NLO
New Life of Objects
A platform dedicated to facilitate the exchange of household utilities between students who move and those who move in.
Note of Intent
Problem
In an evermore globalized world, more and more young people move around for their studies or internships for short periods of time. There is no convenient exchange network for incoming and outgoing students permitting them to re-use their household utilities and items that have not been used to their full potential/fully depreciated. There is a high proportion of waste among students moving in and out of the same city. Outgoing students struggle to sell their used items while incoming students are forced to buy new items, sometimes for short use periods. This discrepancy creates waste that is harmful to the environment. We therefore want to reduce the amount of waste and reduce overconsumption by focusing on household utility waste among out of town students.
Proposed Concept
With this in mind, we decided to create NLO which stands for New Life for Objects, a platform dedicated to facilitate the exchange of household utilities between students who move and those who move in. In this purpose we will rent household items that were collected from students who were moving to student who are moving in. Collects will be organised. the list of objects that can be collected will be restricted for storage considerations. Will be accepted : toaster, coffee machine, printer, bin, hair dryer, boiler, pan, plates and glasses, microwave, vacuum, iron, blender & cooking robots, tupperware and other containers, multi-socket, hanger, shoe racks, lamp, decoration, small cooking items, shower items, bedding items excluding sheets. All items must by carryable, clean and in working order (if relevant), any items that does not comply with these conditions will not be accepted during collects. Rental will be proposed in exchange of a small rental fee for the semester, which will vary with the type of item and the length of time (one semester, six months, one year…). Students will pay upfront and other information will be recorded in order to enforce a fee for late returns, deterioration or failure to return items. This rental solution will be proposed through an app where students will be able to book their items (please refer to application visual below). This solution is targeted to Sciences Po students and international exchange students.
Our proposed solution, will offer an alternative to purchase new household items while preventing waste of objects that still can be used. The reusing of objects makes our solution effective and sustainable. Moreover, this is an innovative solution that currently doesn’t exist. NLO will be an original way to prevent waste but also to make people aware that objects can have several lives ! This solution is feasible because objects will be reused and move from a linear to a circular cycle (see figure below).
Moreover, we will acquire Sciences Po association status that will give us access to an area that we can use as a warehouse to store all collected items before we rent them.
POC and tests → We based our Proof Of Concept (POC) on a survey. Here are the results (add results + graphs)Based on the result of x sciences po student, we can say that …
Expected Positive impacts
Thanks to the sustainability of the solution, we expect this solution to reduce waste but also reduce useless consumption of household items. People will be able to make savings by reusing object while reducing total waste of household utilities. NLO will also raise awareness among Sciences Po students about waste and make them more conscious of solutions to avoid waste.
Major risks and actions to reduce them
Risks:
Lack of stock: As the product we are proposing relies entirely on donations, a major risk includes the potential lack of donations, and therefore, offer on our part.
Obsolescence of stock: if we receive products that we are unable to sell because of obsolescence, lack of demand for this particular product, or other impairment, the cost of stocking and transporting this item that would cause a net loss, as we would be covering the cost of storing an item without being able to make a profit or offer on it.
Varying demand: highly fluctuating demand makes it difficult to plan for future operations. A decreasing demand one period, resulting in an a large leftover stock, would increase the burden of stocking a larger amount of inventory.
Customer deterioration or failure to return items: following up on customers that have ruined, damaged or lost products requires time and effort. High rates of deterioration and failures to return items would be difficult to follow up on and reduce our credibility as an association able to enforce our business model.
Actions:
We could remedy to this first risk by hiking up our communications and marketing to sensitize audiences and inform them on the benefits of our offer.
Conduct a strict screening process on all donations to ensure that they correspond to an existing demand, are in suitable shape to be reused (have not depreciated enough), and that they will not lose value over time.
Partnership with Emmaüs would permit us to ensure that all of our stock goes to good use. We could donate items to this non-for profit organization in order to account for a stock that is much higher than demand.
