1. Why would your innovation fail?
Slide 1
Welcome to today's podcast where I will be talking about a system that relates to online
shopping. Specifically, I will focus on how online shopping sizing decisions can be improved and
therefore lead to better decisions through the use of an AR system in an app.
Slide 2
I will provide a brief overview of how the app may work. In relation to online shopping sizing, the
AR system in the app can consist of a 3D body scan that will identify the recommended size
according to a human’s body data. On top of this, it will visually showcase how different styles of
clothing can be worn or matched together in different environments whether that be in a less
formal setting like a mall or a formal restaurant for example.
Slide 3
The layout of the presentation will go as follows where I firstly cover why and how the innovation
can fail. I will then move on to how it will not fail, go over the budgeting and follow up with a
conclusion.
Slide 4
So, moving on, I want to analyze why this innovative idea could fail by getting straight to the
point. The first reason for potential failure is consumer resistance, which actually has nothing to
do with the business itself. As suggested by Talwar (2020) and colleagues, consumer resistance
takes many forms such as rejection, postponement, or opposition. Rejection refers to the
complete refusal of innovation acceptance, postponement is a delayed decision of accepting the
innovation, and opposition is, “strong negative feelings” about the innovation. Before individuals
decide on whether to use new innovative technologies they tend to ask themselves “is it safe?”,
“how will i benefit from it?”, “what if i don't feel comfortable using it?” and questions alike. In
regards to the AR sizing try on app, it does recommend customers to wear tight clothing for
accurate measurements, therefore some may feel uncomfortable taking pictures of themselves
which may result in rejection, postponement or opposition against using its features.
Slide 5
The second reason as to why the innovation may fail is due to the fact that it is just a
technology. What I mean is that technology used to identify human sizes does not compare to
the human eye. This fact was derived from when I conducted a survey during the testing phase
where 5 out of 10 individuals stated that human eyes can see more than a digital scanner when
it comes to clothing sizing. Although this survey was short, it comes to say that already 50% of
those participants are less likely, not completely, but less likely to use such a technology if it gets
implemented into the real world which signals that it is not universal for all.
Slide 6
Another reason why AR may not work is the requirement of large investments for proper
development. According to Parekh (2020) and colleagues, AR systems are extremely expensive
whether it be developing a system in retail or other fields such as education, marketing,
entertainment etcetera. Although retail such as the AR clothing sizing try on app may not be the
most expensive, it is still costly to implement. For example, since this app is a fully catered
service for the end user, the technology has to be immersive which is able to stimulate a
realistic experience. This will hence require solid software development, image recognition
technology, 3D tracking, mirror technology, body optimization and etcetera.
2. Why would your innovation not fail?
Slide 7
I shall now move on to why this innovation could not fail and here is the business model canvas
for this innovation. I will go over each section over the next slides.
Slide 8 - key activities
Key activities are just as important as all the sections in the business model canvas and it
reflects what the business is planning to do in order to become a proper business. So, since this
AR system is heavily focused to be used through an app, it is crucial to create an app that is
user centered and is immersive in order for the user to use our app again. And since our
customers are majorly online clothing businesses, we have to ensure that our customer support
is strong in case of any technical issues arising which we will help with. We are also planning to
partner with large online retail stores such as ASOS, H&M, Zara and shops alike. Now of course
in order to establish a presence in the market, we will utilize several promotions through those
partners as well as general marketing.
Slide 9 - key partners and key resources
Our key partners will include clothing stores as mentioned in the previous slide. We will also
have a group of investors who believe in our innovation which will help with major funding of
aspects such as Research and development. So our key resources are what will aid the
company in striving to achieve our goal. Those resources are our main assets so we will be
maintaining strong relationships with all of them.
Slide 10 - value propositions
Now moving on to value propositions. The key features of the app is that it is UX and UI friendly.
End users are our top priority, so we want to ensure that the experience that users receive using
the app is sufficient and comfortable. We plan to invest proper funds into research and
development so the results for clothing size recommendations are quick and accurate. We are
also aware that with new innovations come new security doubts. While that MAY be the case
when speaking of technology in general, it is not true with this app since those concerns are
related to virtual reality rather than augmented, as stated by Fineman & Lewis (2018). Moreover,
one of our largest values for the businesses would be funneling more customers to the online
stores since the technology we are offering is convenient for the customers.
