Disruptive Fashion eCommerce Fit Technology Start-Up

1. Alex Martin
Alex Martin

2. Confidential
Confidential
All information in this package should be considered
fid ti l d l b d b th i t d d di
confidential and only be used by the intended audience.
2

3. Executive Summary – The Concept
What if Online shoppers were able to:
 Be walked through a process to enter their measurements once using
SIZzlE com’s technology and have the proper size recommended to
SIZzlE.com s technology and have the proper size recommended to
them on every online clothing website that they visit
 Eliminate the guess work out of choosing sizes and scanning confusing sizing
charts that are different for each brand
The net effect for the retailer and user:
1) Online shoppers spending more time shopping & not figuring out
which size to order
2) Reduce the return rate of online retail shopping, which is currently at
14%, nearly double the online industry average, eliminating the hassle
for customers and saving shipping costs for the retailer
 Some retailers claim their return rate is as high as 20% 30% on their online
 Some retailers claim their return rate is as high as 20% - 30% on their online
shopping sites, including Zappos at 35%, whereas the return rate for made-to-
measure online sites is in the low single digits (shows that proper fit contributes to
reducing the return rate)
3) Users will be able to store their clothing purchased into a personal
3) Users will be able to store their clothing purchased into a personal
closet in their SIZzlE profile, allowing them to share their closet with
personal friends who are also connected to their profile
3

4. Executive Summary – The Benefits
SIZzlE.com – A millions of user, one-stop online clothing platform
 There are over 80 MM Americans that bought apparel online in 2010
 Establish SIZzlE.com as a valuable partner for online retailers
 Establish SIZzlE.com as a valuable source of social information on deals for
users
 Become the one-stop platform that users use when shopping for clothes
online
Benefits to User:
 Eliminate the guess work out of choosing sizes when buying clothes online
 Choosing the right size the first time, preventing the hassle of dealing with
returns
returns
 Receive offers customized based on style and SIZE, when previously offers
could only be customized based on style or brand
Benefits to Retailer:
 Improves website customer experience, avoiding the user from having to
access confusing size charts, focusing their time on purchasing and sales
conversion
 Helps user choose the right size, reducing the return rate
 Reduces inventory obsolescence and inventory investment capital due to
promoting deals based on sizing
4

5. Executive Summary – The Digital Revolution
 When looking at core consumer retail markets, clothing sales as percentage of
online versus offline still trails other markets significantly, as there has been a
major deterrent that has slowed the transition: no platform technology that has
enabled consumers to purchase repeatedly online
Market
Pioneer of
the Digital
Transition
Current Online
Leaders
Market Size
(Total , $B)
Market Size
(Online, $B)
% Online
Clothing ? $260 – 380 $26 – 38 10%
Computers $200 300 $100 200 54%
Computers $200 – 300 $100 – 200 54%
Music
(Recorded)
$18 $5 – 6 29-31%
( )
Video
(Streaming &
DVD)
$10 – 12 $3 – 4 34%
5
Books
(Physical &
eBooks)
$18 $4 21%

6. Executive Summary –
Where Others have Failed SIZzlE will Succeed
 1) MyShape: Founded in 2005 and ceased operations in March 2011
 Funding: Raised >$31M from Draper Fisher Jurvetson, Tenaya Capital and Angel Investors
 Focus: Online personalized shopping site for women. The company matches shoppers with
Where Others have Failed, SIZzlE will Succeed
p pp g p y pp
items that correspond to their personal measurements and preferences based on certain
shapes such as HourGlass, etc.
 Why they Failed: Focused only on women and had sub-tier brands signed up for their site
 Were not a platform on other web sites with high traffic, instead relied only on traffic to the
MyShape website
y p
 2) Fits.me: Robot-based sizing platform that is starting to gain retailers online
 Funding: Raised €2.6 million from Estonian Development Fund
 Focus: Fitting Room that takes a user’s measurements each time they visit a site and then
recommends a size
 Why they Haven’t Gained Mainstream Adoption: Based in Estonia and until recently, have
not had many mainstream brands. Have recently added Thomas Pink and Park&Bond by Gilt
Groupe in the UK. Have not focused on becoming a platform where users have a profile.
 3) Fitiquette: Founded in 2010 and acquired by an Indian Company, Myntra in 2013
Funding: Not available Acquired by Myntra a $100M annual revenue Indian clothing business
 Funding: Not available. Acquired by Myntra, a $100M annual revenue Indian clothing business
 Focus: Virtualization product that creates a virtual avatar of how clothes fit.
 Why they Haven’t Gained Mainstream Adoption: Based only on Myntra’s site and costly to
create an avatar-ed clothing item for each item of clothing that a store offers, especially since
they change every season. This is cost prohibitive to adopting sizing technology for every brand
li
online.
SIZzlE will learn from others’ mistakes & become a de facto measurement
profile without adopting avatar technology due to prohibitive costs
6

