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Business Model Innovation at Wild-fang Case Solution & Answer

Business Model Innovation at Wild-fang Case Solution  

Introduction

Emma Mcilroy, the CEO and her team weighted the advantages of the two distinctive business models as they prepared for the funding pitch to scale Wild-fang – one of the leading and valuable menswear-inspired fashion brand, which was built around the bad ass tomboy image. It was founded in 2012 by Julia Parsley, Taralyn Thuot and Emma Mcilroy who were previously employed at Nike.By 2015, the company was generating more than 2 million dollars on annual basis, and was growing at the rate of 250 percent year-over-year. The funding pitch tends to hinge on the process and resource gaps.The company would be required to address these issues in its business model coupled with the results of the CLV analysis.

One of the biggest concerns of the company is how to scale the business, regarding which it was presented with two approaches, including: brick and clicks approach private label retail strategy and multi-sided platform which has the potential to link products/ services of other brands to the Wild-fang community. Hence, the decision became a considerable challenge for the company as the founders pondered on whether to take the company in the different direction or not. (Mathwick, 2015).

 

Customer segments:

Women segment who presents as tomboy

Fashion enthusiasts who prefer to buy menswear aesthetics

Idealists who value female empowerment and independence

 

Customer relationship:

Community

Product-based

Value preposition:

Menswear aesthetic that fits women

“Not be scared” and

A part of the community

Key activities:

Research on customer insights

Follow market trends

Management of online and retail operations

 

Key partners:

Fashion bloggers, TV actress, fashion aspirers, clothing designers,

Fashion influencers, celebrities etc.

 

Business Model Canvas for Wild-fang’s current operation

Summary table comparing the two business model designs under consideration.

  Brick and clicks approach private label retail strategy Multisided platform
Introduction

 

It is the business in which the company operates both a physical store as well as anonline store, thus integrating two into one retail strategy The multisided platformbasically creates value primarily by enabling direct connections between two or more participant groups of customer group.
Significance Combining offline and online retail efforts has the power to amplify the company’s sales and reach.

 

It also provides ideal experience to customer and satisfies a wider range of customers, which results in greater financial outcomes.

It enables the value creation through facilitating the transactions.

It allows the company to achieve network effects.

 

Multisided platform appears to be a powerful business model in the digital economy due to their adaptability, ability to handle complexity, value capture and rapid-scale up.

 

It allows the company to achieve high financial valuation and remarkable growth.

 

The viability of this platform is that it leverages core competencies in the brand building, community engagement, and content creation.

Strategies/ tactics Wildfang would expand private label either via collaborating with current clothing labels or with in-house designers.

 

Currently, the company is offering only one type of style, hence making the company unique.

 

The company has well-defined customers, including: self-confidence, independent and who have roles models and shared-attitudes.

 

Wildfang would promote in-house brands in B&M store and when the word of mouth would gain momentum, the company would go for Wild-fang exclusives and web-based advertisement.

This model creates value by bringing two or more interdependent groups together who might operate as user vs paying customers (YouTube, Google), buyers vs. sellers (eBay) and creators vs. supporters (Kickstarter).

 

In order to improve the customer’ engagement, a system was created to allow for product reviews and users’ feedbacks, which was used to improve the quality of the assortment mix and to reduce the burden of merchandise duration.

 

Under the multisided model, the company outposts as high-profile billboards in order to generate traffic to its online business. In a consequence, the company would open limited number of outposts in key markets.

 

Early planning of the model is based on the assumption that 20 percent of the assortment mix would shift towards affiliated merchants, whereas; the remainder would comprise of private label brands and third-party.

Estimate a blended CLV for a simulated portfolio of 10,000 shoppers.

The customer lifetime value is the expected amount of money that the customers spend in the business during their lifetime. The blended customer lifetime value is calculated for the simulated portfolio of 10000 shoppers. On the basis of the information provided in the case, there are various types of Wild-fang’s customers, which include: core loyalists, fashion-engaged walk-in traffic, fashion-engaged online shoppers and Wild-fang’s exclusives. Out of 10000 shoppers, 4000 shoppers are core loyalists, representing 40 percent of the current portfolio, 3000 shoppers are fashion-engaged walk-in traffic, representing 30 percent of the current portfolio, 1500 shoppers are fashion-engaged online shoppers, representing 15 percent of the current portfolio and 1500 shoppers are Wild-fang’s exclusives, representing 15 percent of the current portfolio. The customer lifetime value is calculated for each type of shoppers, with the use of the formula provided below:

CVL = Average lifetime * average monthly spend * gross margin

The portfolio of core loyalists is based on 4000 simulations ran with the use of the RAND BETWEEN formula on excel, for the elements of the CLV formula. For each type of shoppers, the gross margin is assumed to be the minimum and maximum value of the gross margin, i.e. 45% and 56.9%; whereas, the minimum lifetime is assumed to be 0 and the maximum lifetime is calculated by dividing 1 by churn rate.Whereas, the churn rate is calculated by deducting the retention rate from 1. Additionally, the minimum value of average monthly expenditure of core loyalists is $68 and the maximum value is calculated through increasing $68 by 40% (the 40 percent is calculated based on information provided on Wild-fang’s exclusives who spend $400 in single visit and more than $1000/ month, representing 40% spending on monthly basis). The average customer lifetime value of core loyalists is $405.1173.

The portfolio of fashion-engaged walk in traffic is based on 3000 simulations, ran with the use of the RAND-BETWEEN formula on excel, for the elements of the CLV formula. For each type of shopper, the gross margin is assumed to be the minimum and maximum value of the gross margin, i.e. 45% and 56.9%.Whereas, the minimum lifetime is assumed to be 0 and the maximum lifetime is calculated by dividing 1 by churn rate of 75%. Additionally, the minimum value of average monthly expenditure of core loyalists is $96 and the maximum value is calculated by increasing $96 by 40%. (the 40 percent is calculated based on information provided on Wild-fang’s exclusive who spends $400 in single visit and more than $1000/ month, representing 40% spending on monthly basis).  The average customer lifetime value of fashion-engaged walk in traffic is $56.28………………..

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