposition
The business seeks to provide value to the consumer by filling an existing need identified in the market. It is common for Asians to purchase specific items or goods which are unique or generic to their culture and country. Such goods are not readily available in the U.S, and those small merchants that import such goods do not offer consistency to consumers. Thus, ensuring a continuous supply of Asian products needed by the Asian community in America is the value the business seeks to provide to ensure the consumer’s return in the future.
Points of differentiation, also known as points of difference, are our product or service characteristics that distinguish it from competitors. The business seeks to differentiate itself from other businesses by relying on skilled manpower and technology. The customers will be served through the established online website, where orders are processed and dispatched to customers in less than forty-eight hours. To enhance the differentiation, the business aims to use interactive artificial intelligence software to enable Asian customers to use their native language through a voice recognition system to make orders. The feature will benefit Asian customers who have not fully grasped English as a language and may experience challenges in expressing themselves when shopping online.
3.5. Mission / Vision
Ideally, the mission and vision statements are important to an organization. The mission statement “tells the consumer” the objective of the business, and such goals will be met. Thus the mission of the business is to “provide the Asian experience to customers through digital space.” The vision states the future and current goal of the organization. Therefore, the vision of the company is to “become a customer-focused organization, where each customer can come and find Asian themed goods and services that satisfy their everyday needs.”
3.6. Business Model
The business model is based on providing Asian-themed goods and services to consumers at a low price and within the shortest time. There are no online businesses that cater to the specific needs of the young Asian community, especially around colleges and campuses. Many students or graduates are forced to spend more to acquire goods overseas since existing businesses provide products that are not tailor-made to the needs of the young Asian population the business is seeking to target. Thus, by providing low-cost and readily available Asian products, the company will be able to serve a specific demographic in the market. In the future, the business can expand and diversify its product portfolio as needs and demand for unique goods only found in Asia increases.
4. PRODUCTS AND SERVICES
4.1. Product/Service Development
The business model’s success is ensuring that the needs of the consumers are met and satisfied. The resources employed in the business, such as human resources and technology, are selected and acquired based on their constriction towards fulfilling the customer’s needs. Product and service developments are necessary to ensure the continuous provision of goods and services that satisfy customer needs and wants. A business can adopt numerous product and service development tools. The nature and type of development adopted are based on the company’s needs. For this business, a backward method will be adopted to facilitate product and service development in the future. The backward method is defined based on its focus on the needs of the consumers. This means looking at ways the website or technology adopted in the business can first benefit customers. A backward method enables the business to focus on how the lives or experiences of the customer can be changed before making adjustments to business resources such as labour or technology. This means that products and services offered will be subject to changes or improvement after the customers’ needs have been assessed and determined using the backward method.
4.2. Product Manufacturing & Sourcing
The business will rely on outsourcing products from overseas. This is because no large-scale manufacturers locally produce products or services that our consumers require. It is imperative to note that the company will not manufacture any products it sells. Most goods sold through the website will be imported from Asian countries like Taiwan, Japan, Korea, Thailand, and China. These Countries have large industries that provide goods and services that cater to the lifestyle needs of Asian migrants in the United States. As an online business, we can negotiate with these overseas manufacturers for reduced discounts that enable selling goods at lower prices to college and university students targeted by the business.
4.3. Operating Model Distribution
The Operating Model Distribution contains the key processes integrated into the supply process. In the first stage of goods acquisition, items sold on the website will be sourced from overseas manufacturing centres in Japan and China. The products will be shipped to our inventory stores and warehouses located at various sites and warehouses for storage. Secondly, the storage and maintenance of the imported goods using various systems such as FIFO (first in, first out) and LIFO (last in, first out) (Tanaka & Respati, 2021). Thirdly, listing products on the website for consumers to access and make orders. Such an operating distribution model plays a vital role in ensuring the continuous availability and supply of goods and services required by consumers.
4.4. Service Supply
Once a customer places the order through the website. The company sales department processes the order by issuing a sale order to the inventory, where the item(s) listed for sale are retrieved and prepared for dispatch. The goods are packed and prepared for delivery, with a maximum of time forty-eight hours waiting period. Once packaging is completed, the customer will be notified through an online receipt on the status of the goods purchased and when the product will be delivered (time and place).
4.5. In the case of an APP Development or Software Solutions, detail the SDLC:
SDLC or Software Development Life Cycle is the steps taken when developing a website or software for an organization (Okesola et al., 2020).
