Store survival in online marketplace: An empirical investigation

Authors:
Youwei Wang;Shan Wang;Yulin Fang;Patrick Y. K. Chau
Affiliations:
School of Management, Fudan University, China;School of Business, Renmin University, China;Department of Information Systems, City University of Hong Kong, China;Faculty of Business and Economics, The University of Hong Kong, China
Venue:
Decision Support Systems
Year:
2013

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Abstract

In the past, many studies on business survival have been conducted but very few have explained the survival of online stores operating in the ''long tail'' market. To address this paucity, this study proposes a theoretical model, hypothesizing that online social networks, structural assurance, and online word-of-mouth (WOM) affect online store survival. An empirical study on 5772 online stores in two industries was conducted to validate the model. For social network factors, socialization efforts in SNS (social network site) personal space and online discussion forums were not found to be related to store survival. Structural assurance, as operationalized by the status of abiding by the ''faithful description'' consumer rights safeguarding program, has a significant impact on store life span. Furthermore, positive WOM, manifested as consistent DSR (Detailed Seller Rating) evaluations, was found to contribute to store survival. However, another WOM indicator, average DSR ratings, was found to be negatively related to store survival. In general, these results confirm some of our earlier hypotheses, while revealing some discrepancies from the theoretical predictions. Theoretical and practical implications on store survival in online environments are also discussed.