7. The Existing Technology
g gy
7

8. The Existing Technology
The Existing Technology
 Gap.com – Size Chart
Gap.com Size Chart
8

9. The Existing Technology (C t’d)
The Existing Technology (Cont’d)
 Banana Republic.com – Size Chart
Banana Republic.com Size Chart
9

10. The Existing Technology (C t’d)
The Existing Technology (Cont’d)
 BustedTees.com – Size Chart
BustedTees.com Size Chart
10

11. The NEW Technology
gy
11

12. SIZzlE Clothing Technology
SIZzlE Clothing Technology
 Gap.com Example – Incorporating SIZzlE
Technology
Technology
SIZzlE
 User will already be logged into their SIZzlE profile and their size will be
hi hli ht d
highlighted
 Replace size chart user interface with SIZzlE recommendation
technology per user measurements
12

13. SIZ lE Clothing Technolog (C ’d)
SIZzlE Clothing Technology (Cont’d)
 Gap.com Example – Incorporating SIZzlE
Technology
Technology
 Rather than having to click on the Gap size chart, taking their measurements and
scanning the confusing size chart, SIZzlE will have already walked the user through
the process of taking their measurements and will highlight their correct size
 Results in a one-time sizing rather than every time on each individual site
 Results in a one time sizing, rather than every time on each individual site
13

14. US Online eCommerce Market
14

15. The US Online eCommerce Market
The US Online eCommerce Market
 Total eCommerce market expected to grow at a 10% CAGR from
2010 – 2015
 Apparel represents approximately 25% of US online eCommerce
$171.7
Apparel Other Total eCommerce
$122.7
$130.1 $129.8
$142.5
$156.4
($B)
$100.0 $103.5 $99.3
$108.1
$118.2
$129.9
$22.7 $26.6 $30.5 $34.4 $38.2 $41.8
2007 2008 2009 2010 2011 2012
Source: US eCommerce Forecast: 2008 to 2012, Forrester Research, January 18, 2008.
15

16. The US Online eCommerce Market
The US Online eCommerce Market
MM % of Total % of Online
MARKET Total US consumers 312
MARKET Total US consumers 312
SIZE Online US consumers 212
68% 100%
ONLINE Visted a retail web site 174
56% 82%
 With nearly 76% of online users purchasing online in 2010, this
SHOPPING Purchased online 161
52% 76%
Purchased apparel 84
27% 40%
y p g ,
shows that the stigma associated with purchasing online has
largely been overcome, with ¾ of all online users engaging in
Online eCommerce
P h i l i till l ti l l t f ll li
 Purchasing apparel is still a relatively low percentage of all online
shopping, with only 40% of online consumers purchasing apparel
 Indicates a lot of room for growth with improvements in the
online apparel retail purchasing experience
online apparel retail purchasing experience
Source: Per Zeitgeist and Forrester Research, 2010.
16

17. US Online Apparel Retail Market
US O e ppa e eta a et
17

18. The US Online Apparel Retail Market
The US Online Apparel Retail Market
 Apparel/accessories/footwear represent 15 - 25% of
pp p
annual online retail eCommerce
($B)
$30 5
$34.4
$38.2
$41.8
$22.7
$26.6
$30.5
14-23% 15-25%
2007 2008 2009 2010 2011 2012
Source: US eCommerce Forecast: 2008 to 2012, Forrester Research, January 18, 2008.
18