4.5.1. APP/Software Development approach & Requirements Gathering
Warehouse machines and employee biometric data are requirements to facilitate the website’s development. This ensures that goods ordered overseas or by customers can be easily processed and detached to designated locations from the company’s warehouse.
4.5.2. APP/Software Analysis and Design, APP/Software Functionality
The designing phase requires the input of critical tech infrastructure to support the website’s operation. The key phases of the designing process include architecture, which outlines the programming language. Secondly, the user interface creates digital space for customers to interact with the company and the goods offered. Lastly, it provides cyber security by incorporating SSL traffic encryption and password protection.
4.5.3. APP/Software Testing
The website can be subjected to various virtual tests or through group control scenarios where customers can be allowed to interact with the site before being launched. Testing is important in eliminating any system redundancies.
4.5.4. APP/Software Deployment
The website application is made available to end users during the development stage. The deployment can occur in phases or a single phase based on the company’s needs.
4.5.5. APP/Software Production Model
The Waterfall SDLC model has been used in the development of the website. The model allows for testing each stage of development before processing to the other phase, which reduces risks once the website is operationalised.
4.5.6. APP/Software Support Model
The IT service management will be used in supporting the website application. IT service management simultaneously provided end-to-end communication encryption between the company, suppliers, and customers.
4.5.7. APP/Software Maintenance Model
The closed-loop model will be used to maintain the website. The choice for a closed-loop model is because it facilitates continuous repair, reuse and upgrades of the application.
4.6. High-Level Pricing
The designing and development stages of the application were costly because the website is required to conduct multiple functions simultaneously. Hence it is expensive to design and implements.
5. ADMINISTRATIVE STRUCTURE
Before starting in the form of business, the enterprise needs to investigate some
of the critical components or facts that will be instrumental in enabling the business to start and
thrive. The key elements responsible for enabling a business to succeed
predominantly depend on the nature, scope, and area of specialization the business engages
with. Essentially, there are core components critical in almost every business
to guarantee success, such as location, legal formation, intellectual property, and organizational structure and management. Numerous researchers have identified the above-mentioned administrative structure constructs as vital for enabling business ventures to operate in e-commerce. These form the basis of the administrative structure needed by Tokyo On.
5.1. Location
Location is an important factor to consider when starting a business. Business experts argue that the choice of location influences how the business will grow in the long run. However, being an online-based company, the location does not have to be visible to consumers since most purchases are made online through the website. The chief executive officer selected New York as the headquarters of the company. The offices will be in a warehouse situated in the port of entry where imports will be stored before being distributed to the customers. Since most of the products sold will be sourced from japan, the warehouse will be located at the point of entry for ships docking from Japan. This will enable the business to minimize the cost of distributing goods to inland offices or warehouses.
5.2. Legal Formation
There is a need for a robust legal formation. It is common for startups to experience legal challenges when becoming operational. This is because most business owners typically do not possess the legal expertise to navigate the various laws, policies and regulations that can negatively impact their business. It is vital for a business commencing operations in a highly competitive environment like online retail to partner with legal firms or advisory boards. Such a move enables a firm like Tokyo On to have important legal expertise in “evading” legal problems. There are several benefits to having a robust legal formation for Tokyo On. First, the legal partners will prepare legal documents such as standard contracts, non-disclosure agreements, and employee agreements, among others, based on the company’s needs. Secondly, the legal advisor can act as an attorney for Tokyo On in case of a legal dispute.
Thirdly, the legal team advises the company’s management teams on the appropriate legal approach when engaging on issues pertaining to taxes both at the federal and state levels. This is important because many startups like Tokyo On end up in legal disputes with tax agencies for failing to comply with existing tax regimes. Lastly, hiring or partnering with a legal firm will enable Tokyo On to apply for the necessary permits and licenses needed by a firm operating as an online retailer.
5.3. Intellectual Property
I ensure that the company and the website have a registered trademark for the logo. Running an online retail business requires the owners to protect any intellectual property, such as the log, image or name of the company, from infringement. There have been numerous cases of logo duplication and infringement by unscrupulous businesses that seek to capitalize on the success of other businesses. Ideally, having intellectual property protects consumers from purchasing fake products online disguised using the company logo. This is important for Tokyo On because most of the products being sold to the country are imported from Asia, where there is a surge of copyright infringements or duplication of logos/ images to deceive customers. This is important for Tokyo On because most of the products being sold to the country are imported from Asia, where there is a surge of copyright infringements or duplication of logos/ images to deceive customers. Therefore, to minimize the infringement of the company’s website and logo. Tokyo On will apply for a trademark to protect the image and logo used by the company. This will ensure that no other businesses will be allowed to use our logo to sell similar or related products once the company becomes operational in the long run.
