Group 2: e-Commerce vs. Storefront Kevin Sell Minh Si Kimsenjaya Tjendana Xibin Wu.

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Presentation transcript:

Group 2: e-Commerce vs. Storefront Kevin Sell Minh Si Kimsenjaya Tjendana Xibin Wu

Business Venture Business Type: Book Seller Market focus: College students Scenarios: 1. Storefront 2. e-Commerce

Key Advantage Bookstore: –Higher discount percentage per book from the retail book seller e-Commerce: –Low overhead

Criterion to Determine the Best Alternative Neither Input Nor Output is Fixed Therefore Maximize Profit

Assumptions Minimum Attractive Rate of Return: 15% Annual Book Sales: 20,000 books Average Selling Price: Storefront - $90 e-Commerce - $85 Analysis Period: 10 years Discount: 10% for e-Commerce 15% for storefront No equipment purchase, lease instead

Annual Cash Flow Diagram e-Commerce Storefront

Annual Worth Analysis Bring all annual ATCF to present P=F(P/F,i,n) Find Annual Worth from P A=P(A/P,i,n) e-CommerceStorefront AW$28551$84767

Sensitivity Analysis: MARR Range: 10% - 30%

Sensitivity Analysis: Analysis Period Range: years in 2 year increments

Sensitivity Analysis: Discount Percentage Range: 5% - 20%

Sensitivity Analysis: Sales Volume Range: 10, ,000 books

Sensitivity Analysis: Selling Price Range: $82 - $100 per book

Conclusion The Winning Scenario Based on Maximizing Profit is “Storefront”

Reference Newnan, Donald G.. Essentials of Engineering Economic Analysis. Oxford University Press, NY Elena’s Hair Salon. San Diego, CA. Baker & Taylor Retail Services for Book Sellers Amazon.com Bronco Bookstore SBC Yellow Page SoCal Yellow Page In & Out Warehousing INC Salary Wizard of Salary.com Dr. Phillips R. Rosenkrantz

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