19. Gap Case Study – Growth Online
August 2010 Launching Country Specific eCommerce Sites
August 2010 – Launching Country-Specific eCommerce Sites
 Gap is betting heavily on e-commerce beyond its U.S. home base. It officially
launched its Canadian e-tailing sites for its three main chains and earlier this
month it rolled out its sites in the U.K. and will do so in China later this year. By
the end of 2010 it will offer shipping to 65 countries
the end of 2010, it will offer shipping to 65 countries.
 “We are a big growth engine for the company,” said Toby Lenk, president of
Gap’s online division. “We’re the little engine that could.”
Revenue by Segment – Growth in Direct (Online) Segment
Revenue by Segment – Growth in Direct (Online) Segment
 As Gap closes locations due to stagnancy in its store sales, its online segment
continues to post double digit growth, with operating margins double those of in-
store sales
Financial Data
Sales ($MM) Sales Growth % Operating Margin (%)
2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012
Gap.com ‐ Direct 1,030
$ 1,118
$ 1,299
$ 1,560
$ 1,927
$ 14% 9% 16% 20% 24% 20% 23% 23% 22% 23%
Gap.com 333
324
365
433
537
8% ‐3% 13% 19% 24%
Banana Republic 145
134
155
188
247
7% ‐8% 16% 21% 31%
Old Navy 475
473
533
638
748
11% 0% 13% 20% 17%
Other 77
187
246
301
395
148% 143% 32% 22% 31%
Stores 13,496
$ 13,079
$ 13,365
$ 12,989
$ 13,724
$ ‐9% ‐3% 2% ‐3% 6% 10% 12% 12% 8% 11%
19
Direct as % of Total 7% 8% 9% 11% 12% 14% 14% 15% 24% 22%

20. Potential Customers
• SIZzlE has identified over 25 retailers with their own online stores:
1) 10) 18)
1)
2)
3)
10)
11)
12)
18)
19)
20)
)
4)
5)
12)
13)
14)
20)
21)
22)
6)
7)
15)
16)
23)
24)
8)
9)
• This list focuses on just some of the retailers with their own brand – there
17) 25)
• This list focuses on just some of the retailers with their own brand there
are also major department stores that have their own online sites, as well
as flash sales sites that sell many brands such as Gilt Groupe
20

21. R M d l &
Revenue Model &
Potential market value
21

22. Revenue Monetization Model
 Upfront setup fee to integrate online stores’ back-end with SIZzlE
sizing system
Revenue Monetization Model
g y
 Maintenance revenue of maintaining their size database each season
 Annual fee: Either license fee with transaction fee based on number
of transactions processed
of transactions processed
 Illustrative Example: Transaction Revenue fee of ~$2. Assuming average
purchase size is $100, represents a low percentage fee
 Per-transaction fee has to be cheaper than the cost of shipping one-way to ensure
S f
that SIZzlE results in margin improvement for the overall online business
2010 2011 2012 2013 2014 2015 2016 2017 2018
Retail eCommerce ($BN) 22.2
$ 26.0
$ 28.5
$ 31.2
$ 34.2
$ 37.5
$ 41.2
$ 45.1
$ 49.5
$
Growth 17% 10% 10% 10% 10% 10% 10% 10%
Average transaction size 100
$ 100
$ 100
$ 100
$ 100
$ 100
$ 100
$ 100
$ 100
$
Number of Transactions (MM) 222
260
285
312
342
375
412
451
495
Per Transaction Fee ‐
$ ‐
$ ‐
$ ‐
$ 2
$ 2
$ 2
$ 2
$ 2
$
Potential Revenue ‐
$ ‐
$ ‐
$ ‐
$ 685
$ 751
$ 823
$ 902
$ 989
$
22
Transaction Capture Rate 0% 0% 0% 0% 3% 6% 9% 12% 15%
Transaction Revenue ($MM) ‐
$ ‐
$ ‐
$ ‐
$ 20.5
$ 45.1
$ 74.1
$ 108.3
$ 148.4
$
Growth ‐
‐
‐
‐
‐
119% 64% 46% 37%

23. Si ing p the online apparel market
Sizing up the online apparel market
 Depending on the estimates, online apparel represents a
sizeable market with $26 35B of annual sales in 2010
sizeable market with $26 – 35B of annual sales in 2010
 Growing at 17%, online apparel retail e-Commerce represents
15-24% of total e-Commerce
($MM)
Actuals Forecast
Forecast (Researcher) (Date) 2007 2008 2009 2010 2011 2012 2013 2014 2015 CAGR
e‐Commerce (comScore) (2/4/2011) $122,719 $130,104 $129,797 $142,491
Growth ‐
6% 0% 10%
eCommerce (Forrester) (2/28/2011) ‐
‐
$155,929 $176,200 $193,150 $211,730 $232,098 $254,425 $278,900 10%
Growth ‐
‐
‐
13% 10% 10% 10% 10% 10%
Apparel / accessories / footwear (Forrester) (2/28/2011) ‐
‐
$22,222 $26,000
Growth ‐
‐
‐
17%
% of apparel spending in US ‐
‐
‐
10%
Apparel as % of total e‐Commerce (comScore) ‐
‐
17% 18%
pp f ( )
Apparel as % of total e‐Commerce (Forrester) ‐
‐
14% 15%
Apparel / accessories / footwear (Forrester) (1/18/2008) $22,700 $26,600 $30,500 $34,400 $38,200 $41,800
Apparel as % of total e‐Commerce (comScore) ‐
‐
23% 24% ‐
‐
Apparel as % of total e‐Commerce (Forrester) ‐
‐
20% 20% 20% 20%
Growth ‐
17% 15% 13% 11% 9%
23