5.4. Organization
5.4.1. management
The company consists of four core individuals handling distinctive managerial functions. Sunny Du is the chief executive officer and owner of the company. I graduated from NYU with a bachelor’s degree in Integrated Marketing. I have previously worked at Estee Lauder Jo Malone. Working as an employee equipped me with skills, I can utilize to successfully run the company. Hazel Smith has been appointed as the chief marketing officer for Tokyo On. She previously worked as a marketing executive for F&G. It is worth noting that the latter graduated from Cornell University with a degree in Strategic Communication. Hazel Smith’s primary function is to create and execute marketing campaigns that will enable the company to attract the targeted consumer base. As the chief marketing officer, Hazel Smith will collaborate with marketing advisors to communicate Tokio’s brand and image to the consumers.
Kyrie Gao is the chief financial officer of LSE’s Department of Finance.
Kyrie Gao has worked with one of the leading financing firms in the world- KPMG. Thus, Kyrie Gao brings a wealth of financial experience that will enable the company to start and grow. The role of the chief financial officer (CFO) is to track and monitor the usage of Tokyo On finances while analyzing the financial strengths of the company. As the chief financial officer (CFO), Kyrie Gao will partner with a financial advisor and jointly evaluate the best financial practices that Tokyo On can adopt and implement to increase profitability. Charles Lin has been appointed as the Chief Operating Officer responsible for overseeing the company’s day-to-day operations. Charles Lin graduated from the UK University and proceeded to work with Google. The chief operating officer will liaise with other heads of departments to ensure that the company is run efficiently. Since the company is relatively small, the duties and responsibilities of human resources will be performed by Charlet Lin.
5.4.2. Organizational Chart
The organization chart summarizes the management hierarchy of the company.
Chief executive officer, Sunny Du
CFO, Kyrie Gao
Advisory Board
COO Charlet Lin
CMO, Hazel Smith
Chief executive officer, Sunny Du
CFO, Kyrie Gao
Advisory Board
COO Charlet Lin
CMO, Hazel Smith
5.5. Personnel Matrix – Monthly for 3 Years
An employee matrix is a tool used by human resources to assess whether employees are qualified and productive. The tool is based on an annual assessment of the employees based on their competence to be productive. The personnel matrix is quantified into two categories. The first category assesses the capability to perform specific tasks, and the second measures attitude. Below is a summary of the personnel matrix for Tokyo On.
Categories (year 1 to year 3)
Hazel Smith
Charles Lin
Kyrie Gao
Category 1
A qualified strategic communication specialist.
A qualified COO with previous experience at Google.
LSE Finance qualified.
Category 2
Possess the ability to ascertain and meet the needs of the consumers.
She can macro-micro-manage a myriad of activities.
Able to use statistical and modelling tools to budget and project financial outcomes for the company.
5.6. Strategic Partners
Ideally, it is common for online businesses to partner with other stakeholders to guarantee success. Several stakeholders Tokyo On will partner with to ensure the company runs successfully; these include logistic, strategic, corporate and advisory partners. Each partner is strategically selected because of their unique contribution to supporting Tokyo On to achieve its set objectives. Logistic partners are important in enabling Tokyo On to distribute its products to consumers. To ensure that goods are delivered within two days, Tokyo On will rely on the experience of existing logistics companies like FedEx, DHL, UPS, and Doordash to ensure our 2-day delivery. FedEx, DHL, and UPS have a lengthy history of guaranteeing the safety and timely delivery of goods and services across the country. Partnering with such logistic companies ensures that Tokio customers can rely on the company to dispatch goods purchased through our website.
Coherently, strategic partners consist of student association cooperation, like student bodies that oversee the well-being of college and university students. Asian Student Association (ASA) has been identified as among the main student organization bodies that can partner with Tokyo On. Asian Student Association (ASA) is an umbrella body that represents the interest of various Asian group clubs, such as the Chinese Club, Japanese Club, and Korean Club, situated in various colleges and universities across the United States (Wu & Tyson, 2021). Partnering with such institutions enables Tokyo On to gain access to the Asian students who are the core part of the company’s targeted consumers. Additionally, the company can cooperate with schools in main cities with a large student body.
In the age of social media, the company will partner with various ambassadorial groups to assist the company in the market and reach its targeted consumer base. These ambassadors can operate from small pick-up locations where customers can collect purchased products physically. Advisory Partner consists of advisors from top companies who can provide their expertise in nurturing the business as it grows. It is important to partner with advisory groups that specialize in managing online-based start-ups like Tokyo On to gain business insight on how to manage and grow the business in a competitive environment.