Slide 11 - customer relationships and channels
In regards to customer relationships, our feedback system is beneficial for B2B and B2C. It is
based on a review system where businesses can contact our support team using our portal in
regards to any technical issues, while customers can use the businesses website or our website
to leave reviews. We will have 4 channels of communication and those include our website, the
business website, the mobile app and social media channels like Instagram and Facebook.
Slide 12 - customer segments
Now, we have 3 customer segments and they include online or physical clothing stores which
don't have this technology implemented, businesses which have their system (but is lacking
innovation), and finally individuals who do not have access to physical stores. This column links
with value propositions because it identifies who we are creating value for. Having concluded
real customer reviews in regards to online shopping sizing systems from the need-finding table,
it can be said that all reviews were negative since sizing charts are not sufficient enough. This is
primarily why the decision to target those customers was made.
Slide 13 - revenue streams
There are multiple streams of income that can benefit our app. License fees refer to the legal
rights of businesses being able to use our software on their website for example so there are no
copyright issues. Sponsorship fees grant us benefits such as brand credibility, sales boosts,
brand image and it acts as marketing as well. We can either get sponsored by companies or
have ourselves sponsor other companies. We also offer full time contract partnerships for a set
period of years who wish to commit for long term partnerships. Lastly, marketing. It will benefit
us greatly in generating new leads and this can be done through social media.
Slide 14 - cost structure
Our cost structure includes research and development which is the crux of the business model,
therefore, we plan to have a majority of investments set aside for top class technological
development. Other costs consist of app and technology maintenance which are the costs used
to ensure the app and the AR technology function without any issues. Since we are a business,
fair employee salaries will go to our managers, the R&D department, HR, customer support and
etcetera. And finally in terms of legal costs, a portion of our investments will go to legal costs
such as accounting and other legal documentation for the business to be able to, essentially,
legally “exist” in the market.
Slide 15
I will now talk about the potential costing and specifically the income and the expenses.
Slide 16
The income totals at approximately 838,500 pounds and this is earned over a course of 2 years
and 3 months. Identical to the revenue streams in the canvas shown before, we have priced our
fees and income in relation to the intense technological development that this system will
require. License fees increase overtime because our business will flourish, and therefore we
use surge pricing. After a minimum of 1 and a half years of a long term partnership, we decided
to decrease the prices afterwards as a reward for customers by trusting and working with us. In
terms of marketing, according to the Forbes’ EXpert Panel (2021), YouTube is the mainstay for
marketing. Therefore, our company will run a branded entertainment Youtube channel with the
aim of increasing revenue. Combined with Youtube, we will utilize TikTok’s Creator Fund as an
extra revenue stream.
Slide 17
On the other hand, expenses total at almost 690,000 pounds in 2 years and 3 months. We don't
plan on spending a significant amount of funds on marketing since we will have in house
marketers. The R&D will commence in Q1 and we plan to carry it out over a year with a
decrease in investments since intense R&D will be in the first 2 quarters, and also to economize
expenditure. Fair salaries are what will keep our employees motivated. Below that, the website
and app will take around 3 quarters to develop and initial expenditure will be invested in the first
quarter. Similar to the website and app, our physical office will be compact and our expenditures
there include powerful computers, desktops, chairs, sofas and etcetera. Moreover, we plan to
rent an office space with an estimate of 10,000 pounds for 3 months. For software, an app
called ARkit offers 40 pounds monthly and 120 per quarter. This will help our R&D department in
developing a quality system. Our infrastructure is mainly WiFi, which will cost us 300 pounds
quarterly with utility bills at around 900. Overall, our first quarter in running this business
witnesses a 56,000 pound loss followed by 6,100 losses in quarters 2 and 3. This is because of
expensive initial investments. Overtime after quarter 3, we see a forecast of almost 150,000
pounds profit after quarter 4 until quarter 9.
Slide 18
I would like to conclude this podcast by mentioning that although there are potential ways as to
why this innovative idea can fail, it is still possible for it to succeed if all goes according to plan.
It can fail due to 3 reasons: the customer will not accept the innovation, it is not an accurate
technology that can measure human sizes in comparison to the human eye, and it is costly. On
the other hand, it could succeed, according to the business model and the forecast. There are
lots of features included in the model and the most crucial aspects are revenue streams, value
propositions, and channels of communication or distribution. Regarding forecasts, the business
can be profitable over a course of months given that the estimates are realistic.