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

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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)

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.

Suggested Citation

  • Qiang Yan & Simin Zhou & Xiaoyan Zhang & Ye Li, 2019. "A System Dynamics Model of Online Stores’ Sales: Positive and Negative E-WOM and Promotion Perspective," Sustainability, MDPI, vol. 11(21), pages 1-13, October.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:21:p:6045-:d:282130
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    References listed on IDEAS

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    Cited by:

    1. Sonia Singh & Subhra Mondal & Lata Bajpai Singh & Kalyan Kumar Sahoo & Subhankar Das, 2020. "An Empirical Evidence Study of Consumer Perception and Socioeconomic Profiles for Digital Stores in Vietnam," Sustainability, MDPI, vol. 12(5), pages 1-30, February.
    2. Roland Goldberg & Johan Gouws, 2023. "The Preferred Retail Format Of Millennials In South Africa," Malaysian E Commerce Journal (MECJ), Zibeline International Publishing, vol. 7(2), pages 68-74, September.
    3. Na Zhang & Ping Yu & Yupeng Li & Wei Gao, 2022. "Research on the Evolution of Consumers’ Purchase Intention Based on Online Reviews and Opinion Dynamics," Sustainability, MDPI, vol. 14(24), pages 1-26, December.

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