Posted: February 26th, 2023

Supply Chain Management #3

Due by 1/20/2023 Monday

Financing of an E-Commerce Business & Lead Time Schedule

Part 1 – Financing

·

Selected Financing Method-Asset-Based Financing

Our company MASC, which deals in men’s skincare, cosmetics, and other grooming products, is a renowned unique brand recently launched in Los Angeles, California. I believe asset-based financing is the best option for this company as it is a new startup with no perfect credit score for applying for conventional bank loans. Asset-based financing is a practical option for small business startups with weak credit as a security for applying for a loan. This financing method allows using the company’s assets, such as accounts receivable and inventory, as collateral to obtain working capital or term loans from banks. In the case of MASC, it has a well-established asset, good potential for growth, and a positive response from its target market ever since its launch. Therefore, this financing is a suitable option for the company.

Moreover, this financing method allows the company to effectively manage its cash flow and fulfill its goals for growth and development. This financing method offers the most flexibility and provides a loan evaluating the company’s asset value and trading history; therefore, the company with less established credits can also get this loan. It will be a great way to capitalize on the company’s current assets while also allowing it to invest in the future growth and development of new products, just like the latest product of a 12-hour long-lasting sunscreen foundation for Men.

·
What factor or factors influenced your decision?

Several factors were evaluated when deciding which financing method was best for our company, some of the major factors are listed below:

1. The company wanted a loan that would not require them to have perfect credit; asset-based financing is one of the few options that allow companies with less than pristine credit to access capital.

2. The company wanted a loan without extensive paperwork or a drawn-out approval process; again, asset-based financing fits the bill perfectly.

3. The company wanted a loan that gave them access to quick capital to quickly get their products off the ground; asset-based financing provides rapid access to funds compared to other traditional forms of lending.

In conclusion, asset-based finance provides many advantages for companies needing rapid funding access that do not have perfect credit but have established asset and trading history. This method will provide the company with enough working capital and resources to launch its 12-Hour Foundation product online and in brick-and-mortar stores around the country (Buldeo Rai et al., 2021). With this method, the company can leverage existing assets already held by the company while also investing in potential future growth opportunities associated with introducing a new product into an established market.

Part 2 – Lead Time Schedule

Customer Lead Time

1. Receive customer orders and issue order confirmation – This step in the Customer Lead Time process involves receiving the customer’s order and verifying that all required information is provided before issuing a confirmation of the order. Depending on the size of the order and any additional requirements, this step can take between one to two days to complete.

2. Process payment – Once an order has been confirmed, payment must be processed to proceed with manufacturing/producing the product. Payment processing typically takes one day but may take longer, depending on the payment method used by the customer.

3. Manufacture/produce product – Depending on the product’s complexity, this step can take anywhere from five days to several weeks to complete. Custom parts may need to be ordered in some cases, which also adds time to this process step.

4. Inspect product (quality control) – After production is complete, each product must undergo rigorous quality control testing before being packaged and shipped to customers. Generally speaking, this step should take no more than two business days, regardless of how complex or large an individual order is.

5. Package product – The packaging stage involves protecting each product for delivery and can include assembling retail-ready packaging for those that require it. On average, it takes one day to pack a single item before it is ready for shipping out to customers.

6. Transport product to customer’s home – The final stage of Customer Lead Time is transporting the finished product from its point of origin to customers’ homes or requested locations around the country or worldwide. Shipping times vary depending on the distance between origin and destination points and the mode of transport chosen by the customer when placing their order (air cargo, road freight, etc.). It usually takes two to four days for products shipped domestically and up to 5 days for international orders before they are delivered successfully at their destination points.

References

Buldeo Rai, H., Broekaert, C., Verlinde, S., & Macharis, C. (2021). Sharing is caring: How non-financial incentives drive sustainable e-commerce delivery. Transportation Research Part D:
Transport and Environment, 93, 102794.

https://doi.org/10.1016/j.trd.2021.102794

Yu, H., Zhao, Y., Liu, Z., Liu, W., Zhang, S., Wang, F., & Shi, L. (2021). Research on the financing income of supply chains based on an E-commerce platform.
Technological Forecasting and Social Change, 169, 120820.

https://doi.org/10.1016/j.techfore.2021.120820

image1

Introduction

Since 2023, Masc was founded in Los Angeles, California. It is a brand focusing on men’s skincare and cosmetics. Based on the support for men’s pursuit of exquisite lifestyle in the new era, the Masc team has always been adhering to the brand value of high-end aesthetics and affordable prices and strives to create a national makeup brand for men that can integrate personal style into and daily basis.

