Shareholder Update – November 2015

In October, we experimented with a new sales strategy with the aim to increase long-term earnings and profitability. Traditionally, we have priced ourselves at the lowest price on the market place to ensure maximum liquidity in a month; however, some further analysis suggested that the price of a good fluctuates substantially in any given month and that RecyclaBox could yield higher earnings by increasing the price of our items. For instance, the price of a mid-value DVD typically fluctuates between £1.15-£2.50, and previously we have priced immediately at £1.14 to ensure the quickest rate of sale. This month, we initially uploaded these items at £1.89, and then periodically reduced the price week-on-week until the item sold. This resulted in a 68% increase in revenue, to £3,208 and has had a massive impact on our average profit margin. Sales of newly uploaded stock were monitored and compared at different prices. The results highlighted that our stock had previously been underpriced and near to the end of October similar stock was starting at £2.49. In the future, we would like to invest in more intelligent pricing software that accurately monitors competitors pricing and liquidity to create a more sophisticated pricing model. Though this has given us valuable insight into what is possible going forward. On the purchasing side, this month we have tried to focus on improving customer service by making payment quicker and responding to customer enquiries with phone calls as well as emails. We have also begun the process of calling all of our customers to gather feedback; this will be crucial in improving the customer experience and our service for a roll out. RecyclaBox use increased substantially in Newport from £571 paid in quotes to £817; we attribute this to a greater awareness of the RecyclaBox amongst our customer base. We have also produced banner adverts that are attached to the chassis of each machine; this should engage customers that are walking past the machines, especially near checkout tills. This month we have had continued technical problems with the Cwmbran and Thornhill machines caused by two main things. Firstly, the shutters on the machines have begun to jam on occasion when opening and closing. Unfortunately, as a new machine, untested in a commercial environment, these issues are difficult to predict. To combat this we have created a technical fault log to accurately record and analyse issues as they occur and a technician has reduced the speed of the shutters, which in turn has increased the power in the motors that power the shutters. Secondly, Sainsbury’s staff, specifically cleaners have been unplugging the machines to plug in cleaning machines. To counter this, we have ensured that all staff are instructed not to tamper with The RecyclaBox. As a result, there has been a substantial impact on RecyclaBox use in October, especially in Cwmbran. Whilst, steps have now been taken to remedy this we expect use in the coming weeks to slowly pick up as customers see the machines online. Overall, October has been an incredibly valuable month for our development both from making significant progress with sales-side understanding and in creating a more robust and reliable system. Sainsbury’s have now requested feedback and analysis on the trail, which they will use to make an internal proposal for a roll out across further stores. As always, contact us if you would like any further information.

Many thanks,
Tom & James



020 7071 3945


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