Expanding and widening customized design-based consumer goods access

Periodic Reporting for period 1 - EXPANDCUSTOM (Expanding and widening customized design-based consumer goods access)

Okres sprawozdawczy: 2016-06-01 do 2016-10-31

The objective of the project EXPANDCUSTOM is to develop and commercialize an internet shopping solution applicable to all kind of customizable consumer goods (furniture, clothing, glasses, bags, fashion complements, etc.) featuring the very first 3-D Customization Shopping Engine. EXPANDCUSTOM targets small to medium size (SME) manufacturers and traders of consumer goods, allowing them to deploy their “virtual shop” within few minutes, offering their clients full control over their products´ design (3-D visualization, virtual testing and fitting, comparison), ordering (e-commerce tool connected to Amazon, PayPal, etc.) and delivery (from configurator to ERP system), using computers or any portable device.

The value proposition of EXPANDCUSTOM is increasing the sales of our customers (by 35%), ensuring a 5% conversion rate , and less than 50% shopping cart abandonment . Another objective is to help manufacturers and traders to experience increased site traffic by 20% using EXPANDCUSTOM within one year which will reflect improving client satisfaction. EXPANDCUSTOM will be commercialized by Q3 2018, and has the potential to boost our sales to reach €6M with a ROI of 2.02 by Q4 2021.

EXPANDCUSTOM represents a two-sided mirror to the final consumer and retailer/manufacturer:
• The consumer can easily configure his/her final product to his/her full satisfaction, either in a stand-alone e-store, or thanks to the store integration in a CSE; in both cases the potential buyers can obtain a customized version in a specialized virtual location supported by EXPANDCUSTOM capabilities.
• For the retailer/manufacturer: the same portal (website) will connect its background to a set of tools that allows an easy and fast deployment of a shopping site integrated with existing ERP/CRM tools and with unassisted feed of products, including functionalities specific of customizable products: co-design, virtual model creation/conversion, virtual material creation and management, virtual tester, real time rendering, fitting tool, and automatic e-shop deploy tool as well as connection to ERP system for production. Each manufacturer will have his own shopping site, with his own personalized versions of the tools, being able to be accessed directly or through the collaborating CSE traffic routing capabilities.

EXPANDCUSTOM focuses on Internet, the global market, comprising countries all over the world. In this global context, Europe represents a major market:
EXPANDCUSTOM will initially target the USA and five Western European countries (Spain, UK, Italy, Germany and France), accounting for 69,5% of total e-commerce sales in Europe , providing a strategic advantage to EU consumer goods retailers/ manufacturers, allowing them to easily and competitively market their products in Internet.
One of the issues to be considered along this study is the best way of adapting EXPANDCUSTOM to regional preferences, such as the choice of language for the interface, currencies, systems of measurement, etc.

Moreover, EXPANDCUSTOM clearly serves the European Initiative in Electronic Commerce which aims to encourage the vigorous growth of electronic commerce in Europe and aims at establishing a common European position to achieve global consensus through international negotiations.

In order to confirm the feasibility of our project, we have carried out a 5-month study focusing our effort on three main areas: technical, operational and economic. The Technical viability plan includes an in-depth analysis of the functionality of the major components of the Customization Shopping Engine and ensures their interoperability, scalability, connection with 3D scanning systems and compatibility of the UI with major mobile and desktop operating systems. This plan also includes a risk analysis for all technical activities indicating the mitigation and contingency measures to be prepared for Phase 2 execution. In addition, we have a conducted an IPR survey to analyse potential conflicts of EXPANDCUSTOM with existing products and the opportunity to protect and patent our investment. In the Commercialization plan, we have carried out an in-depth analysis of our market entry strategy (segmentation, timelines, marketing actions, resources, etc.) into the European market. The Financial plan is based on the technical viability report and the commercial plan. We have defined the license price, sales forecast, and estimated revenues from our product line and services, and a Return of Investment analysis has also been included.