24. Market effects of SIZ lE’s s ccess
Market effects of SIZzlE’s success
($MM)
Online as
% of overall 2010 2011 2012 2013 2014 2015
Analysis assumes:
T iti i e‐Commerce market (Forrester) 155,929
$ 176,200
$ 193,150
$ 211,730
$ 232,098
$ 254,425
$
Apparel e‐Commerce market 22,222
$ 26,000
$ 28,501
$ 31,243
$ 34,248
$ 37,543
$
Apparel as % of Total eCommerce 14% 15% 15% 15% 15% 15%
Online apparel as % of total apparel spending 10% 10% 10% 10% 10% 10%
Implied Total Apparel Spending 222,222
$ 260,000
$ 285,011
$ 312,428
$ 342,483
$ 375,429
$
 Transitioning
from 10% of
apparel sold
online to 12%
Total Apparel market 222,222
$ 260,000
$ 285,011
$ 312,428
$ 342,483
$ 375,429
$
Online apparel as % of total market 10% 26,000
$ 28,501
$ 31,243
$ 34,248
$ 37,543
$
12% 31,200
34,201
37,491
41,098
45,051
Δ in Online Sales 5,200
$ 5,700
$ 6,249
$ 6,850
$ 7,509
$
Δ in Online EBIT % compared to in‐store 10% 10% 10% 10% 10% 10%
o e to %
 10% higher
operating income
margin for online
Δ in EBIT 520
$ 570
$ 625
$ 685
$ 751
$
Returns as % of online sales Returns
Sales 20% 5,200
$ 5,700
$ 6,249
$ 6,850
$ 7,509
$
EBIT 10% of sales 520
$ 570
$ 625
$ 685
$ 751
$
Sales 15% 3,900 4,275 4,686 5,137 5,631
versus in-store
 Reducing return
rates from 15% - Sales 15% 3,900
4,275
4,686
5,137
5,631
EBIT 10% of sales 390
$ 428
$ 469
$ 514
$ 563
$
Sales 10% 2,600
2,850
3,124
3,425
3,754
EBIT 10% of sales 260
$ 285
$ 312
$ 342
$ 375
$
Δ in EBIT from 15% to 10% of returns 130
$ 143
$ 156
$ 171
$ 188
$
TOTAL Δ in EBIT 650
$ 713
$ 781
$ 856
$ 939
$
10% of online
sales
Terminal value 10.0x
9,386
$
Present value at discount rate: 10% 591
$ 589
$ 587
$ 585
$ 583
$
5,828
$
TOTAL Present Value 8,762
$
24

25. Sensitivity of market value
Sensitivity of market value
 There is the opportunity to generate considerable EBIT
market value especially when considering the market cap of
market value, especially when considering the market cap of
The Gap is currently $18B
($MM)
Di t t
Discount rate
8,762
$ 8% 9% 10% 11% 12% 13% 14% 15%
10% $1,898 $1,823 $1,752 $1,685 $1,621 $1,561 $1,503 $1,448
ll
12% $9,489 $9,116 $8,762 $8,426 $8,107 $7,803 $7,515 $7,240
15% $20,875 $20,055 $19,276 $18,537 $17,835 $17,167 $16,532 $15,928
s % of overa
20% $39,852 $38,286 $36,800 $35,389 $34,048 $32,774 $31,562 $30,408
25% $58,830 $56,518 $54,324 $52,241 $50,262 $48,380 $46,591 $44,889
30% $77 807 $74 750 $71 848 $69 093 $66 475 $63 987 $61 621 $59 369
Online as
25
30% $77,807 $74,750 $71,848 $69,093 $66,475 $63,987 $61,621 $59,369

