Reference no: EM133177313

Question - Mr Amana has noticed that a lot of his competitors now sell online to customers in the UK, Europe and US. He has been considering closing the Brighton, Birmingham city centre and Manchester city centre branches in order to streamline the business activities and move 50% of their sales online. Several factors have to be taken into consideration when making this decision.

i) Cost of setting up delivery network - £150,000

ii) Cost of upgrading current website to handle large volume of sales - £50,000

iii) Salary of a fulltime IT programmer - £35,000 per annum

iv) Based on market research, there would be guaranteed sales of 100,000 units annually

The business also has the alternative of selling their products directly on Amazon and would have to take the following factors into consideration when making this decision.

i) Amazon fulfilment fees - £50,000

ii) High levels of competition between Amana souvenirs and other sellers on these platforms - Guaranteed sales of 65,000 units on Amazon annually with the potential to increase depending on demand.

iii) Lack of control over pricing and return policy.

Required - In your report, provide an analysis of Mr Amana's decision to go online and advise if they should set up their own online shop or sell on Amazon. You should take into consideration all the relevant costs.