V-Intern Task 2: Projected Profit and Loss Statement for eBusiness Your Virtual Internship Task 2: Develop Projected Profit and Loss Statement for eBusiness Plan of Approach Your Internship Coordinator has asked you to develop a Projected Profit and Loss Statement for the company's eCommerce venture, spanning the course of two years

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V-Intern Task 2: Projected Profit and Loss Statement for eBusiness

Your Virtual Internship Task 2: Develop Projected Profit and Loss Statement for eBusiness

Plan of Approach

Your Internship Coordinator has asked you to develop a Projected Profit and Loss Statement for the company's eCommerce venture, spanning the course of two years. Additionally, you make recommendations regarding the company's technical infrastructure and mix of marketing methods.

Task 2 requires you to prepare three deliverables:

2.1 Develop Projected Profit and Loss Statement for your eBusiness

Setup an Excel workbook that includes:

Estimated eBusiness Profit and Loss Statement for two years by quarter

Supplemental data worksheet with assumptions or calculations that support your estimates for each line item in the eBusiness Profit and Loss Statement

2.2 Develop Technical Infrastructure, completed in the Infrastructure Cost Table that includes:

Estimated costs for each relevant cost category for each of the three sourcing options

Recommendations regarding whether your eBusiness should change to a different infrastructure sourcing model and, if so, when this should happen

2.3 Develop Marketing Mix Plan:

An executive summary of a recommended mix of marketing approaches and the staging of those approaches over the next two years in a two to three pages

Total marketing budget allocation for each quarter with a breakdown of the budget allocation for each recommended method over the next eight quarters in an Excel worksheet

 

Get Started

1. Review the above instruction from your Internship Coordinator to make sure that you understand the details of this task.
2. Download and review the three linked files for Task 2. These documents provide detailed information that you will need to thoroughly understand to complete the deliverables for this task. Take some time to review them carefully.

https://docs.google.com/spreadsheets/d/1rTFMpMPgF0IDW3Fl-jhfEqBeSANudhq-4uL_G_xxbNE/edit#gid=1995890932

Task 2 –Develop Projected Profit and Loss Statement for eBusiness

2.1 Develop Projected Profit and Loss Statement for your eBusiness

You will need to prepare a two-year projected profit and loss statement (P&L) for your eBusiness. including forecasting the traffic, conversion rate, and expected average sale per visit.

You need conduct research to construct a logical and reasonable business case that maximizes profits. The P&L you develop should be thorough, accurate and well supported, with clear explanations of your assumptions and reasoning. By the time you're done, the P&L should be easy for another person to read, and it should be easy for them to understand why you built it the way you did.

 

Set up the eBusiness Projected Profit and Loss Statement (P&L) workbook.	You will need to enter the spreadsheets to reflect your data.
Estimate eBusiness revenue.
To estimate revenue, you will need to consider the expected visitors to the site, how many of those visitors will make a purchase, and the size of an average purchase. Use your estimates to calculate quarterly revenue for the next two years. Keep in mind that, before you calculate revenue for Year Two, you will need to estimate Year Two traffic based on the growth pattern anticipates.
Estimate eBusiness costs.
Add a supplemental worksheet in your P&L workbook, track your assumptions and calculations for all costs related to the eBusiness. Once you have finalized your assumptions and calculations, update each related line item in the Profit and Loss tab of the workbook.
a.   Estimate Cost of Goods Sold (COG). "Cost of Goods Sold" is the cost that a company pays the supplier for the goods they sell. Given that your eBusiness is assuming the same markup on goods as for their bricks & mortar business, it can be calculated as a percentage of revenue from the Projected Profit and Loss Statement for your existing business.
b.   Estimate wages. Start with developing an organizational structure by listing the roles your eBusiness will need to launch and run the eBusiness. Next, determine how many full-time employees will be required to fill the roles you have identified. Review the Technical Considerations for your eBusiness for salaries related to SEO and web development; research the average salaries of any additional roles you have identified. Calculate total wages and include your supporting assumptions in the supplemental data tab. Keep in mind that you will want to maximize profits, while still ensuring that staffing levels can meet the demands of the business.
c. Estimate technical infrastructure cost. To calculate the infrastructure costs for the planned outsourced model, you will need to estimate how much total bandwidth will be required for each quarter, based on the estimated visitors to the site and the expected bandwidth required for each visit. Consider the information in the Technical Considerations for your eBusiness as you calculate these costs.
d. Enter the projected marketing costs based on the planned marketing budget.
e. Identify and estimate any additional costs. Review the Profit and Loss Statement for your existing business and the activities you identified in Task One; ensure that you have accounted for all costs related to launching and running the eBusiness over the next two years and you excluded any costs that are only related to running your brick and mortar business.
When calculating the cost of human resources, don't forget to consider all the costs to the company associated with employing that resource.

