Channels for Resolving Fluctuating Demand of Products in E-Commerce - with a Bias on Online - Research Proposal Example

Channels for Resolving Fluctuating Demand of products in E-commerce: With a Bias on Online Shops/Website Author’s name Institutional affiliation Abstract The paper contains a detailed research proposal on causes and channels for resolving fluctuating demand of products in e-commerce with a bias on focusing on online shops/website. Fluctuating demand is not a new concept since it already occurs in the traditional commerce. However, the aspect of internet and technology incorporating into the business world brings further competition and alternatives shopping sites for buyers across the world in an easy way. Fluctuating demand in e-commerce produces devastating effects some of which business can stand in operation. The research seeks to establish the causes so as to identify channels that can be improved to enhance online retailers’ competitiveness. The proposal intends to look further into the inefficiencies of the e-commerce applications, their usability, design and features, which retailers and customers interact with to perform their transactions. The proposal’s literature section identifies few of the causes and stress on the need for application re-engineering to enhance business competitiveness and attract customers. The paper further explains the methodology and ethical issues associated with the research. Keywords: Retailers, E-commerce, business, customers, supply chain, online shops, transaction, marketing, Methods 1. Rationale of the research The development in technology and internet service has over the past two decades provided employment and shopping opportunities for the society. The internet space is now a home for numerous online businesses that contribute a substantial portion in the distinguished national retail sales. Sales, marketing, purchase and ordering activities among others are been handled in E-commerce, which avail easy shopping and business between clients and suppliers. However, though the e-commerce is on rise globally, you have to admit that e-commerce are capital intensive operations and have in the past been experiencing volatile customer demands. Some of these fluctuations could be immediate or occur gradually affecting the profitability and rate of return. The research project will focus on varying demand of products in electronic commerce, specifically to establish the causes of the problem so as to find opportunities that can be exploited to resolve the issue. It is hence necessary that online business owners or retailers implement strategic actions to enhance e-commerce businesses and their management against effects of the businesses fluctuating demand. The reason for conducting the research is to assists the businesses come up with innovative plans to help improve demands of products/services they offer in the competitive global market. It would major on improving the websites or marketing space to enhance customer attraction and demand to the products. This in a way exposes the desirable features and specifications that were not captured by the software developers of the interface used by business management and interacting clients. 2. Research questions 1. Identify the causes of fluctuation of demand in E- commerce or internet retailing? 2. Explore ways internet retailers could enhance their market reach and influence customers buying or ordering behaviour? 3. Literature Review Demand is the driving force of businesses in any economy. Without demand then business products remain in stock because there is no movement, which could cause the supply to diminish because products are no market. Unlike normal transactions where sellers and buyers meet, evaluate the product and negotiate one on one, E-commerce falls short of such advantages, which affect their businesses indirectly. E-commerce is literally perceived to be the sales and purchase of products over the internet; it is a shallow meaning and considering the evolution of technology and commerce, it is still uncertain (Thanasankit, 2003). E-commerce is a recent concept that evolved around the mid 90s and with capacity of more growth. According to Basu, Wigand described E-commerce as an application of information and communication technology that supports the entire value chain of business processes (whether complete or partial) performed electronically and structured to achieve a business goal (2007). The posing difference between the traditional commerce and E-commerce is the use of the virtual space for communication and transactions. Both types of commerce share certain challenges in business and their transactions. However, E-commerce faces certain structural inefficiencies in its operation, which limits the user of the systems from time to time especially when changes are applied. 3.1 Seasonality There are many E-commerce retailers in industries that are high affected by seasonal consumption of products and services. For example in air travel and fashion industries, online booking and clothe purchase in different clothe lines increases close and during the holidays than in other business days. Seasonality in business affects certain industries most compared to others; Maharjan associates seasonal fluctuation in economic activity to changes in climate and leisure time attributed to vacations and holidays (2012). In this context, vacations and holidays contribute highly to E-commerce demand fluctuations as the population demanding the product or service increases. The termination of vacations and holiday periods effectively change the business by reducing the demand of service/product offered. Seasons tend to interchange; the peak followed by the off peak. However, they are unlikely to cause much of a problem because they are at least relatively predictable (“A classification,” n.d). Unpredictable seasons would find or leave online businesses suspended for some period, due to the short surges caused by the demand. If seasons are predictable then E-commerce retailers could easily plan for seasonal demand fluctuation in advance. Most researches tend to focus on the demand aspect of commerce while little has been covered on the seasonality of the E-commerce systems. Online systems have had a social impact in people’s lives and their activities. While demand influences the business, the uptime of the system also interferes with the demand and the relations between retailers and buyers. The impact for normal commerce transactions could not be as severe as that on E-commerce. Breakdown of an E-commerce operation, especially during the peak seasonal shopping and aggressive marketing periods could not only lead to lost revenues, but damage company’s reputation and difficulties in raising up the demands once again (Shih, 2013). Some websites developed to support e-commerce are not robust enough to handle the generated traffic of their clients and consumer demands at peak times, which results to frequent the system downtime. Most retail systems are integrated with other larger systems from bigger companies that either supply or distribute to them the products. When a system goes down for a period, the customers would seek alternative means to meet their needs, because it affects the supply chain down to the consumer, when the products and transactions cannot be cleared (Chopra & Sodhi, 2004). The essential feature in business is to avoid keeping customers waiting; and considering the global competition, e-commerce retailers need to re-assess their website and technology infrastructure to be able to engage and compete in the market. 3.2 Marketing and competition activities Every organization in the supply chain has its own goals and objectives, and could therefore formulate strategies to compete effectively in the market. However, for the supply chain to achieve profitability Kroenke enforces that “each organization has to operate at less than its own maximum profits” ( n.d, p. 15). Retailers are the parties operating down in the supply chain and service the customers’ needs by providing the combination of products they need. The number of intermediaries operating between the producer and the consumer play a larger role in cost reduction of the transaction to the end consumer. The evolution of E-commerce industry and its globalization has led to expansion of business practices, which introduces dominant supply chain participants that end up influencing the intentions and performance of other involved parties (Barber, N.d). Whether it is manufacturer, supplier, distributor, retailer power centric, it would dictate whom the end consumers want to purchase the product from. Products produced at a high cost from the manufactures and supplies side would translate to high prices of a product at the retailers end. If the product is available at a cheaper price through normal commerce, then it would be consumers’ option. Similarly, when the retailers have to compete with distributors or other intermediaries in the supply chain, it influences the demand and its distribution among the retailers and other players. Dagman and Landstrom state that disintermediation changes the business logistics among other activities; to allow produces deal directly with the customers, by passing other intermediaries to access the retailers, it could lead to benefitting producers and customers more than others (2004). Manufactures or producers that deal with consumers directly provide them with much better offers than retailers can compete with. Retailers can however survive the disintermediation by proving they can add substantial value to the supply chain, so that consumers cannot only choose their products, but their specific outlet. 3.3 The bullwhip effect The retailers risks lots of their investment in inventory of the products for unpredicted consumer behaviour. Financial markets also tend to vary with varying economic factors, which expose partners in the supply chain to the bullwhip effect, that in a way affect customer behaviours. According to Schniederjans and Cao, the bull whip effect refers to phenomenon where orders sent upstream to the manufacturer and supplier portray larger variance than sales to the end customer downstream, hence distorting demand information upstream (2002). Much of the causes of the bullwhip effect have been eliminated by use of electronic media to conduct commerce, which improves information sharing among supply chain partners. Companies like Campbell soup have utilized internet and IT capabilities to alleviate bullwhip effects; where EDI technology was used to link the company with retailers, facilitating exchange of information electronically over sales and flexibility of customer demand to influence production upstream (Gupta & Mishra, 2012). Price variation is a sensitive area for the supply chain and end consumer. Supply chain may adopt certain marketing strategies that lower prices and encourage forward buying by the consumers, due to their perception of future uncertainty. The relation between price and volume in economics makes the two factors o be perceived as substitute measures of the market reactions (Dardan, Stylianou & Dardan, 2005). The net effect is that customers will end up purchasing more for the future; this is not their actual consumption pattern and will cause their future demand to decrease drastically will that of the supply chain upstream would increase to meet the earlier demand projected. Amazon Company has a price fluctuation feature of their products. Though meant for customer advantage, most of them are frustrated by the fluctuating pricing they have to seek for alternative outlets rather than track the prices, resulting to low demand for products in certain periods (Evans, 2012). Though with a suitable system, customers require non confusing figures and system that will not consume most of their time performing the transaction processes. 3.4 Push and Pull systems and fluctuating demand Traditionally, supply chains relied on push system to where most of the production decisions were depended on forecasting. Even to date numerous online retailers still depend on the system in their supply chains to handle the fluctuating consumer demand. However, this comes with other costs of facilitating upstream power over the design and production of the products and risks customer dissatisfaction. One strategy of controlling consumers’ demand fluctuation is the use of pull systems; companies have made tremendous steps by integrating push and pull system to enhance customer service (“Business,” N.d). The gradual but increasing shift from push to pull systems shifts the focus to the consumer demand, and production becomes consumer centric. Amazon Company adopted the push-pull system some years ago and has so far managed to improve the customers’ service; as the business grew it not only expanded the variety of products from books, but introduced personal shopper service to guide consumers, and increased the company’s number of outlets across the world (Goy, Ardissono & Petrone, n.d). There is a great need for E-commerce systems to be developed in a manner that fits customer requirements to provide a platform that would enhance their interaction with the retailers and meet their needs much easier. Numerous new entrant retailers have taken advantage of social media to influence consumers buying behaviours and to enhance their marketing power in what is currently referred as social commerce (Baghdadi, 2013). Though E-commerce has fundamentally changed the way businesses are conducted, it does not escape from the challenges facing commerce activities. However, technology employed is E-commerce’s strength and weakness in business to influence consumers’ demands on the retailers’ end. The development of the marketing space and websites online show more potential for re-engineering to improve retailers’ management and consumers’ support services and interaction which could help control the fluctuating demand. 4. Methodology/method/ sample The research intends to use descriptive research methodology so as to obtain information on the current status of the E-commerce retail shops. Descriptive approaches are more “concerned with explaining and interpreting present conditions, practices, structures, relations, processes or evident trends at a specific place and time” (“Descriptive,” n.d, p.70). By studying the retail shops and websites, it would be possible to gather information on the design and features of the E-commerce applications that supply chain partners, retailers and most specifically, the customer use to perform their functions. Furthermore, the approach would provide the platform to interact with different variables dealing with E-commerce application to answer the descriptive and causal questions of the research. The methodology takes a phenomenological philosophical stance Methods: Two methods: questioners and observation will be used. A self completed questionnaire consists of a series of questions structured to be answered by the individuals and enable gathering on information. For this project sufficient data and information is required from multiple sources (online retailers ad customers from different online shops) to capture their attitudes and behaviours towards the online shopping applications and most importantly because the questionnaire can be mailed to the selected online retailers and their customers (CDC, 2008). The drawback for this method is the lack of an individual to guide the respondent through and the follow up task. The other method is observation, which would be self administered by the researcher to the respective websites or marketing space and evaluate their variations in structure, specifications, offers and usability for end users. It entails the researcher’s ability to encounter the different cases/situations with open mind and capture relevant information to the research problem being addressed (Phellas, Bloch & Seale, 2011). The challenge to observational method risk capturing unnecessary information unless with guided by a plan and is highly criticized for over biasness. 5. Sampling Strategy The research and data collection will employ probabilistic, simple sampling strategy to avoid biasness in sample representation. There are numerous E-commerce shops online that deal with different products and services. Some of these applications have developed been in operation for a long period while some are still new or unpopular. The research will focus on the retailers, customers and lastly the observation of the online shops/websites that facilitate their e-commerce activities. With a bias on the existence of the shops, sampling units would be chosen on random basis. The research would require multiple samples to capture the variations of the different designed and performance of the online retail shops. However, due to the time and cost constraints, the research would focus on four of the shops and its variables. 6. Ethical Issues The research would be dealing with different people (retailers and Customers) who need to be free in responding to the questions directed to them. The research requires that every individuals supporting the collection of data ranging from websites owners, retailers and customers to the online shops, freely consent to the activity and allowed to withdraw at their statement any time as the code of ethics and conduct stipulates (British Psychological Society, 2010). It is vital to assure them that their expression and attitudes towards the business and products are confident and would not lead to harm their existing relationships in the business. In this project the research will respect individual’s right to confidentiality and privacy; hence the information they are willing to reveal and with their identities will all be secure. Some questions could pose some form of discomfort, they can either stop answering them if they so wish, and where answers are given there should be no worry since the data will be protected. Similarly, where there is need to publish any information the researcher would ensure complete anonymity to protect the clients and respondents. References List A Classification of Supply Chain Problems. (N.d). Retrieved from http://www.ucalgary.ca/bnault/files/bnault/Supply_Chain_Problems210512.pdf Baghdadi, Y. (2013). From E-commerce to Social Commerce: A Framework to Guide Enabling Cloud Computing. Journal of theoretical and applied electronic commerce research, 8 (3). Retrieved from http://www.scielo.cl/scielo.php?pid=S0718-18762013000300003&script=sci_arttext Barber, E. (N.d). Strategic Approaches to Domination in Supply Chains. Retrieved from http://cdn.intechopen.com/pdfs-wm/18506.pdf Basu, S. (2007).Global Perspectives on E-Commerce Taxation Law. Surrey: Ashgate. British Psychological Society. (2010). Code of Human Research Ethics. Retrieved from http://www.bps.org.uk/sites/default/files/documents/code_of_human_research_ethics.pdf Business Logistics: From Push To Pull Logistics. (N.d). Retrieved from http://www.tampabayfreight.com/pdfs/Freight%20Library/nov2009/03_FrmPushToPullLogs.pdf CDC. (2008, November). Data Collection Methods for Program Evaluation: Questionnaires. Retrieved from http://www.mu.ac.in/myweb_test/Research%20Methadology-Paper-3/Chapter-5.pdf Chopra, S & Sodhi, M.S. (20040. Managing Risks to Avoid Supply Chain Breakdown. Retrieved from http://www.tlog.lth.se/fileadmin/tlog/Managing_Risk_to_Avoid_Supply-Chain_Breakdown.pdf Dagman, K., & Landstrom F. (N.d). Intermediaries Handling Disintermediation, Due to the Changing Business Environment of e-Commerce: A case study of incoming operators in the visiting/resort industry. Retrieved from http://epubl.luth.se/1404-5508/2004/094/LTU-SHU-EX-04094-SE.pdf Dardan, M., Stylianou, A., & Dardan, S. (2005). The Valuation of E-commerce Announcements during Fluctuating Financial Markets. Journal of Electronic Commerce Research, 6 (4): P. 312-326. Retrieved from http://www.csulb.edu/web/journals/jecr/issues/20054/paper5.pdf Descriptive Research. (N.d) Retrieved from http://www.mu.ac.in/myweb_test/Research%20Methadology-Paper-3/Chapter-5.pdf Evans, B. (2012, November 25). Price of Top Christmas Toys Fluctuate by the Hour as Amazon Third-Party Sellers Cash in on Soaring Demand. Retrieved from http://www.dailymail.co.uk/news/article-2238228/Price-Christmas-toys-fluctuate-hour-Amazon-sellers-cash-soaring-demand.html Goy, A., Ardissono, L., & Petrone, G. (N.d). Personalization in E-commerce Applications. Retrieved from http://www.di.unito.it/~liliana/EC/ah-book06-per-www.pdf Gupta, S., & Mishra, P. (2012, September). Information and Technology- Toll to Deal with Bull whip Effect in Supply Chain Management. International Journal of Management & Information Technology, 1(3): p. 26-36. Retrieved from http://cirworld.com/index.php/ijmit/article/view/13-MIT-199/pdf Kroenke, D. (N.d). Using MIS 2e,Chapter 8 E-Commerce and Web 2.0. Retrieved from www.cob.sjsu.edu/.../kroenke3ech08-v3.pptx‎ Maharjan, A. (2012, March). Demand Fluctuation in Off Season: Case Study of Summit Hotel, LaritPul, Nepal. Retrieved from http://www.theseus.fi/bitstream/handle/10024/41151/Maharjan_Anju.pdf?sequence=1 Phellas, C.N., Bloch, A., & Seale, C. (2011, November 22). Structured Methods: Interviews, Questionnaires and Observations. Retrieved from http://www.sagepub.com/upm-data/47370_Seale_Chapter_11.pdf Schniederjans, M. J., & Cao, Q. (2002). E-Commerce Operations Management. London: World Scientific Publish ling Shih, P. (2012, March 12). Lessons Learned Again with E-commerce Sites and Seasonality. http://www.peer1.com/blog/lessons-learned-again-ecommerce-sites-and-seasonality Thanasankit, T. (2003). E-commerce and Cultural Values. Hershey, PA: Idea Group Publishing Read More