The Cash Flow Risk Of The Transition From Traditional Retail Business To The Internet Retail Business Model

In recent years, traditional retailing has been impacted fiercely by Internet retailing. Internet retailing sweeps the market and takes over much market share amid the time when the whole retailing industry slows down its development. At this moment when internet technology is fast developing, it is a must for traditional retailing to get transformed. Since 2010, many traditional retailing enterprises have reached out for online businesses and tried for transformation, results seems to be good for some but bad for others. On the whole, only a few enterprises successfully transformed, most enterprises lost the battle of getting into online retailing industry. The reason was that most enterprises had not fully taken into consideration the risk after transformation, especially the lack of correct cognition and fruitful management on cash flow.This essay researched on the cash flow risk of transformation from traditional retailing enterprises to online retailer, it unveils features and mechanism of cash flow risk facing transforming enterprises to make it easier for transforming enterprises to better manage cash flow risk. For this purpose, this essay adopted both theoretical research and example analyses on cash flow risk. On the first, during theoretical research period, a cash flow risk theoretical framework was built for the transformed traditional retail business. Based on the two levels of value proposition, value network and maintaining, this paper analyzed the cash flow generated risk factors and how these factors affected cash flow risk. Secondly, during example research period, hypothesis was raised according to previous theoretical research results. Transformation from traditional retailing enterprises to online retailer would increase cash flow risk. To verify the hypothesis, data of listed companies between 2009 and 2014 in WIND database was chosen for regression analysis. Output of regression analysis and robustness test both demonstrated increased cash flow rate after transformation from traditional retailer to online retailer, which agrees well with theory of this essay.There exists great practical and theoretical significance of research on cash flow risk facing transformed traditional retailing enterprises, research in this essay enables transformed enterprises to better understand features of cash flow risk and to manage cash flow risk more scientifically, thus provides guidance to some extent for traditional retailing enterprises which intend to or has carried out transformations to online retailing enterprises...