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Group 2: e-Commerce vs. Storefront

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:

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Group 2: e-Commerce vs. Storefront

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

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

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

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

  5. 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

  6. Annual Cash Flow Diagram e-Commerce Storefront

  7. 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)

  8. Sensitivity Analysis: MARR Range: 10% - 30%

  9. Sensitivity Analysis: Analysis Period Range: 4 - 20 years in 2 year increments

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

  11. Sensitivity Analysis: Sales Volume Range: 10,000 - 30,000 books

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

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

  14. Reference • Newnan, Donald G.. Essentials of Engineering Economic Analysis. Oxford University Press, NY. 2002 • 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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