Managing supply network complexity with E-commerce platforms

E-commerce is part of our daily life. Numerous customers purchase products from e-commerce platforms such as Amazon and Alibaba every day. The use of e-commerce platforms in business-to-business purchasing is even more prominent. According to Statista, the global B2B e-commerce market is estimated to be over US$20.4 trillion.

To sell and deliver suitable products to customers, supplier companies on an e-commerce platform rely both on the platform digital infrastructure and the business network the platform creates. The digital platform connects product manufacturers, logistics providers, and customers, supporting supplier companies by recommending appropriate products to customers and matching them with the best logistics. While the platform itself provides marketing and logistic services, other companies connected with the platform also offer complementary services (complementors), such as logistics, warehousing, data analysis and softwares like Enterprise Resource Programs (ERP). This intricate network allows suppliers to seamlessly combine various services to enhance their product offerings and meet specific customer needs.

However, since customers may have specific requirements due to their business processes, geographical locations, or individual requirements, relying solely on one platform (and its services or resources) is sometimes insufficient for a supplier to present a tailored offer. Therefore, some suppliers might need to extend beyond one platform and leverage resources from other platforms and partners to customize their services as needed. In such a complex platform-based supply network, how do supplier companies connect with different platforms and business partners to combine different services and resources to meet customers’ specific requirements?

The Three Main Strategies

In our research, we conducted an in-depth case study with a B2B e-commerce platform. In this case study, we have conducted 21 interviews with managers working for the platform company, supplier companies and companies offering complementary services. We have also analyzed their documents, online posts, and meeting minutes. Our analysis revealed three main strategies that these three parties have used to combine different services and resources to meet customers’ specific requirements.

Optimizing Data Sources

This strategy involves maximizing the quantity and quality of data available on the platform. By leveraging advanced technologies such as image recognition and natural language processing, platforms can transform physical resources (e.g. products or logistic equipment) into data, which can then be used to make more informed decisions. For example, the platform in our study uses AI to analyze product images and descriptions, helping supplier companies improve their product listings and better match products with customer preferences. Complementors allow supplier companies to use their ERP programs as browser plug-ins to identify the source of products on other e-commerce platforms by scanning product information. They can then source products from relevant manufacturers.

“The way we acquire data is that users install our browser plug-in. When users browse the web page, the plug-in automatically crawls and stores the data in the pool. We identify the source of products on domestic e-commerce platforms through pictures.” (General Manager, (Complementor) Third Party Application Provider K)

The ERP programs provided by complementors can also estimate the weight of these products. As supplier companies are selling their products on multiple platforms, these ERP programs synchronize product data across multiple platforms to increase operational efficiency for the suppliers. These processes ensure that high-quality information is readily available for all parties involved, facilitating more effective resource integration to meet customers’ specific requirements.

Restructuring the Platform

Platforms enhance their modular structures* to allow for better integration of diverse services and resources. By incorporating various technical modules, such as different types of ERP programs and data analytics tools, platforms provide suppliers with the flexibility to restructure their operations as needed. For instance, the platform in our study not only expands its own logistic network but also connects with a wide range of ERP vendors, logistics solution providers, and warehousing companies.

“We have a service market and some open platforms here, mainly open to some service providers, to let them help sellers with more in-depth and customized services.” (Supervisor of Products for Merchants, DB)

It also connects with different product manufacturers, allowing supplier companies to choose products from a wide range of manufacturers. As such, it enables suppliers to customize their product offerings and logistic processes to meet specific customer demands. Meanwhile, supplier companies and complementors also support the platform in smoothing the interfaces and upgrading functions. This practice ensures smooth data flows among different parties. This modular approach ensures that suppliers can efficiently combine resources from the platform and complementors, enhancing operational agility and efficiency.

Shaping the Supply Network

This strategy focuses on how supplier companies interact with other business partners within the supply network to get access to and combine resources. Supplier companies may connect with multiple platforms and external service providers to access a broader range of resources and services. For example, suppliers on a platform might use logistics services from third-party providers to ensure timely delivery of products. They might also use external ERP programs or data analytics tools and assign some of their processes to these tools. 

“We use third-party overseas warehouse services. Logistic software provides us with a logistics service. Other Enterprise Resource Planning programs (ERP) are used for cross-platform management. Therefore, systems can be categorized into three types, ERP systems, warehousing, and logistics.” (Sales Operation Manager, Supplier H)

Suppliers also use these tools to evaluate the products and logistics solutions for better matching customer needs. By leveraging these external resources, supplier can better customize their offerings and improve overall supply chain efficiency. This interaction between supplier companies, platforms, and complementors fosters a dynamic and resilient supply network, capable of adapting to changing market conditions and customer needs.

A Supply Network Based on Digital Platforms

Marketing researchers have considered digital platforms as essential infrastructure enabling exchanges and cooperation in the supply network. These platforms streamline coordination and the adoption of digital technologies, improving supply chain resilience. Our study advances this understanding of the “platform supply network”. To meet customers’ specific requirements, platform owners, supplier companies and complementors collaborate to optimize data sources, restructure the platform, and shape the supply network.

Platform owners should support e-commerce suppliers in integrating advanced AI technologies. These technologies, such as image recognition and natural language processing, aid in extracting and transmitting data from physical resources. Suppliers should evaluate the constraints of the digital platforms and modify the platform design or think about expanding connections in the platform network. Policymakers should support digital infrastructure development and training for suppliers, especially SMEs, ensuring they can navigate complex platform networks. After all, success depends on collective efforts from all parties.

*Platforms are made of parts or ‘modules’ (for instance a marketing module, a logistic, a payment module…) which can be independently changed.