5.7. Advisory Board
The advisory board comprises individuals with prior knowledge of managing or running a successful online retail company. The selection of the advisory board is based on the company’s strategic needs. Notably, Tokyo On requires advisors on finance, IT infrastructure, social media marketing, business development, and legal experts. The financial advisors’ guide on matters pertaining to how the company should allocate financial resources in the company. The financial advisor equips Tokyo On managers with financial skills to navigate existing financial regulations on taxation and expenses that handle many start-ups. Coherently, advisors on IT infrastructure provide the technical skills needed to manage the Tokyo On website. Furthermore, the IT advisor assists in providing technical knowledge on how to best protect the website from black hackers seeking to steal consumers’ information. A social media marketing advisor is an individual with practical knowledge to assist Tokyo On management with skills to use social media platforms to reach consumers.
Social media marketing (SMM) is a marketing strategy that employs the use of social
networks and social media to market Tokyo’s products and services to consumers. Coherently, Social media marketing will enable Tokyo On to engage with the ninety thousand potential customers through an online website platform. This marketing strategy is suitable for our new business venture because it will enable Tokyo On to conduct marketing with large costs while reaching a wide or specific targeted group of customers.
Furthermore, in the United States, most young Asians in colleges and universities increasingly rely on social media platforms such as Facebook, Twitter, and Instagram to look or search for product reviews regarding a given e-commerce retailer. Thus, by having a social media marketing advisor, Tokyo On will be able to reach such potential customers who are online in a cost-effective manner and invite them to come and purchase products on the company’s website. A recent study on social media marketing strategy conducted by PewResearch concluded that a significant relationship exists between Social media marketing strategy and business growth through increasing consumer base. Thus, adopting a social media marketing strategy will be instrumental in enabling Tokyo On to market its service on online platforms cost-effectively.
Therefore, sufficient guidance on ” attracting” customers to the Tokyo On website is a priority. Lastly, a legal advisor will be part of the advisory board. Their role is to provide legal counsel on the “right’ or legal directions the company needs to undertake to ensure that current laws are not violated. Furthermore, providing legal guidance on how Tokyo On should handle issues about customers’ concerns and/or lawsuits that may arise in the future.
6. MARKET RESEARCH
Ideally, for a business to overcome existing challenges in the business
environment and secure a niche in the marketplaces, it requires adopting a strategic
planning process. By definition, strategic planning is the direction a company will take in order
to fulfil its objective in the long run. A study (Camilleri, 2018) outlines the key
fundamental strategic planning processes necessary for any organization seeking to grow and
sustain market longevity. The key functional strategic planning processes include finance,
business development, human resources, and marketing. For the case of this study, the marketing strategy will be explored. This is primarily because marketing will form part of the critical component that will enable Tokyo On to thrive and sustain customers. Marketing is a key driver of success for a majority of businesses in the online retail sector. Therefore, it will be important to study the most appropriate marketing strategy which Tokyo On can use to market itself to potential customers on both offline and online platforms.
A marketing strategy is a strategic plan that allows a business to create profits, increase
market competitiveness, and facilitate a corporate advantage for the business through
establishing direct contact with the market. Moreover, marketing strategy allows a
firm, such as Tokyo On, to connect with the consumer at a personalized level by designing and
developing listing web services that showcase the various Asian-themed goods that suit the needs of Asian consumers. In doing so, Tokyo On will be able to develop consumer loyalty, which increases the profitability and productivity of the business while minimizing competition from other firms engaging in a similar operation in the online retail market, such as Weee buy. In essence, marketing strategy consists of an integrated combination of choices regarding how Tokyo On- a website targeting young Asian community members- can capture and create value for an extended period. This means adopting effective evaluations that enable Tokyo On to create and capture value throughout its business life cycle by examining internal and external factors affecting its functionality. PESTEL is among notable evaluation tools used in strategic planning for businesses seeking to enter new or existing markets.
6.1. Market Research & Analysis (PESTLE)
PESTEL is an assessment tool used to evaluate the microenvironment factors that may
significantly influence the organisation’s performance. Ideally, PESTEL analysis is
typically undertaken to identify key issues within the co
mpany’s control and have elevated levels of impact on the organisation’s performance. PESTEL
consist of six constructs that include political, economic, sociological, technological, legal and
environmental factors (Pan, Chen & Zhan, 2019).