 

 

Task 2 –Develop Projected Profit and Loss Statement for eBusiness

2.2 Develop Technical Infrastructure for your eBusiness

For the purposes of the business case, you estimate your costs based on a fully outsourced model. However, at some point, it will be less costly to bring the infrastructure either partially or fully in-house.

You need estimate costs based on the evolution of our bandwidth requirements and determine if and when you should move to a different infrastructure sourcing model.

Please create a brief report with your recommendations and supporting reasoning and calculations.

1. Review the infrastructure sourcing options. Revisit the Technical Considerations for your eBusiness and review the information on the three different options for sourcing the technical infrastructure: 1) managed hosting, 2) cloud-based with in-house management, and 3) in-house servers.
2. Conduct a cost/benefit analysis of each model.
   1. Calculate the costs for partially and fully in-house models, taking into consideration the level of bandwidth required as visitors to the site ramp up over time. Enter the costs into Infrastructure Cost Template.
   2. Identify the business benefits and costs of each of the three models. A particular infrastructure sourcing model may be attractive even if it costs more. For example, a company may choose to support the infrastructure in-house even before it makes sense from a cost perspective because it enables the business to have total control over a critical function.
   3. Write up your recommendations. Synthesize your cost analysis and considerations of other benefits for each model and in the Infrastructure Cost Template, recommend whether your eBusiness should continue with a fully outsourced model for the next two years or migrate to a different model. If you recommend a different model, include the timing of the transition. Provide a brief explanation of your reasoning for your recommendations.

Note: Outsourcing prevents you from paying for more bandwidth than you need. It is difficult to size the needs of a website up front. Once you have some data, you can estimate future needs more accurately.

Note: Setting up and running a network can take a lot of expertise. It may not make sense to focus on building that expertise when the focus of the business is on launching the website and optimizing it for search placement.

3. Submit your Technical Infrastructure Sourcing Recommendations.  

 

Appendix:

Infrastructure Cost Template

Instructions

The cost categories you will need to consider for the infrastructure sourcing models are provided below.

• If a cost category is not applicable to a specific sourcing model, insert “N/A”. 
• Consider the expected demand (traffic and bandwidth utilization estimates) for each of the two phases of growth.
• Conduct your own research to determine for each sourcing model the costs to support the expected demand for each phase of growth.
• Estimate costs when it is not possible to pin them down.
• Fill in the cost table template (Part B of this document).
• Write a brief explanation of which sourcing model you recommend your eBusiness should deploy at each stage—startup and fully mature (Part A of this document).

Part A: Infrastructure Recommendation

Synthesize your cost analysis and considerations of other benefits for each model and recommend whether your eBusiness should continue with a fully outsourced model for the next two years or migrate to a different model. If you recommend a different model, include the timing of the transition. Include a brief explanation of your reasoning for your recommendations.

