Impact assessment of external factors on cash flows of e-commerce companies

Evaluating the impact of external factors on cash flows is one of the priority directions for analyzing and planning the cash flows of e-commerce companies. It allows to receive information on the effectiveness of management and understand which part of the financial result is generated due to the internal efforts of both managers and employees, and which one was formed under the influence of the external environment.

The question of determining the influence of environmental factors on the enterprise was studied by such researchers as M. Albert, I. Ansof, K. Bowman [2], F. Kotler [3], L. Ligonenko [4]. The issues of the external factors’ influence on the enterprise’s cash flows were investigated by I. Blank [5], L. Ligonenko [4], V. Kovalev [6], M. Bilyk and others. Problems of assessing the influence of external factors were explored by D. Kipe [7], L. Stupuleva [8].

This study identifies and classifies external factors of influence on cash flows of e-commerce companies. The method for estimating the influence of external factors on cash flows for e-commerce companies was first developed.

The research purpose was to investigate the significance of external factors in the formation of cash flows of e-commerce companies and measure this impact in monetary terms. Based on the research of the aforementioned authors and e-commerce development trends, a task to elaborate a method for assessing the impact of external factors on cash flows, which will be the most relevant to the conditions of e-commerce activity in Ukraine was set.


External environment is a complex of external parameters and systems with regard to the enterprise’s internal boundaries that cannot be changed by the enterprise. The concept of ‘influence’ implies not only the need to adjust the enterprise’s strategy according to these factors. It also includes a financial impact, which is reflected in additional cash inflows or loss of funds.

According to I. Blank [5, c.253] and V. Kovalev [11, c.34], the main role in the system of external factors of influence on cash flows is played by the commodity market, stock market, taxation system of enterprises, suppliers and buyers’ lending practice, system of transactions, availability of loans and possibility of attracting free targeted financing.

Works of Y. Ivanov [9, p.173-174] introduce a generalized model of the external factors influence. It is based on the classification of factors as determined and undetermined, i.e., clear and unambiguous factors and factors whose impact is difficult to assess in monetary terms. By analogy, in order to assess the impact of the external environment on the cash flows of e-commerce companies, it is also advisable to adopt a two-tier hierarchical model, where external factors are the influence factors of the first level, with which the enterprise interacts directly (figure1).

External factors affecting cash flows of e-commerce companies

Figure 1. External factors affecting cash flows of e-commerce companies

Complementary factors of macro environment are the factors of the second level expressed by means of the inflation rate, the state of the economy, country’s investment attractiveness, purchasing power of the population, etc.

Let’s consider in more detail the external factors of influence on cash flows of e-commerce companies and define the method for their estimation.

  1. Competition and advertising activity of competitors exert the strongest impact on the size of cash flows of e-commerce companies. Competition influences heavily not only incoming, but also outcoming cash flows of the enterprise. The higher the competition, the smaller the proceeds from sales and the higher the costs of promoting a website to the top positions among search engines. So, if a website is listed among the top five search results, it has a chance to receive from 3 to 18% of visitors. If the website did not appear in the first 10 searches, the probability of selling goods will not exceed 1% (Table 1).

Table 1 – Dependence of the number of website visitors on its position in the search results [11]

Position in search results Visitors from Google Visitors from Yandex
1 18,2% 18,6%
2 10,1% 16,2%
3 7,2% 12,4%
4 4,8% 4,9%
5 3,1% 5,97%
6 2,8% 5,93%
7 1,9% 4,12%
8 1,8% 4,76%
9 1,5% 4,81%
10 1% 4,44%

For example, if during the year the website dropped from the 3rd position to the 5th, its income would decrease by 4.1% (7.2 – 3.1) of the market volume or by 57% (4.1 / 7.2 х 100) compared to the previous period. Such losses are unpredictable for e-commerce companies, so they are forced to allocate additional funds to improve the position of the website in the search results list.