Political factors
These factors determine government influence through the existing
laws, policies, and legal frameworks. Additionally, when examining political factors, the
researcher assesses the political stability, facial and taxation policies. The government’s decisions
concerning the political factors listed above can significantly impact
the business environment. At the moment is relatively high political tensions in the united states because of the different ideologies in the “left” and “right” wings. Tokyo On owner is minoring about the political situation, especially in New York, to observe how it will affect the important retail business.
Economic factors.
These are determinate factors that influence the performance of an economy, which
, in turn, affects the business environment. Common economic factors include interest rates, inflations, economic growth, foreign exchange rates, and foreign direct investment. Assessment of the economic factors enables a business to examine the performance of the economy affects the overall productivity and success of a firm. GDP per capita has been growing steadily over the last few years. The stable inflation exchange rate keeps growing from USD to Yuan.
Social factors
These comprise social components, which affect the business directly or indirectly. Examples of social factors include population analytics, cultural trends, and demographic. Notably, social factors tend to affect consumer behaviour in the long run. In recent years there has been a cultural shift in the number of international Asian students moving to the united states for tertiary education. Most bring their cultures and way of life. However, upon arrival to America, many cannot fit into the American lifestyle, especially regarding food, beverages, and cultural values. Tokyo On is being established to meet the needs of Asian students or those who have migrated to the United States.
More so, the evolution of students studying abroad increases their purchasing power. Since the Asian community tends to live close, Tokyo On management needs to evaluate areas with a large population of Asian college and university students. This will enable the company to target its consumer base with ease. Coherently, the emergence of COVID makes it difficult for Asian students not to go back to their own countries. With the need for social distancing, most are using online platforms such as websites to purchase the required goods and services.
Technological factor
The construct examines technological innovation and its impact on the internal and
external environment of the business. Technological factors include research and development, automation, and technological policies and frameworks. Online payment is booming for people who want to shop online, estimated at 65% of the American population. The Young, the target market of Tokyo On, forms a large population of online shoppers. The company has invested in state-of-the-art retail technology that will enable the company to provide efficient services to online shoppers while reducing the risks of cyber threats. Tokyo On has partnered with a cyber security firm to prevent advanced malware from attacking the company’s system to guarantee the protection of customers’ confidential information.
Legal factors
Business organizations must have full knowledge of the existing
laws that govern their operations. Moreover, companies must be updated on the
changes in legislation and how they may directly or indirectly affect business operations. The online retail sector is highly regulated, which can overwhelm startups. Therefore, to avoid “collision” with the existing regulatory framework, it is vital for Tokyo On CEO to hire or partner with legal professionals experienced in the legal working dynamics of eCommerce businesses.
Environmental factors
It involves analysis and assessment of changes in weather, climate, environment offset,
and geographical location and the corresponding impact on the business environment. In recent years there has been an increase in the need to conserve the environment because of the increasing negative implications of climate change. Businesses are encouraged to adopt policies and economic resources that minimize environmental or climactic degradation. Considering the environmental impact, Tokyo On management has partnered with logistics companies that use zero-emission or electric trucks for delivery services. Incorporating such greening practices ensures that Tokyo On’s economic activities do not expedite the climate change process.
Overall, adopting PESTEL as an assessment tool is important since it necessitates the
understanding of the wider business environment. Coherently, the PESTEL assessment tool enables business executives to analyze the impact of external factors, which are not within the control of the business, and develop long-term strategic approaches to counter any merging or anticipated threats. There is an increasing need for businesses to adopt sustainability strategies that ensure environmental conservation and reservation. Tokyo On aims to integrate sustainability programs like partnering with companies that support green initiatives to ensure commitment to preserving the environment.
6.1.1. Macro and Microeconomics
Microeconomics examines how the decisions of individuals and businesses impact the business environment. In the online retail sector, individual choices play an important role in determining the level of goods sold by a business. If consumers “refuse” to purchase a given product, its price and supply tend to reduce significantly, which increases the amount of dead stock for a company. Tokyo On management needs to ensure that they understand the key factors that impact the decisions of its customers before importing products from japan.
In contrast, macroeconomic factors examine how factors beyond the control of a business’s influence interact in the market. There are numerous macro factors that can hinder the performance of Tokyo On.
For example, the continuing war in Ukraine has increased the country’s energy costs. Due to the increased cost of production, businesses have been forced to increase the cost of goods and services. The Tokio management must understand how they can leverage the conflict in Ukraine to sell products at lower prices, as envisioned in the mission statement. Furthermore, the military and economic tension in the south Asian region between China and Taiwan can influence the functionality of Tokyo On. If a conflict erupts in the south China Sea, it can be difficult for Tokyo On to import goods from japan or other surrounding countries.
