Group 2 eCommerce vs Storefront Kevin Sell Minh

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) AW e-Commerce $28551 Storefront $84767

Sensitivity Analysis: MARR Range: 10% - 30%

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

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

Sensitivity Analysis: Sales Volume Range: 10, 000 - 30, 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. 2002 • Elena’s Hair Salon. San Diego, CA. • Baker & Taylor Retail Services for Book Sellers • Amazon. com • Bronco Bookstore • SBC Yellow Page • So. Cal Yellow Page • In & Out Warehousing INC • Salary Wizard of Salary. com • Dr. Phillips R. Rosenkrantz