What We Need & What You Get

Cost of Goods Sold (COGS) – COGS is comprised of four costs as follows:

• Web hosting
• IT Maintenance
• Credit Card Fees
• Customer Support

Web Hosting is set to $200/month or 0.25% of transaction dollars, whichever is greater.

IT Maintenance is the greater of $2000 or 0.4% of transaction dollars, whichever is greater, capped at $5000/month.

Credit Card Fees begin at 2.9% of transaction dollars declining to 2.7% when credit card fees exceed $10,000/month.

Customer support is outsourced.  The cost is the greater of $1500/month or 1% of transaction dollars.

SG&A Expenses consist of marketing, payroll, and several other expenses.  Marketing and payroll are the principal expenses for most companies, including Kimit.

Marketing – The company has some start-up marketing expenses.  See the start-up section of this Financial Assumptions chapter.  Once the testing phases commence, marketing drives the monthly buyer and seller acquisition rates.  The financial model acquires buyers first, and then identifies the marketing budget required to maintain a 17.5:1 buyer to seller ratio.  The ratio is lower in the initial months.

Payroll – The initial two years of payroll are as follows.  Shaded cells indicate W-2 positions.  Non-shaded cells indicate 1099 contractors.

Rent and Utilities – The company will commence operations with a virtual office.   It will acquire a physical office at the commencement of the Early Growth phase.  

Office expenses – Includes all routine office expenses, dues & subscriptions, postage, minor licensing fees, etc.  The bulge in the Early Growth phase represents office furniture acquired for the new office.

Phone & computers – Includes internet and company paid phone and internet service.   The bulge in the Early Growth phase represents computers and peripheral equipment acquired for the new office.

Website Upgrades – Increases over time as the company adds additional product categories and prepares for international expansion.

Legal & Accounting – Initial costs for start-up (reviewing terms of service, buyer and seller agreements, and employee contracts), followed by recurring costs that increase as transactions as actives and products offered grow.

Travel & Entertainment – Includes funding and business expansion related travel.

Insurance – The greater of $120/month or 0.15% of transaction dollars.

Miscellaneous - $500/month. 

Depreciation – Property, plant & equipment depreciated straight line over 7 years.

Value Proposition - Buyers

Using the Kimit system, a buyer can look at as many as 20 curated products per minute.  The system will allow the buyer to flag items to refine their search for a second pass.  The list of flagged items will remain in Kimit memory for a limited time to allow the buyer to review the flagged items.  When buyers sign in to Kimit, the system will show the buyer’s lists of flagged items based on the keywords used to create the individual lists.

Kimit will provide a list of keywords that sellers can use to guarantee that their products appear in a search.   The seller can use words not included on the list to further prioritize their products in the list of products presented to sellers.   Kimit will also allow sellers to pay an advertising fee to move their products to the head of the lists.  This will allow the seller of amethyst earrings to move his/her listing nearer to the top of the list of earrings presented to the potential buyer.  Etsy and others (including Amazon) offer an advertising option.

Initial Markets

Kimit will commence operations with jewelry, art, and craft products.   Kimit will limit sellers to products made by artisans.  Unlike many others in the industry, including industry leaders Amazon, E-Bay, and Etsy, Kimit does not welcome drop-shipped items sourced from large factories either domestic or overseas.   Kimit will require sellers to verify that the product offered for sale on the site are small batch, artisan products.  

The second product line scheduled for roll-out is antiques.  Most jewelry, art, and craft projects ship easily anywhere in the country.  Antiques may include items that are costly to ship.  When this category goes live, potential buyers will have the option to limit their searches by miles from a zip code.  They will also have the option to identify antique dealers close to them to see all the products offered on the Kimit site by specific dealers.

Using Kimit, a potential buyer can preview items available for sale at an antique dealer without spending the time and cost to visit the store.  Buyers can reserve items they wish to inspect in-person for a limited time by paying a percentage of the item cost.  Should the seller remove the item listing within a specified time, Kimit will assume the buyer completed the sale and retain the fee.  Alternatively, the buyer can pay the full price for the item on the Kimit site.