6.1.2. Industry size and structure
In recent years the e-commerce sector has gained tremendous growth. This is attributed to the rise of globally recognized e-commerce firms like Amazon and eBay, which have revolutionized how consumers relate and interact with the retail market. Revenue from retail e-commerce in the United States was estimated at roughly 768 billion U.S. dollars in 2021. The industry is expected to double its revenues to 1.4 billion by 2025. There are estimated to be more than one million retailers operating in the United States. However, most retailers have noted that they have concentrated their businesses on online platforms. This is because of the increased dominance of e-commerce giants like Amazon, Walmart and eBay.
Nevertheless, there is “room” for small businesses like Tokyo On that seek to provide specialized retail services to consumers (young Asian communities). It is worth noting that online retailers have structured themselves into various categories based on specialized services offered, such as general merchants, booksellers, household appliances, and medical and health services, among others. However, general merchants are the largest players in the sector because they cater to a large population of consumers in the United States and international market.
6.1.3. Income and spending analysis
Much of the expenditure is geared towards purchasing products, acquiring and maintaining technology and human resource costs. Since the company is partnering with other stakeholders like advisors and logistics companies. The overall cost of maintaining the company is minimal compared to a traditional retail store. Since much of the purchasing activities occur online, most of the operational costs will be paying employees and maintaining company servers.
6.1.4. Trends
The U.S online retail market experienced steady growth over the last few years. The growth is attributed to the increasing use of online websites to purchase. At the onset of the pandemic in 2020, most retail consumers used online platforms like websites to make frequent purchases. This increased the market resilience of the online retail sector. Recent data show that the online retail market grew by forty-three percent in 2020 due to increased frequency and use by consumers. Such trends are expected to increase as more customers rely on online shopping for daily needs. Among the most purchased products made by the young population include consumables like food, lifestyle goods, fashion attires, gadgets, and electrical applications. According to Forbes, Asian reading in the United States has the highest purchasing power, estimated at $1.2 trillion as of 2021. The figure is expected to reach $1.6 trillion by 2021. Tokyo On is expecting to “tap” into the increasing purchasing power demonstrated by the Asian community residing in the United States by providing “Asian-themed” products and services.
6.2. Estimated Size of the Market (By Location in US $)
The size of the online retail market is estimated to be seventy-eight billion dollars. The market is expected to grow in the coming years. It is worth noting that few online retailers cater to the consumer needs of Asians residing in the United States. Thus, Tokyo On is a huge opportunity to establish itself as a competitor in a growing market, both in terms of the rising Asian community and market expansion.
6.3. Competition
As mentioned above, more than one million retailers are in the United States. This means that the market is highly competitive. However, online retail spaces are relatively less competitive. Nevertheless, key players in the online market have been identified as key competitors of Tokyo On, including YAMIBuy, Weee Buy, and Amazon. YAMIBuyis is an online retailer that provides goods and services to the Asian community. The company specializes in providing Asian cuisine and beverages to Asians online. We Buy the largest online retail store for Latin and Asian communities. The company provides unique groceries imported from various Asian countries to serve the needs of Asian Americans looking for traditional food. Amazon is the largest online e-commerce platform in North America. The company provides a wide portfolio of products needed by consumers. It does not offer specialized goods but offers items that meet the needs of Asian communities across America.
6.3.1. Target Market
The company targets young Asian communities living in or within colleges and universities. This is because the owner of Tokyo On observed that the existing online retailers often neglect the needs of the young population. Whom majority offered generic products like groceries, food, and clothes. No dedicated retailers cater to the needs of Asian college and university students, especially those who have migrated to the U.S for higher education. Thus, addressing the needs of the identified target market will enable Tokyo On to grow and become a household name among young Asian communities.
6.3.2. Market Segmentation (identify customer segments)
Market segmentation is an essential tool for any business that seeks to enter a competitive market like e-commerce. The company is not looking to serve the interest of all consumers like Amazon Corporation but segment the market into a distinctive group of customers. The company is interested in serving the consumer needs of the Asian community living in the United States. Specifically college and university students and those in white-collar jobs. The segmentation is based on the opportunity identified by the business owner (who is Asian).
