Difference between revisions of "Profit in store vs e-shop"
| Line 30: | Line 30: | ||
costs that do not change with the level of sales for an e-commerce business. | costs that do not change with the level of sales for an e-commerce business. | ||
| − | = salary * employments e-shop | + | = salary * employments e-shop + 1000 |
Units: CZK | Units: CZK | ||
| Line 41: | Line 41: | ||
''' Variable cost e-shop ''' | ''' Variable cost e-shop ''' | ||
| − | costs that vary with the level of sales for an e- | + | costs that vary with the level of sales for an e-shop. |
| − | = 5000 + advertising budget + gifts + | + | = 5000 + advertising budget + gifts + (money paid for discount/2) |
Units: CZK | Units: CZK | ||
| Line 48: | Line 48: | ||
costs that vary with the level of sales for a physical store | costs that vary with the level of sales for a physical store | ||
| − | = | + | = 10000 + gifts + (money paid for discount/2) |
| + | Units: CZK | ||
| + | |||
| + | ''' Advertising budget ''' | ||
| + | |||
| + | the amount of money allocated by a business for promoting its products. The company is advertising through Google Ads and pays for each click. | ||
| + | = RANDOM UNIFORM(20, 1000 , 50 )*25 | ||
Units: CZK | Units: CZK | ||
| Line 54: | Line 60: | ||
the cost of renting a physical location for a business. | the cost of renting a physical location for a business. | ||
| − | = | + | = 80000 + parking |
Units: CZK | Units: CZK | ||
| Line 66: | Line 72: | ||
the number of employees working in a physical store. | the number of employees working in a physical store. | ||
| − | = | + | = 4 |
''' Employments e-shop ''' | ''' Employments e-shop ''' | ||
| Line 91: | Line 97: | ||
the amount of money earned from an e-shop. | the amount of money earned from an e-shop. | ||
| − | = price * quantity sold e-shop * (1+(advertising budget-0.5)) | + | = price * quantity sold e-shop * (1+(advertising budget-0.5)) * customer satisfaction e-shop |
Units: CZK | Units: CZK | ||
| Line 97: | Line 103: | ||
the amount of money earned from a physical store. | the amount of money earned from a physical store. | ||
| − | = price * quantity sold store * (1+(advertising budget-0.5)) | + | = price * quantity sold store * (1+(advertising budget-0.5)) * customer satisfaction store |
Units: CZK | Units: CZK | ||
| Line 103: | Line 109: | ||
the number of products sold by e-shop. | the number of products sold by e-shop. | ||
| − | = | + | = RANDOM UNIFORM(500, 1000 , 800) |
Units: m^3 | Units: m^3 | ||
| Line 109: | Line 115: | ||
the number of products sold by a physical store. | the number of products sold by a physical store. | ||
| − | = | + | = RANDOM UNIFORM(300, 700, 500 ) |
Units: m^3 | Units: m^3 | ||
| Line 115: | Line 121: | ||
the amount of money that is charged for a carpet | the amount of money that is charged for a carpet | ||
| − | = 150 + delivery | + | = RANDOM UNIFORM(150, 650 , 300)+delivery |
Units: CZK | Units: CZK | ||
| Line 145: | Line 151: | ||
a reduction in the regular price of a product. The current discount is 10 % | a reduction in the regular price of a product. The current discount is 10 % | ||
| − | = | + | = RANDOM UNIFORM(0.6, 0.9 , 0.7) |
| + | Units: % | ||
| + | |||
| + | ''' Money paid for discount ''' | ||
| + | |||
| + | the money which the company spent to give the customer a discount | ||
| + | = order cost*discount | ||
Units: CZK | Units: CZK | ||
| Line 161: | Line 173: | ||
the degree to which customers are happy with e-shop's products. | the degree to which customers are happy with e-shop's products. | ||
| − | = | + | |
| − | Units: | + | If the store gives gifts, it will increase revenue by 2%. |
| + | If the store gives a discount of 30%, it will increase revenue by 20%. | ||
| + | If the store gives a discount of 10-20%, it will increase revenue by 10%. | ||
| + | |||
| + | If the store has gifts and a 10-20% discount, the revenue will increase by 12%. If the store has gifts and a 30% discount, the revenue will increase by 22%. | ||
| + | |||
| + | = IF THEN ELSE( (IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.12 , 1.12 , 1.22) | ||
| + | Units: % | ||