26. The Action Plan
26

27. Plan of Action
Current Progress
 Have had discussions and developed website wire frames with a software
engineer regarding website design and ensuring a scalable back-end
g g g g g
platform that will scale to millions of users and be able to incorporate the
many sizing charts of retailers
 The beauty is that this sizing information is available publicly for most of the
retailers as they use it in their current size charts for their customers, so we can
start creating profiles for certain retailers, before we even sign them up a customer
 When it comes time to pitch an online retailer as a potential customer, SIZzlE will
already have all of their sizes uploaded into our platform and will be able to show
them at the pitch a prototype of how their site will work
Gating Item
 Require start-up capital to fund the development of the website back-
 Require start-up capital to fund the development of the website back-
end and hire a team of software engineers to design the software and
ensure that the system is fail-safe for roll-out at large online retailers
 Have attempted to recruit software engineers based on equity and the
reality is that the developers are requiring a salary for their time
27
reality is that the developers are requiring a salary for their time
commitment

28. Plan of Action – Launching
1) Develop Website Back-end
 Hire a team of software engineers to design the website and ensure that the
system is fail-safe for roll-out at large online retailers
2) Develop Website Front-End
 Hire web programmers to design the SIZzlE website and measurement process
with users, as well as integration into online retailers` own websites and Facebook
3) Pitch Online Retailers
 Once we have a working prototype, we will begin targeting online retailers for initial
discussions
4) Integrate with Online Retailers
 Will begin working with the online retailers team to ensure that our SIZzlE profile
integrates with their website
L h t U ith S l t R t il (A
5) Launch to Users with Select Retailers (As soon as
have technology established and at least 3-5 online
retailers as customers)
 Once we have our SIZzlE system integrated with a select set of online retailers we
28
 Once we have our SIZzlE system integrated with a select set of online retailers, we
will launch the SIZzlE.com domain and a massive branding campaign across
Facebook and other sites to gain users

29. Plan of Action – SIZzlE Future Plans
1) MEASUREMENT PROFILE
• Become the de facto profile for online shopping
g
2) CLOTHING CLOSET SHARING AMONST
)
FRIENDS
• Once purchased, pictures of the goods purchased will be saved to
the Users’ SIZzlE profile where their friends can view the clothing
the Users SIZzlE profile, where their friends can view the clothing
purchased, offer to borrow the clothing item from their friend or just
comment on the clothes – believe this will drive the social
engagement of purchasing clothes online with friends
3) CLOTHING DESIGN
• SIZzlE will specialize as a software and Internet company and will
29
potentially begin developing a software platform for clothing
companies to design their clothing to optimize fit for online sales

30. Management Biography
g g p y
30

31. Management Biography
Alex Martin
Alex Martin
Professional Experience
 Technology Investment Banker for Credit Suisse
 Business Development Consultant for Movieclips.com
 Technology Investment Banker for Pagemill Partners
 Technology Investment Banker for Pagemill Partners
Biography
Alex Martin is a Technology-focused professional who has been exposed to many industries and business
models in software and Internet over his time as an Investment Banker, while also assisting the start-up
Movieclips.com in preparing their Investment materials as they prepared for a Venture Capital Round.
p p p g y p p p
A true believer in the power of the Internet to empower consumers and transform industries, Alex believes that
the time is now to invest in the online clothing market as he recognizes an investment opportunity with current
lack of overall adoption and a strong and growing market, outpacing traditional bricks-and-mortar in-store
clothing sales.
Alex attended the Richard Ivey School of Business at the University of Western Ontario on a National
Scholarship and graduated with distinction. He was the student council President at his high school, Brother
Andre. In his spare time, Alex is an avid golfer and early adopter of new technologies.
Business Mindset and Favorite Quotes
“When you grow up you tend to get told the world is the way it is and you're life is just to live your life inside the
When you grow up you tend to get told the world is the way it is and you re life is just to live your life inside the
world. Try not to bash into the walls too much. Try to have a nice family, have fun, save a little money. That's a
very limited life. Life can be much broader once you discover one simple fact: Everything around you that you
call life was made up by people that were no smarter than you and you can change it, you can influence it, you
can build your own things that other people can use. Once you learn that, you'll never be the same again.”
- Steve Jobs
31
“People who say it takes money to make money are using the worst excuse ever. . . Create massive value for
others by providing a solution where no other exists.” - Matt Mickiewicz, Founder,
Sitepoint, 99 Designs and Flippa

32. thank you
32