Question

Would you expect a brick-and-mortar retailer or an online retailer to have a higher asset turnover? Why or why not? Which supply chain drivers impact asset turnover?

Answer 1

Answer:

An online retailer would on a balance of probability have a higher asset turnover than a brick-and-mortar retailer.

Explanation:

 

The reason is not farfetched. If done properly, an online retailer is most likely to succeed at reaching more customers and penetrating more markets.

The total population of active internet users is currently estimated at 4.5 Billion. For truly global products or retail outlets such as Amazon and Alibaba, this figure is staggering. It is impossible to compare a truly successful online retailer to a brick-and-mortar retailer whose market, at its best, covers only those within its locality.

So using online retail store such as Amazon as an example, they might have significant investment in online platforms, dedicated servers and warehouses, their turnover which as at 2019 stood at 4.5x is relatively strong.

The supply chain drivers which impact asset turnover are inventory, accounts receivables and facilities.

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