  1. The e-commerce market is developing at a less rapid pace than, say, ten years ago. By the end of 2018, the number of new Internet users increased by 7% [12].
  2. Commodity markets demonstrate different dynamics depending on the type of goods or services. In particular, the market for services for businesses increased by 10% in 2018 [13]. If we consider certain specific products, some of them may enjoy a very rapid growth. Gyro boards are a bright example of it because the volume of sales grows by 900% per year [14]. However, soon this market will show a declining trend.
  3. Macroeconomic factors refer to the second-level factors. They exert a significant impact on the cash flows of any enterprise, including e-commerce companies. The direct influence on the cash flows of e-commerce companies is made by inflation expectations, consumer price index growth, exchange rate changes, interbank interest rates, monetary policy and the possibility of a financial crisis. Indirect impact is exerted by economic development of the country, liquidity of the banking system, money supply growth, etc. If the impact of inflation processes on cash flows can be determined using the inflation index, then more complicated calculations based on multifactorial modeling are required to calculate the complex impact of all indicators.

In order to offer a cash flow estimation method available to managers, it is proposed to use the rate of return on T-bills to assess the impact of macroeconomic factors. To calculate this indicator, the National Bank of Ukraine uses its own models, based on the complex impact of the above mentioned factors. Information on the T-bills’ rates is published on a monthly basis on the NBU’s website [15]. In particular, the estimated yield of T-bills varies between 18 and 19% during 2019 [15].

Let’s consider an example of the influence of external economic factors on the cash flows of online stores of digital goods (Table 2).


Table 2 –  Proceeds from the sales of online stores’ digital goods in 2015-2018

Domain Year, thousand UAH Growth rate, %
2015 2016 2017 2018 2015-2016 2016-2017 2017-2018 75,6 85,6 105,6 122,3 13,2 23,4 15,8 47,3 33,1 22,0 18,5 -30,0 -33,5 -15,9


Let’s determine how the external factors influenced the change in cash flow from sales.

Table 3 – Influence of external factors on cash revenues from sales for e-commerce enterprises in 2015-2018

2015-2016 2016-2017 2017-2018 2015-2016 2016-2017 2017-2018
Impact of competition on cash flows, % +10 -10 -25 -60 -55 -50
Impact of e-commerce market on cash flows, % +11 +8 +7 +11 +8 +7
Impact of the digital goods market on cash flows, % -5 0 +10 -5 0 +10
Influence of macroeconomic factors on cash flows, % +15,9 +15,9 +18,9 +15,9 +15,9 +18,9
General impact of external factors on cash flows, % +31,9 +13,9 +10,9 -38,1 -31,1 -14,1


The results of the analysis allow concluding that in identical markets and under the influence of the same macroeconomic conditions, the impact of competition can completely change the level of website development. In particular, the example of the website shows that a slight annual decrease in positions leads to a negative overall impact of external factors, which eventually causes a decrease in cash inflows.

Table 4 – Value of external factors in the changes of cash receipts from sales for e-commerce companies

2015-2016 2016-2017 2017-2018 2015-2016 2016-2017 2017-2018
Growth rate of cash receipts from the sale of goods, % 13,2 23,4 15,8 -30,0 -33,5 -15,9
General impact of macroeconomic factors on cash flows, % 31,9 13,9 10,9 -38,1 -31,1 -14,1
General impact of internal factors on cash flows, % -18,7 9,5 4,9 8,1 -2,4 -1,8


The coefficient of correlation between the growth rates of cash receipts from sales and external factors is 0.92 for both websites. This is a high figure, confirming that external factors really exert an influence on the formation of cash flows of e-commerce companies.

Consequently, the results of the research found that external factors have a significant impact on the cash flows of e-commerce companies. All external factors are divided into two levels. The first level consists of the determined indicators, which include competition, commodity market and e-commerce market. Competition exerts the greatest impact among all these indicators. The second level comprises undetermined factors. This is a set of macroeconomic indicators, which are combined in one indicator for the purpose of calculating the cost impact on cash flows. The yield of T-bills is taken as the indicator of the impact of macroeconomic factors, the calculations of which include the dynamics and forecasts of inflation processes, the level of economic development, monetary and tax policy, etc.

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  12. Kolichestvo internet-polzovatelej v Ukraine uvelichilos [The number of Internet users in Ukraine has increased]. Available online: (in Russ.).
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  14. Jezhemesiachnyj prirost prodazh personalnogo elektrotransporta sostavliajet 80% [The monthly increase of personal electric transport sales is 80%]. Available online: (in Russ.).
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If you want to quote this article, please use these references: 
Kostiuk-Pukaliak, О. (2019) Impact assessment of external factors on cash flows of e-commerce companies. Collection of abstracts of the International scientific-practical conference, "Innovative technologies in the development of modern society". April 18–19, 2019. Lviv: Lviv Polytechnic Publishing House. Pp. 118-122.

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