 

 

 

 

 

 

 

Part B: Cost Tables

 

Startup (low traffic and revenue): Managed Hosting Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain name     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

Startup (low traffic and revenue): Cloud-based with In-house Management Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain name     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

Startup (low traffic and revenue): In-house Servers Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain name     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

Fully Mature (high traffic and revenue): Managed Hosting Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain names     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

Fully Mature (high traffic and revenue): Cloud-based with In-house Management Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain names     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

Fully Mature (high traffic and revenue): In-house Servers Category Cost Description Servers     Hosting facility     Bandwidth costs     Domain names     SSL certificates     Merchant processing fee     Technical staff     Order fulfillment     Total

 

Task 2 –Develop Projected Profit and Loss Statement for eBusiness

2.3 Develop Marketing Mix Plan

The marketing consultant to estimate the yearly marketing budget for the next two years, assuming some unspecified mix of marketing methods (e.g., AdWords on search engines, optimizing our web site, email marketing, print ads, etc.). The marketing budget for Year One is $875,000 and for Year Two is $1,500,000. You need recommend a mix of marketing approaches that maximizes bang for the buck, and you need to know how the mix should evolve over the next two years by quarter.

One thing to keep in mind is your eBusiness has built a good quality email list of 10,000 store customers which you can leverage for the eBusiness. The coordinator would also like you to evaluate whether additional print, radio or TV marketing should play a role in the marketing plan, and provide some justification for your answer.

Please provide your recommendations and supporting reasoning in a short document.

1. Evaluate different marketing methods. Review the click through rates and purchase conversion rates for various eMarketing approaches from Marketing Consultant: Marketing Recommendations for your eBusiness. Investigate costs and results of more traditional marketing approaches and determine whether they are appropriate for your eBusiness.
2. Research pricing. You can refer to Google AdWords to determine their pricing for individual queries. For costs related to email campaigns and banner ads, refer to the Marketing Recommendations for an eBusiness.

Note: Don't pay more to get a customer than that customer is worth. Revisit your revenue and traffic estimates to calculate what an average customer is worth to the business. For example, if a customer is worth $8 to the company in sales you don't want to recommend a method that costs more than $8 to attract a customer.

3. Determine the appropriate mix of methods. Synthesize what you've learned about the effectiveness of different marketing approaches, their relative costs, and each method's role in marketing and promotion. Determine which mix of methods will best drive sales and increase brand awareness over the next two years. Keep in mind that the mix you recommend must not exceed the marketing budget.

 

Note: Consider how to evolve your marketing efforts to keep pace with your success. In the initial stages, the focus is on paid strategies to generate traffic. In these early stages you will begin work on Search Engine Optimization (SEO), but won't necessarily see the benefits right away. In the mid-stage, SEO efforts begin to take hold and paid strategies are minimized. As the site evolves, initial SEO efforts begin to plateau and there is a need to enhance SEO efforts by optimizing for additional search terms. Adding targeted paid strategies can help boost customers as the additional SEO efforts begin to show results.

4. Write up your recommendations. Summarize your recommended marketing approaches and the staging of those approaches over the next two years. Include a brief explanation of your reasoning for your recommendations.
5. Complete the marketing cost spreadsheet. Enter the costs allocated to each method over the next two years by quarter in an Excel worksheet. Total the costs allocated to all methods and verify that you have not exceeded the planned marketing budget.
6. Submit both your Mix Marketing Plan and the Excel worksheet with the allocated marketing costs.

Appendix:

Marketing Consultant: Marketing Recommendations for Your E-business

Executive Summary

The life-blood of an eCommerce site is relevant traffic. The online retail sales market is estimated to be over $873 billion dollars, and growing rapidly. The most effective way to attract some of the customers driving this immense industry and growth is search engine optimization (SEO). SEO provides the greatest amount of return on investment of any promotional method, and is a more trusted method of finding information than traditional advertising for users. In this report, we outline a strategy that emphasizes SEO promotion and compliments it with supporting efforts in AdWords, email, and banner advertising. With the right execution and a good mix of strategies, Your company can generate revenues from day one, with excellent prospects for future growth.

 

Your Website Objectives

The image you want to project with your website

The target market for your E-business is the individual or small business buyer who is purchasing either for themselves individually, or for an organization of less than 100 people. These consumers are especially sensitive to price, brand reputation, and storefront image. Most do not have an IT infrastructure supporting them, and therefore require additional customer or technical support.