Product

Masc’s latest product is a 12-hour long-lasting sunscreen foundation containing glycerin ​and galactoarabinan to help men to replenish moisture and improve overall skin hydration. At the same time, the product has butanediol betaine added. This small molecule of moisturizing agent further eliminates glycerin caused by a sticky feeling close to men’s need for refreshing.

Front Label

(Reference: Packaging of YSL 24H Foundation)

12 HOURS

FOUNDATION

OCTINOXATE SUNSCREEN

BROAD SPECTRUM SPF 20

UP TO 12H WEAR

FLAWLESS MATTE

FULL COVERAGE

MASC

Back Label

(Reference: Packaging of YSL 24H Foundation)

Drug Facts:

Active ingredient: Octinoxate 3%

Purpose: Sunscreen

Uses: Helps prevent sunburn. If used as directed with other sun protection measures (see Directions), decrease the risk of skin cancer and early skin aging caused by the sun.

Warnings: For external use only. Flammable until dry. Avoid fire, flame and heat during application. Do not use on damaged or broken skin. When using this product keep out of eyes. Rinse with water to remove. Stop use and ask a doctor if rash occurs.
Keep out of reach of children. If swallowed, get medical help or contact a Poison Center right away.

Directions: For sunscreen use: Shake well before use. Apply generously 15 minutes before sun exposure. Reapply at least every 2 hours. Use a water-resistant sunscreen if swimming or sweating.

Sun Protection Measures: Spending time in the sun increase your risk of skin cancer and early skin aging. To decrease this risk, regularly use sunscreen with a Broad Spectrum SPF value of 15 or higher and other sun protection measures, including: limit time in the sun, especially from 10 a.m. – 2 p.m.; wear long-sleeved shirts, pants, hats, and sunglasses. For children under 6 months of age: ask a doctor.

Other information: Protect the product in this container from excessive heat and direct sun.

Questions or comments? Contact:
www.masc.us.com

12 months use after opening

0.84 fl. oz. 25ml

MASC

919 S. Grand Ave., Los Angeles, CA 90015

MADE IN THE U.S.A.

Product Design

Pricing: $49.99

We looked at similar women’s brands like MAC, NARS, Haus Labs by Lady Gaga, and others, with price ranges ranging from $39 to $59. Because our product contains effective skincare ingredients specifically tailored to men’s skin conditions, we have a good reason to set the price at $49.99. The price is based on an “odd number” and a 99-cent pricing strategy. Some studies have found that prices ending in 0.99 have a “downshift effect.” That is, an item priced at $49.99 would fall into the “under $50” category. However, by adding a penny to the price, the product will up into the “$50 and up” class, creating a subtle but essential contrast (Martin et al., 2014). In addition, the price includes a series of pre-sale and post-sale services and an experience of the men’s makeup community created by Masc. As a result, buying Masc products will give consumers added value, such as identity and community sharing.

Measurability

According to statista.com, as of July 1, 2021, there were about 97.15 million men aged 18-65 in the United States. Among them, 3.9% of males may identify as LGBT (Frank Newport, 2018). Overall, 15% of heterosexual men aged 18-65 in the U.S. currently use men’s cosmetics; Another 17% would consider using it in the future, which would double the size of the market (Ipso, 2022). According to the information above, as of July 1, 2021, the male makeup market in the United States is estimated to reach 0.57 million population (97.15*3.9%*15%) and will grow by 0.64 million population (97.15*3.9%*17%) in the future.

On top of that, while Masc’s 12-hour long-lasting sunscreen foundation can theoretically be purchased and used by all ages, we will focus on Generation Z and millennials in the product design and promotion process. According to statista.com in 2021, with the exception of Gen Z (11-14 years old), who do not have the purchasing power, male 14-44 consumers in the U.S. makeup 61.8% of male 14-64 consumers. Thus, we can estimate further that Masc’s future target consumer market will grow by 0.39 million population (0.64*61.8%) and reach a total of 0.74 million (0.57*61.8% + 0.39).

