A System Dynamics Model of Online Stores’ Sales: Positive and Negative E-WOM and Promotion Perspective

Qiang Yan, Simin Zhou, Xiaoyan Zhang and Ye Li
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Qiang Yan: School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing 100876, China
Simin Zhou: School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing 100876, China
Xiaoyan Zhang: School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing 100876, China
Ye Li: School of Economics and Management, Beijing University of Posts and Telecommunications, Beijing 100876, China

Sustainability, 2019, vol. 11, issue 21, 1-13

Abstract: In this paper, we build a causal interaction diagram between the factors that may influence the sales and profits of online stores. An online store’s real operation data were used to help determine the causal relationship between variables. Finally, we proposed a system dynamics model and conducted a simulation of the operation of an online store. In this model, we focused on the impact of promotion and positive/negative electronic word of mouth (e-WOM) on the sales and profits of the online stores. The simulation results showed a similar trend to the real data and the main research finding showed that promotion is not a long-term measure for the sustainable development of online stores. Excessive promotion effort may lead to consumers’ dissatisfaction leading the increase of negative e-WOM. The systematic simulation can help us understand better the long-term effect of promotion and e-WOM on the operation of online stores. Finally, we gave some management suggestions for online stores’ sustainable operations.

Keywords: online store; positive e-WOM; negative e-WOM; promotion; system dynamics; sustainable operation (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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