We will undergo an in depth administrative process for customers, in which we record their personal information and contact information. We could ask for credit card information when customers sign up in order to incentivize them to return items, and in their original state. Credit card information could be used to enforce fines for students not returning some of the larger items.
Deployment strategy and major milestones
To begin with, we will organize a big collect of household utilities at Sciences Po. We will ask student to bring the items that they will not use anymore. We will then rent the items to other students, for a very small cost. We will also keep a deposit to make sure that they will give back the item in time, and in good conditions. We will repeat this until products are not in proper conditions. At this moment, we will send the items to be recycled. We will start the association in Sciences Po and wish to expand in other schools in Paris, and then in France.
Return on Investment analysis
Key Assumptions
Projected growth in turnover is expected to be 5% and 8% in year 2 and year 3 respectively The organisation maintains a cost of goods sold of 30% of revenue each year while other expenses like administration, transportation and marketing form 23%, 15%, and 14% of sales respectively. An initial investment of 5000 Euros will be contributed by team members to kick start the project and cover all start-up cost as well as pre-operating expenses.
Projected Income Statement
While the project is expected to record a positive gross profit year on year, other expenses which are substantial in the operations of the organisation accounted for the loss of EUR 73 recorded in the first year of operation. Subsequent years saw a rise in the bottom line of the firm mainly due to the increased awareness of the business and cost cutting measures attributable to the learning effect. A EUR1686 and EUR2087.5 profit was recorded for year 2 and year 3 respectively (see table 1.1). Table 1.2 shows the detailed break-down of the cost analysis and the determination of revenue for the three years
Table 1.1 Projected Income Statement for three years
Return on Investment (ROI)
Return on investment is computed as: ROI = Profit / cost of investment. Consequently, based on the three year profit projections; the organisation recorded a -1.5% ROI for year 1. Subsequently, ROI was rose to 33.7% and 41.8% in year 2 and year 3 respectively mainly due to the increase in profit for these two years (see table 1.4).
Table 1.4 Return On Investment (ROI)
Break-Even Analysis
This analysis outlines the sales level at which the firm will cover all its fixed expenses incurred during the start-up phase through to the three years under review. With a contribution margin ratio of 0.33, the business is able to break-even at EUR 9840. This results from a huge variable expense of EUR 10462 and a projected fixed expense of EUR 3250. As such, with an accumulated revenue base of EUR 9900 during the second year of operation, the organisation is expected to break-even in the second year (1.9 years). See table 1.5 for detailed computation of the break-even sales.
Table 1.5 Break-Even Analysis
Organization
Members of the association The members will all be masters students from SciencesPo. We will hire them depending on the skills they develop in their master. The first member will be a manager. The manager will be required to be a student of either the Finance & Strategy or the Economics and Business master. We will also have a finance manager. He/she will be required to be a student of either the Finance & Strategy or the Economics and Business master. We will also need a Communication & Marketing manager, to promote the association and handle the social networks accounts. He/she will be required to be a student of either the Communication or the Marketing master. We will also need a technician, to create and manage our website and app. He/she will be required to be a student of the Innovation & Digital Transformation master. Finally, one of the members will be in charge of the relations with school. He/she will be required to be a student of the HR master. Each of the members will also be in charge of handling the daily activity of the firm: handling the inventory, the contact with clients and so on. Since it is an association, members will not be paid.
Partners, sponsors, etc.
Emmaüs
We wish to create a partnership with Emmaüs. Indeed, if our stock exceeds demand or when items are not usable anymore, we would give them to the association instead of throwing it. Specializing in this sector of activity, Emmaüs often takes on transportation and moving fees itself, which could be beneficial for us.
Darty
We would also make a partnership with Darty. This retailer of household utilities could indeed giving us some household items when we need more. In exchange, by helping us, it will be part of a CSR (Corporate Social Responsibility) strategy for the firm and will improve both their image and respect of the law. Indeed, the decree 2005-829 of the 20th of July 2005 requires household appliance producers to deal with the collection and treatment of waste from electrical and electronic equipment placed on the market after 13 August 2005. We could then collaborate for the waste treatment when household utilities don’t work anymore.