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An online retailing company (Nozoma) is considering adding a fulfillment center in the Twin Cities. Currently, the company operates two other fulfillment centers in the
An online retailing company (Nozoma) is considering adding a fulfillment center in the Twin Cities. Currently, the company operates two other fulfillment centers in the Upper Midwest: Wisconsin and Iowa. It sends all packages by United State Postal Service, so that mailing cost is the same for all packages, but some customers have been complaining about the time it takes to receive their orders. The additional fulfillment center would allow Nozoma to shorten the time that it takes for many of their customers to receive their packages. Each package on average sells for $10.23. The average profit per package is $0.55. (The costs include the cost of the product itself as well as the cost to ship.) Currently, the size of the market is 100 million packages per year for all online retail packages. Nozoma has 8% of this market now. The company estimates that the market size (as a whole) will grow 10% per year in the next 5 years, and 5% per year after that. It will cost the company $6 million to build and outfit the fulfillment center, which will be completed by the end of the year (December 31). The new fulfillment center will increase its
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