 

Factors that are most important to this demographic of customers include price competitiveness, excellent customer support, a hassle-free experience, and access to the latest technology. In order to most effectively meet our customers’ expectations and minimize the effort or resistance to doing business, the website should exude the feeling of calm and competent expertise. We recommend lighter hues and tones of color with stylish contrasting trim. Most of these customers are professionals who appreciate a smooth navigation experience that is intuitive and contains few surprises. In this respect, navigating your (Green Bay) E-business website should be easy for someone who has never seen the website before, based on their experience with other similar product websites.

 

A distinctive color scheme and eye-catching design is certainly important, but the factors that really keep customers coming back are comfort, reliability, quality, competitive pricing, and – most importantly – an easy-to-locate website with strong visibility in the search engines.

 

The value-add your website will provide to your customers

Your E-business will serve individual and small business customers with top-of-the-line customer support, technology advice, aggressive competitive pricing, and a no hassle shopping experience.

Your eCommerce business model – How your website will achieve its revenue objectives

Central to achieving your revenue objectives is the acquisition of new customers for the online business unit. While referrals from satisfied customers at your bricks and mortar operation will provide one stream of potential customers, new customers from outside your existing sphere of influence are the most desirable for developing new revenue in the online retail business unit and will represent the vast majority of new revenue.

 

The most cost-effective source of potential customers will be from search engines. To access the stream of users typing in searches that are relevant to your business and the products that you sell, an aggressive search engine optimization strategy is recommended. Depending on the size of the online promotion efforts, your website can be effectively optimized to place well in the search results for between 10 and 50 search terms.

In addition to search engine optimization efforts, purchasing AdWord placement in Google and the equivalent in Yahoo or Bing is an effective complementary method of boosting traffic. 

Your On-Line Market

A description of your on-line marketplace (size, characteristics, etc.)

The consumer electronics marketplace is worth over $873 billion in annual revenue, growing at an estimated compound annual growth rate of approximately 7%. Presently, demand is led by the United States and Europe, while future demand is expected to be further boosted by developed and developing Asian economies as demand for consumer electronics deepens through their populations. The majority of this market transacts business online, defining an extraordinarily large market with opportunity for agile, cutting edge electronic retailers to gain market share.

Although competition in the consumer electronics retail industry is very aggressive and price-sensitive, premium experiences, as well as uncommon regional value add schemes, have the opportunity to gain significant traction in the marketplace. Critical for the success of any online electronic retail business is the volume of potential customers visiting the website with intent or possibility to buy. Not only do these potential customers generate revenue directly, but the information that your online business unit will collect about these customers contains potential value in itself, and the efficiency with which you acquire new customers will be a major factor in the valuation of your business. Therefore the importance of activity that generates relevant traffic to your website cannot be overstated.

How your market uses the internet for research and purchasing

Online research, including product reviews, is the single largest contributing factor to a purchase decision for consumer electronics buyers. Of those that purchased online, the primary determining factor in where they purchased was price, followed by convenience. Based on these factors your website must combine access to relevant information for your customers with highly competitive pricing and a convenient, easy-to-use purchase process. 

 

The Competition

Primary competitors and summary analysis of their business

Pure online electronics retailer competitors include Amazon.com, newegg.com, and BestBuy.com, as well as many more first- and second-tier competitors.

Primary competitor website features and services

Aggressive pricing, intuitive navigation, and convenient purchase processes are prevalent on all of these websites. All of these websites include some form of product recommendation system based on product popularity, or some other form of data mining.

Competitor rankings in Google, and Bing for your keywords

These websites also compete aggressively for high search result ranking on relevant terms, including specific product names. Although these electronic retailers are established, market share can still be captured from them by capturing users with competitive search engine rank placement, then converting them into paying customers on your website by providing all of the relevant information as well as a convenient and hassle-free purchase experience.