Accessibility

As the product will be sold on e-commerce, its accessibility is determined by the U.S. business environment of the Internet, social media, and traditional media. Currently, common sales and promotion channels in the U.S. market include the brand’s official website, Instagram, Facebook, and Amazon. Therefore, we will focus on designing and maintaining these platforms to enhance user awareness, operability, comprehensibility, and accessibility to the disability community to ensure an inclusive shopping experience.

Profitability

According to hitbusinessideas.com, the profit margin for cosmetics companies is between 20 percent and 60 percent. In other words, after subtracting the cost of goods and operating costs, Masc could generate a gross profit of $9.99 – $29.99 by successfully selling a bottle of liquid foundation for $49.99.

In addition, JUV Consulting estimates that the global men’s makeup market was worth about $1.14 billion in 2019. According to a survey conducted by Euromonitor, more than 56 percent of American male respondents admitted to using some form of facial makeup, such as foundation, concealer, or B.B. cream, at least once in 2018. (Kelly Kovack, 2020) If the above valuation is accurate, the male cosmetics market will have a huge growth space in the future.

Actionability

In recent years, an increasing number of young men have become interested in buying men’s cosmetics amid growing calls for gender equality and sexual orientation equality. That opens the door for brands to target this group and portends a possible evolution in the definition of masculinity (Ipsos,2022). Therefore, developing effective marketing plans for target consumer groups is something Masc should focus on. According to the Ipsos report, there are two things traditional men’s cosmetics brands should emphasize in order to drive the buying behavior of men aged 18-34:

· How can cosmetics improve their appearance and help them cover up blemishes and defects?

· How cosmetics are widely accepted and “suitable for people like me.”

On both points, Masc has come up with its solutions. First, the new foundation contains effective skincare ingredients specifically formulated for men’s skin. Thus, in addition to immediately enhancing the facial image, Masc also leads consumers on a long-term path to improve the condition of their original skin. Secondly, Masc is not only a company that is “selling men’s skincare and cosmetics,” but more importantly, it established a harmonious and dynamic men’s beauty community. Here, all self-identified gender and all-age customers can discuss male makeup equally, and there are plenty of beginner’s guides available provided by professionals.

Masc promised that our team would always stick to our commitment to support our customers unconditionally and endlessly to advocate their lifestyle. We firmly believe that we are actively supporting an influential culture of the era and devote ourselves to promoting it, strengthening it, and making the world a better place.

References

Martin, S. J., Goldstein, N. J., & Cialdini, R. B. (2014). 37.
Why might a SMALL change in number ending make a BIG difference to your communications? In The small big: Small changes that Spark Big Influence. essay, Grand Central Publishing.

Erin Duffin, (Sep 30, 2022),
Resident population of the United States by sex and age as of July 1, 2021,

https://www.statista.com/statistics/241488/population-of-the-us-by-sex-and-age/

Frank Newport, (
May 22, 2018), In U.S., Estimate of LGBT Population Rises to 4.5%,

https://news.gallup.com/poll/234863/estimate-lgbt-population-rises.aspx

Ipso, (Mar 21, 2022),
There’s a market for men’s cosmetics–and a generation gap,

https://www.ipsos.com/en-us/knowledge/customer-experience/there-is-a-market-for-mens-cosmetics-and-a-generation-gap

Kelly Kovack, (Jan 20, 2020),
THE FUTURE OF MEN’S GROOMING CATEGORY: 3 BRANDS TO WATCH,

https://beautymatter.com/articles/the-future-of-mens-grooming-category-3-brands-to-watch

hitbusinessideas, (Jun 3, 2022),
Is Cosmetic Business Profitable? 6 Things You Should Know,

https://hitbusinessideas.com/is-cosmetic-business-profitable/

image1

LECTURE: SUPPLY CHAIN SYSTEMS

Supply chain management (SCM) uses various tools inclusive of computer platforms. These help to increase efficiency and reduce costs. Today’s digitally based SCM systems focus on the various processes within the supply chain. Some of the processes include: