| E-Commerce industry has grown rapidly in recent years, which generated more and more demand for financial assessments. However, as eCommerce investment has tremendous uncertainty, it's no longer appropriate to apply traditional evaluation methods, such as Net Present Value (NPV) method to eCommerce evaluation. The most important the reason is the cost spent on website development and website promotion is irreversible, uncertainty happens during the course of investment. Accordingly, the investment strategy must be flexible enough to accommodate any uncertainty. Traditional evaluation methods can't deal with the possibility of uncertainty and inevitably underestimate eCommerce investment projects; as a result, the investors missed a lot of investment opportunities.Real option is based on financial option theory; it makes up for the disadvantages for traditional investment decision-making strategy. Real option combines investment decision-making with market evaluation, and gradually becomes an important analysis tool for decision-making under uncertainty. Each time an investor catches a business chance to invest in an eCommerce project, the chance can be taken as an option- an American type option, which can be applied at any time. This paper firstly discussed the meaning of real option, along with its type and evaluation methods, based on this, the paper studied the features of eCommerce investment. Finally, by elaborating an eCommerce investment case, the paper combined theory and case study together, researched the evaluation model and steps, provided an innovative way for eCommerce investment evaluation. |