6.3.3. Demographics and Psychographics
The demographic profile of the target consumer market consists of individuals between the ages of twenty-two to thirty-two Asian Students or white-collar workers. The median average income level is between forty to sixty thousand dollars. Conducting a Psychographics analysis provides the owner of Tokyo On with valuable information regarding the marketing dynamic of Asian American communities across the United States. Today, eighty per cent of the Asians residing in the United States were born outside America, which implies that most associate with the societal and cultural values of their native communities and countries. Their growing population has made the Asian community among the fastest-growing consumer base in America.
The increasing number of foreign Asians, especially students and expatriates, is expected to rise by more than two hundred per cent by 2050. Thus, makes the community a target for most online businesses because more than ninety per cent of Asian households have internet access. Furthermore, Asians, considered the wealthiest minority community in the United States, have higher spending power. Thus, focusing on catering to their intrinsic and unique consumer needs can enable Tokyo On to grow in the future. The Asian community values family, religion, piety, and interdependence; hence selling products that embody the value of Asians can enable the business to attract business from the community.
6.3.4. Customer and needs assessment
a) Primary Research: concept, message, advertising testing, surveys, interviews.
Business experts tend to emphasize the importance of conducting a research study or survey in the market before venturing. There are several research methods that can be used to facilitate the assessment of customer needs. The common approach involves using both primary and secondary data/ information to enable the owners to make informed decisions regarding the functionality and growth of the business. Primary data consist of data acquired directly from consumers. Tokyo On will use different primary data types, such as questionnaires and online interviews, to do market research. The use of primary data is important because it enables Tokyo On owners and managers to have a “clear” picture of what customers expect or want.
Questionnaires provide open-ended questions that allow the customer to provide simple yet straightforward responses on what they want Tokyo On to do when serving their needs and wants. The online interviews allow the managers and owners of Tokyo On to interact with potential customers. Such interactions are important because they enable managers to ask “deeper” questions while allowing customers to give elaborate responses on what they want. See appendix 1 for a sampled questionnaire and interview questions. Besides sourcing information from customers directly, other sources like publications, report data, and journals can be used to source consumer information/ data.
b) Secondary Data: public data, institutions, agencies, etc.
Secondary data is acquired from secondary data source information; these are books, reports publications prepared by experts on consumer behaviours and needs. Government reports on the status of consumer purchases can be useful sources of secondary information. Consumer report data from reputed institutions like Pew Research, McKinsey & Company and Deloitte, among others, can provide ready-to-use data in the decision-making process (Martins, da Cunha & Serra, 2018). Furthermore, information on social media can also be useful in analyzing the needs of the targeted consumer base. Once the primary and secondary data have been collected, Tokyo On managers/ owners can use statistical tools to analyze the data in numerical form and present it in graphs for easy interpretation.
For the quantitative data (data collected directly from the customers), the SPSS (Statistical Package for the Social Sciences) will be used to facilitate the analysis. The SPSS (Statistical Package for the Social Sciences) is highly recommended when analyzing the cause-and-effect relationship between independent (customer needs) and dependent variables (customer satisfaction) (Şahin & Aybek, 2019). The information collected through interviews will be classified into themes dictated by the analysis rule used in qualitative approaches. Arranging the common themes will enable the owners of Tokyo On to analyze and understand the common “things’ ‘ which consumers need or expect from the company once it is operational.
6.4. Competitors – Competitor Analysis (Analysis & Strategy)
6.4.1. Direct Competitor 1 to n (company, product, pictures, market share, operations, target market)
Amazon Corporation is the main competitor of Tokyo On. The company provides a wide variety of goods and services that target the news of the Asian American community. Interestingly, Amazon has more than twenty million products available to its customer base. A majority are young, between the ages of twenty to forty years, comprising young professionals, couples and families in low and middle-income status. As shown in the image below, Amazon has a market share of almost forty percent in the U.S online retail market. The company has a large product and service portfolio to cater to its diverse consumer base that covers textile, electronic, household, industrial products, chemicals, electronics, devices, food and beverages, and clothing, among others.
As shown in the image below, Amazon has a market share of almost forty percent in the U.S online retail market. The company has a large product and service portfolio to cater to its diverse consumer base that covers textile, electronic, household, industrial products, chemicals, electronics, devices, food and beverages, and clothing, among others. The company’s operations are characterized by a vast and complex network of supply and logistics distribution channels. Products are stored and distributed from amazon fulfilment centres located in various parts of the country. A network of small and large distribution trucks is used to ensure the delivery of goods ordered by consumers within a day or two. Prime customers can have their products shipped anywhere in the United States in less than twenty-four hours. Despite its vast operations, Amazon does not provide specialized goods or services that capture the intrinsic and cultural needs of Asian consumers, which Tokyo On seeks to capitalize on.