Value Proposition - Sellers

Antique dealers can use Kimit to expand their market to a nationwide audience.  Most antique dealers draw from a local market.  There are tens of thousands of antique dealers, many offering regional items.  Kimit will allow these dealers to reach a much larger market for items that either ship easily or items of considerable value worth shipping long

Business Model

Kimit employs a subscription model business.  The company anticipates the following KPIs for each business segment.

The Impact

Kimit was designed with unique products in mind.  New commodity consumer products in mass production do not, as a rule, require complex descriptions.  Due to their commodity status, these products sell in many physical and digital stores allowing a consumer to easily research these products.

Craft products, antiques, used cars, houses, and consignment items are unique items lacking in widely available information relevant to the potential buyer.  These products represent the Kimit target market.  When a 2016 Honda Accord LX was new, one car’s description matched every other 2016 Honda Accord LX.  Over time, each 2016 Honda Accord LX becomes unique.  Mileage, damage, repairs, aftermarket upgrades, and other attributes make each unit unique.  A Kimit listing of a used car can provide more information than a simple picture and 80-character description.

Kimit apps are particularly interesting to consumers as they can can provide a tour of available items at a clip as fast as 20 items per minute.  Even faster than a person can walk through an antique shop, the prospective buyer can see hundreds of products in a short 10 to 15-minute viewing session.

Kimit allows a viewer to limit the types of product presented.  One can choose to look at only amethyst earrings.  The app will search its database of pictures, identify those with keywords matching the potential buyer defined product description, and assemble a presentation of amethyst earring pictures.  Each seller will have the option to provide additional pictures, product descriptions, shipping times, and other relevant information.  All this information is available to the potential buyer by virtue of a downward swipe on the phone.

Sellers will have the option to pay an advertising fee to gain priority for their products.  The Kimit software may yield 70 pictures matching a buyer-defined product description.  The program will split the list of 70 into those who have paid for advertising and those who have not.  The Kimit code will randomize the advertising list and the non-advertising lists with the final presentation to the buyer consisting of all the advertised pictures followed by the non-advertised group.   The order will appear random to the buyer.  

Risks & Challenges

Kimit will price its service based on its value to sellers on the site and the context of competitive offerings.  There are several sites that target the same consumer and seller base in Kimit’s initial product categories.  The primary drivers of value to consumers and sellers are as follows:

• Activity/size – more consumers attracts more sellers.  Once a site reaches a critical mass, the opposite, sellers attract consumers, is also true.     
• Curated products – a curated group of sellers helps to minimize the time a consumer needs to identify a product to purchase.  As a rule, the more narrowly a site defines seller acceptance standards, the smaller the number of sellers.   This raises the probability of a consumer finding a product to purchase provided the consumer is aware and in accordance with the site’s standards. 
• Cost – the fees a site charges for listing and selling can deter or encourage sellers to engage on the site.   Some sellers will adjust their pricing to reflect selling fees.
• Ease of use – After nearly 25 years of near ubiquitous internet access, most websites have figured out how to make the purchase process intuitive to consumers.   Yet there remain those who have yet to consider the user experience.   For most sites, this is not a high-ranking value driver.

Metcalfe’s Law of network value has application in the digital retail world.  The large get larger due to their size.  New market entrants must offer something unique to achieve scale.  Consider Etsy in retailing and TikTok in social media.  Etsy commenced operations with a focus on craft sellers.  By targeting a specific retail segment, the site was able to differentiate itself.  It was able to develop a reputation and a following.  Etsy’s standards for listing and the categories they cultivated expanded as they grew.  Yet they are widely still known for the initial image.

TikTok is much the same story.  Its focus on the teenage marketplace differentiated the site from Facebook, Pinterest, and other social media sites.  By offering unique features, the site was able to establish a base allowing it to accelerate its growth by virtual of it size within its category.

Other Ways You Can Help

Please help me to make it happened to help others.  I didn't make this App just to make money.  I want to help others but lately I realize balancing economically and spiritually is important.   We need people with philosophy to help others and influence.