Market and Strategy. Along the value chain there are several opportunities for applying EXPANDCUSTOM capabilities. Potential customer profiles are companies that work without stock and E-commerce web developers. Footwear is still the dominant sector by number of customers, and the marketing efforts are targeting other segments beyond quality shoes, towards what has been described as personalized consumer goods, specifically those design-driven. The results of our market analysis led to the conclusion that our initial expansion should take place in Western European countries (Germany, France, Italy, and UK) that have worldwide recognition for their commitment to innovation, especially in fashion design. By studying the user behaviour and feedback we have concluded that to maintain our current level of user satisfaction, we should fully automate the e-store creation process and, at the same time, strengthen our support engineering team in order to secure our operational capabilities and increase usability.

Partners. Major partners for ALU are the very same manufacturers and traders of customizable consumer goods but also 3D fixed and portable scanning systems sellers (Volumental and IBV) and online secure payment engines (PayPal or Amazon).

Financing. Following a successful Phase 1 submission for the SME Instrument under the European Commission’s Horizon 2020 program, our Feasibility Study was funded. The activities carried out during the past 5 months – technical, commercial and financial – and their results as presented in this report have matured our vision of EXPANDCUSTOM, and consolidated it as a strong and innovative project, thus a perfect candidate for a Phase 2 submission for the SME Instrument, requesting €1.5 million for the whole duration of proposal.

Main competitors to EXPANDCUSTOM will be generic CSEs and e-Shop creators. Rather than compete with existing CSE, EXPANDCUSTOM will break into the non-exploited area of commercialization of customizable consumer goods, searching for new markets rather than competing with well-established solutions. Our business plan focus on attracting trendy fashion stores and to earn their loyalty proving the usefulness of EXPANDCUSTOM to gain and retain customers.

According to Forrester Research , 30% of the overall market population did in fact choose customization over in-store shopping, but are not satisfied with the current shopping interfaces. These consist mainly of generic Comparison Search Engines (CSE) and e-shop creators showing 2D photos of the products with little possibilities for interaction. The ability of customers of co-creating the products of their choice is quite limited and restricted to defined product lines with a few pre-set options to select from.
Manufacturers of customizable goods are avoiding the investment in such solutions as they (1) require a considerable amount of set-up time and resources –also in terms of educated personnel and specialists, (2) are too expensive for small to medium size manufacturers of customizable goods, and (3) are designed for specific types of goods, and thus require a lot of effort and time to be customized for other types. One notable absence is the lack of a specific tools for CSEs willing to add customizable design-based consumer goods to their offerings.

EXPANDCUSTOM Advantages

ALU proposes a unique advanced solution, offering state-of-the-art, easy-to-use set of tools allowing Internet buyers to fully co-create their products. Supported by a SaaS (software as a service) business model, EXPANDCUSTOM will be appealing to manufacturers of consumer goods due to its affordability and minimal technical requirements.
EXPANDCUSTOM is the perfect solution due to its unmatched user friendliness, scalability, capability and flexibility. Unlike current alternatives, a first version of EXPANDCUSTOM can be installed and placed online within 20 minutes on our client´s website. It is ahead of any competition by offering 3-D customization of the goods allowing the co-creation of the product rather than simply selecting between existing models. Through its advanced control panel, it allows our client companies to adapt to rapid changes in trends and fashions while meeting the demands and expectations of their clients seeking to contribute to the design and production of their final goods.

Technical and Commercial Objectives

According to the technical objectives for the CT_CUSTOM project stated in Phase 1 we should:

Technical Objectives
- Optimize the functionality of the major components of the Customization and Comparison Shopping Engine and ensure their flawless interoperability.
- Scale up the EXPANDCUSTOM prototype to incorporate unlimited number of manufacturers and traders.
- Provide existing or prospective CSE with a plugin option to add personalized goods to their platform to enhance their attractiveness to the online shoppers.
- Connect with 3D scanning systems sellers to close the circle from data acquisition to sales and ultimately manufacturing (like Volumental, Swedish winner of a phase 2 project, or IBV Instituto de Biomécanica de València, which has developed mobile technology for 3D body part scanning).
- Ensure compatibility of the UI with major smartphone systems (Android and iOS) as well as the principal desktop environments (Windows, LINUX and MAC).

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Periodic Reporting for period 1 - EXPANDCUSTOM (Expanding and widening customized design-based consumer goods access)

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