The Effect of E-Commerence on Supply Chain Management and Marketing in the Fashion Industry

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‘Electronic commerce and the Internet are fundamentally changing the nature of supply chains, and redefining how consumers learn about, select, purchase, and use products and services’ (Sreenivas, 2007)

According to Barnes and Lea-Greenwood (2006) and Berger (n.d), mass-communication has allowed consumers greater access to information and consequently the performance gap between companies can no longer be hidden. With the introduction of e-commerce, how consumers behave and what they demand has changed. Mintel (2011) reported that over 55% of all Internet users research products via the Web before making a purchase either in-store or online. With so much information at hand, consumers have become more demanding. Their willingness to wait to be satisfied has been reduced and instant product availability is expected (Fernie & Sparks, 2009). These new demands have rippled across supply-chains and impacted how fashion businesses deliver and maximise customer experience. According to Verdict (2010), the rising use of high-speed broadband worldwide is further facilitating the growth in online retail spend and its influence on the movement, storage and sale of merchandise from production through to consumption and service support. E-commerce is proving to be an increasingly significant distribution channel, poses both challenges and rewards for fashion retailers. The challenge for fashion companies has been to shift away from traditional methods of supply-chain management (SCM) towards an integrated approach that attempts to develop end-to-end supply-chains that are consumer-centric rather than product-centric, providing customized products and services (Sreenivas, 2007; Fernie, McKinnon & Sparks, 2010).

Over the last few years, many businesses in the fashion retail sector have forged success by entering into the e-commerce market and shaping their supply-chains in order to be responsive to these changes in consumer expectations and demands. Founded in 2000, pureplay e-commerce retailer ASOS, has maintained a competitive advantage by analysing and acting upon the detailed metrics that apply to its customer base. The company depends upon its supply-chain being “fast and flexible, with short lead-times and quick repeats and deletions” (Webb, 2010: 5). It is clear that ASOS place an emphasis upon agility and market responsiveness, defined by Christopher et al. (2004: 367) as being “characterised by short time-to market, the ability to scale up (or down) quickly and the rapid incorporation of consumer preferences into the design process”.

Supply-chains have had to become flexible enough to offer fashion businesses the ability to make changes in their operations or products in order to satisfy increasing consumer expectations (Bartlett, Julien and Baines, 2007). Fernie & Sparks (2009) stress the importance of agility in relation to SCM when flexibility and responsiveness are demanded. Harrison et al. (1999 cited in Christopher & Towill, 2000) identified to be truly agile, a supply-chain must posses a number of distinguishing characteristics as Table 1 suggests. Table 1: Characteristics of agile supply-chain

Market Sensitive| * Utilizing information technolgy directly from point-of-sale to capture real consumer demand.| Virtual | * Sharing data between buyers and suppliers. * Information-based rather than inventory-based. * Enables partners in supply-chain to act upon real demand | Process Integration| * Leveraging the use of shared information. * Buyers and suppliers collaborate in joint product development, co-manage inventory and use common systems.| Network Based| * Increased emphasis placed on co-ordination, collaboration & relationship buliding among supply-chain memebers.|

Source: Christopher and Towill, 2000

In reaction to new players entering the market with online offers, many traditional retailers responded to this change and started trading on the...
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