6.4.2. Indirect Competitor 1 to n (company, product, pictures, market share, operations, target market)
Weee Buy can be viewed as an indirect competitor. This is because the company only specializes in specific goods such as Asian fruit, vegetables, and meat needed by the Asian community. We Buy product portfolio hinders the firm from being a dominant competitor to Tokyo On. The company was founded by Larry Liu, an immigrant from China decades ago. The company’s mission was to provide cooking items like vegetables and meat for Asians residing in the United state. The company has become a household name among the Asian and Hispanic communities interested in Chinese cuisine. The image below summarizes some of the main groceries sold by the e-grocer online.
Unlike established and large online retailers, Weee Buy has a relatively small market share (less than one per cent). The concentration on serving the Asian community explains the low market share because Asians are not the majority among minority communities in the United States.
6.5. Competitors Matrix – products comparison (table)
A competitive matrix is used by a business to compare itself to existing competitors. Using the competitive matrix, it will be possible to observe the competitive advantage of Tokyo On over its competitors and key areas that require improvement. The matrix is based on weights, the main elements that enable a firm to be competitive in the online retail market, like customer focus, Asian focus, low prices, and rapid delivery. These factors are weighted using numerical values: one is below average, two is average, three is above average, and four is exceptional. The table below summarizes the competition matrix for the two main competitors of Tokyo On.
From the table below, it can be observed that compared to Amazon Corporation, Tokyo On need to improve its ability to make rapid delivery. The estimated delivery time is forty-eight hours, below Amazon’s twenty-four timeline. Coherently, the matrix indicates that Tokyo On has a competitive advantage over its main competitor. Amazon does not offer specialized goods and services tailored to the needs of the young Asian communities being targeted by Tokyo On. Similarly, Tokio is consumer focused as it aims to provide a wide variety of goods that meet the needs of Asians, unlike Weebly, which offers a limited number of products on its website.
Factors
Tokyo On
Amazon (competitor 1)
We Buy (competitor 2)
Customer focus
4
4
3
Asian focused
4
1
4
Low prices
3
3
3
Rapid delivery
2
4
2
7. Branding
A brand is what the consumer first experiences when interacting with goods or services sold by a business. It provides visual clues on the type and quality of the product offered. Thus, Tokyo On needs to have a unique brand that captivates and attracts the targeted consumers.
7.1. Brand your Business Plan
The company’s owner will consult with branding and image consultants to develop a unique branding image that encapsulates the vision and mission of the business. The brand designed for Tokyo On will act as a distinguishing marker between our company and the competition.
8. Sales Forecast
The sales focus is based on the four key assumptions. The first assumption is that: We have divided our spending based on our per-customer transaction. Each product on our website is around $10-$20. Customers need to buy over two products to get delivery-free services. The second assumption is taking note of the industrial conversion rate, estimated to be around three per cent. We calculated the number of customers we expected to receive from our total of ninety-one thousand customers. We then used the industrial growth rate of 13.9 yearly, which is common for businesses operating in the online retail sector. We expect that on an average week, the thirty-five hundred customers make a purchase equivalent to 20$ each, which translates to $70000 per week in sales. The calculation is based on the formula- The total number of customers = the total number of units sold X the Quantity of the product. The sole focus is based on the assumption that consumers will make purchases from the company’s website each week. With $70000 per week in sales translates to $240000 in a month and $2,880,000 in a year. The profit margin for online retailers is estimated to be between twenty to thirty per cent of the total sale.
Reference
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Martins, F. S., da Cunha, J. A. C., & Serra, F. A. R. (2018). Secondary data in research–uses and opportunities. PODIUM sport, leisure and tourism review, 7(3).
Şahin, M., & Aybek, E. (2019). Jamovi: an easy to use statistical software for the social scientists. International Journal of Assessment Tools in Education, 6(4), 670-692.
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APPENDIX – TABLES – FIGURES
Sample questionnaire statement
Which payment do you prepare to use.”
Payment Gateways
USSD
Bank transfer
How often do you shop online?
Once a week
Twice a week
Thrice a week
More than thrice a week
What type of goods do you purchase online mostly
Lifestyle goods
Food and beverage
fashion wears
Electronics and other gadgets
Sample interview Questions
Which Asian countries import most of the goods you purchase online?
Do you have a reliable source of Asian goods?
What has been your previous experience shopping for Asian goods while in America?
How can such an experience be improved?