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A computational analysis of capital chain rupture in e-commerce enterprise

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Abstract

E-commerce has rapidly developed in China. Despite a large number of emerging e-commerce enterprises, many of them withdraw from the market because of capital chain rupture. To expand the market share, enterprises usually reduce the price of a product or gain positive public opinion to enhance their influence on the market. However, improper methods may lead to capital chain rupture and disrupt the development of the enterprise. This thesis views one kind of product from e-commerce enterprise studies on the influence of promotional methods and stocking strategies on internal indexes such as cash flow and investor trust, as well as external indexes such as loyalty. The study then analyzes how these indexes affect the capital chain rupture of enterprises and determine the intrinsic mechanism underlying the promotional methods and stocking strategy. This study uses the multi-agent model and system dynamics to simulate the influence of internal and external indexes on a capital chain. The result is expected to provide suggestions for e-commerce enterprises.

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Acknowledgements

This research is supported by the National Natural Science Foundation of China (Nos. 71531009, 71271093).

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Authors and Affiliations

  1. School of Management, Huazhong University of Science and Technology, Wuhan, China

    Yi Song & Bin Hu

  2. Qingdao University, Qingdao, China

    Zhihan Lv

Authors
  1. Yi Song
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  2. Bin Hu
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Corresponding author

Correspondence to Zhihan Lv.

Appendices

Appendix 1: Model design of cash flow

From the “Shopping days in Tianmao,” when the enterprise offers a price reduction, the return rate increases. Thus, we assume that the benchmark of return rate is 1%, expressed as

$$Returnrate = 0.01 + \frac{{price^{t} - price^{t + 1} }}{{price^{t} }} + \frac{{update\_duration^{t} - update\_duration^{t + 1} }}{{update\_duration^{t} }}$$

where price t is the initial price and price t+1 is the discount price.

The operation revenue is expressed as OpRev = Sold * (1 − returnrate) * price, where Sold is the current quantity of sale.

The operating expense is OpExp = Sold * (1 − returnrate) * productcost + RPDA + I * holdingcost + 4% * OpRev

The operating income is

$$OpInc = OpRev{-}OpExp$$

The net income is

$$NetInc = OpInc*\left( {1 - taxrate} \right)$$

The cash flow is

$$CF = NetInc{-}4\% *OpRev$$

Appendix 2: Model design of investor confidence

When investors have confidence in the company, they are willing to invest in the company. The amount of money they are willing to invest depends on the interest stated in the balance sheet. Investor confidence is the normalized interest.

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Song, Y., Hu, B. & Lv, Z. A computational analysis of capital chain rupture in e-commerce enterprise. Electron Commer Res 18, 257–276 (2018). https://doi.org/10.1007/s10660-017-9278-3

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  • DOI: https://doi.org/10.1007/s10660-017-9278-3

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