''' Customer satisfaction store ''' | ''' Customer satisfaction store ''' | ||
the degree to which customers are happy with a physical store's products. | the degree to which customers are happy with a physical store's products. | ||
| − | = | + | |
| − | Units: | + | If the store has an available parking spot, it will increase revenue by 2%. |
| + | If the store gives gifts, it will increase revenue by 2%. | ||
| + | If the store gives a discount of 30%, it will increase revenue by 20%. | ||
| + | If the store gives a discount of 10-20%, it will increase revenue by 10%. | ||
| + | If the store works on holidays, it will increase revenue by 5%. | ||
| + | |||
| + | If the store has gifts, parking, working on holidays, and a 10-20% discount, the revenue will increase by 12%. If the store has gifts and a 30% discount, the revenue will increase by 24%. If the store has gifts, parking, working on holidays, and a 30% discount, the revenue will increase by 34%. | ||
| + | |||
| + | = IF THEN ELSE( (IF THEN ELSE(parking=5000, 1.02 , 1 ) + IF THEN ELSE(opening hours=1.05, 1.1 , 1 ) + IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.24 , 1.24 , 1.34) | ||
| + | Units: % | ||
== Model == | == Model == | ||
Revision as of 23:03, 25 January 2023
Problem definition
An unnamed company that sells carpets has its own store in Prague. During COVID-19 the company reopened an e-shop, so it currently has two mutually supporting sales channels. Both types of stores have their advantages and disadvantages. At the same time, there are various factors that affect the profit. Examples of these factors are the following: customer satisfaction and needs (carpet quality, order processing speed, price, etc.), expenses (advertising, rent, employees, etc.), the possibility of expansion, etc. To ensure customer satisfaction the company should make some expenses.
The goal of this simulation is to find out what parameters can increase profit the most (individually for each type of store), to find a balance between expenses to satisfy the customers in order to achieve the profit, and in the end to compare these parameters.
Method
The Vensim program is used as a modeling tool, which makes it possible to display and simulate the dynamics of the entire system.
Variables
Profit
the amount of money a business makes after all of its expenses have been paid.
= revenue - cost Units: CZK
Cost
the amount of money that is required to acquire a product or to raise customers' satisfaction.
= fixed cost e-shop + fixed cost store + variable cost e-shop + variable cost store Units: CZK
Revenue
the amount of money a business earns from its sales.
= revenue e-shop + revenue store Units: CZK
Fixed cost e-shop
costs that do not change with the level of sales for an e-commerce business.
= salary * employments e-shop + 1000 Units: CZK
Fixed cost store
costs that do not change with the level of sales for a physical store.
= salary * employments store + building rent Units: CZK
Variable cost e-shop
costs that vary with the level of sales for an e-shop.
= 5000 + advertising budget + gifts + (money paid for discount/2) Units: CZK
Variable cost store
costs that vary with the level of sales for a physical store
= 10000 + gifts + (money paid for discount/2) Units: CZK
Advertising budget
the amount of money allocated by a business for promoting its products. The company is advertising through Google Ads and pays for each click.
= RANDOM UNIFORM(20, 1000 , 50 )*25 Units: CZK
Building rent
the cost of renting a physical location for a business.
= 80000 + parking Units: CZK
Salary
the amount of money that is paid to an employee for their work.
= 25000 * opening hours Units: CZK
Employments store
the number of employees working in a physical store. = 4
Employments e-shop
he number of employees working in an e-shop.
= 1
Opening hours
the time when a business is open. If there is a holiday the store is open and employees will get a +25% to their salary.
= IF THEN ELSE(holiday=1, 1.25 , 1 )
Holiday
= RANDOM UNIFORM(0, 1, 1)
Parking
the availability of parking for customers at a physical location.
= 5000 Units: CZK
Revenue e-shop
the amount of money earned from an e-shop.
