1.What are advantages and disadvantages of estimating demand by virtual shopping?
There are multiple advantages of estimating demand of virtual shopping. The ability to estimate the demand directly influences the retailer’s ability to fulfill the customers’ orders. Retailers that fail to accurately project demands may lose business to other online retailers (Hassounch, 2008). From this standpoint, it is crucial that businesses attempt to determine the demand for an item. Furthermore, this determination, if accurate, can help the business to increase profitability and reduce overhead costs (storage, etc.).
Although there are many benefits of estimating the demand of virtual shopping there are also many disadvantages. Even though retailers attempt to determine how many of an item will sell, this is merely an estimate. There is no guarantee that consumers will purchase the item from the retailer. Furthermore, the consumer may find the item less expensive through another retailer. As a result, the retailer may have too many of an item. This is problematic as if the retailer holds the item for too long they may in turn loose money (cost of storage, lack of demand for the product, etc.).
2.How important is saving for a household and the economy? How much should be saved?
Saving is crucial for any household economy as it allows individuals to plan for unexpected expenses or retirement. Individuals that fail to save may severely jeopardize their financial stability if an unexpected event (illness, loss of job, etc.) occurs. Many individuals question how much of their income should be saved. Generally, the amount of money that households should save is between 10-20% of their annual income (CNN Money, 2012). However, others argue that individuals should save as much money as possible. Unfortunately, there is no one rule as to how much individuals should save. Instead, it is heavily dependent on their lifestyle as well as other factors. For example, an individual’s pension and 401K contribution-matching plans tend to vary from company to company.
- Hassounch D. (2008) Shopping in Virtual Worlds: Perceptions, Motivations, and Behaviors. Journal of Electronic Commerce Research 12 (4) 320-336.
- How much should I save? (2012) Retrieved from: http://money.cnn.com/retirement/guide/basics_basics.moneymag/index7.htm