= price * quantity sold e-shop * (1+(advertising budget-0.5)) * customer satisfaction e-shop Units: CZK
Revenue store
the amount of money earned from a physical store.
= price * quantity sold store * (1+(advertising budget-0.5)) * customer satisfaction store Units: CZK
Quantity sold e-shop
the number of products sold by e-shop.
= RANDOM UNIFORM(500, 1000 , 800) Units: m^3
Quantity sold store
the number of products sold by a physical store.
= RANDOM UNIFORM(300, 700, 500 ) Units: m^3
Price
the amount of money that is charged for a carpet
= RANDOM UNIFORM(150, 650 , 300)+delivery Units: CZK
Delivery
the delivery cost depends on the order weight. If the order cost is more, than 5000 CZK then the delivery is free.
= IF THEN ELSE(order cost>5000, 0 , IF THEN ELSE(order weight<5, 159 , IF THEN ELSE(order weight>5 :AND: order weight<15, 289 , IF THEN ELSE(order weight>15 :AND: order weight<30, 399 , IF THEN ELSE(order weight>30 :AND: order weight<50, 599 , IF THEN ELSE(order weight>50 :AND: order weight<75, 799 , IF THEN ELSE(order weight>75 :AND: order weight<100, 999 , IF THEN ELSE(order weight>100 :AND: order weight<150, 1389 , IF THEN ELSE(order weight>150 :AND: order weight<300, 1649 , IF THEN ELSE(order weight>300 :AND: order weight<400, 1749 , 1979 ) ) ) ) ) ) ) ) ) ) Units: CZK
Order weight
the weight of an order placed by a customer.
= RANDOM UNIFORM(1, 500, 1) Units: kg
Order cost
the cost of processing and fulfilling an order placed by a customer.
= RANDOM NORMAL(200, 100000 , 5000 , 2000, 1000) Units: CZK
Gifts
items that are given to customers as part of a promotion. If the order cost is bigger than 2000, customers will get a gift, which cost 500 CZK.
= IF THEN ELSE(order cost>2000, 500, 0 ) Units: CZK
Discount
a reduction in the regular price of a product. The current discount is 10 %
= RANDOM UNIFORM(0.6, 0.9 , 0.7) Units: %
Money paid for discount
the money which the company spent to give the customer a discount
= order cost*discount Units: CZK
Customer satisfaction
the degree to which customers are happy with a business's products.
= customer satisfaction grow
Customer satisfaction grow
the increase in customer satisfaction over time.
= customer satisfaction e-shop + customer satisfaction store
Customer satisfaction e-shop
the degree to which customers are happy with e-shop's products.
If the store gives gifts, it will increase revenue by 2%. If the store gives a discount of 30%, it will increase revenue by 20%. If the store gives a discount of 10-20%, it will increase revenue by 10%.
If the store has gifts and a 10-20% discount, the revenue will increase by 12%. If the store has gifts and a 30% discount, the revenue will increase by 22%.
= IF THEN ELSE( (IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.12 , 1.12 , 1.22) Units: %
Customer satisfaction store
the degree to which customers are happy with a physical store's products.
If the store has an available parking spot, it will increase revenue by 2%. If the store gives gifts, it will increase revenue by 2%. If the store gives a discount of 30%, it will increase revenue by 20%. If the store gives a discount of 10-20%, it will increase revenue by 10%. If the store works on holidays, it will increase revenue by 5%.
If the store has gifts, parking, working on holidays, and a 10-20% discount, the revenue will increase by 12%. If the store has gifts and a 30% discount, the revenue will increase by 24%. If the store has gifts, parking, working on holidays, and a 30% discount, the revenue will increase by 34%.
= IF THEN ELSE( (IF THEN ELSE(parking=5000, 1.02 , 1 ) + IF THEN ELSE(opening hours=1.05, 1.1 , 1 ) + IF THEN ELSE(gifts=500, 1.02 , 1 ) + IF THEN ELSE(discount<0.7, 1 , IF THEN ELSE(discount>0.7 :AND: discount<0.8, 1.2 , 1.1 ) ) )= 1.24 , 1.24 , 1.34) Units: %
