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E-Commerce Platforms and Supply Chain Management - Functionalities

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DOI: https://doi.org/10.37075/EA.2020.2.04 Economic Alternatives, 2020, Issue 2, pp. 250-261

E-Commerce Platforms and Supply Chain

Management – Functionalities Study

Nikolay Dragomirov*1 Introduction

Abstract T wo decades ago, e-commerce was

quite an exotic undertaking, but since
then it has become familiar and widespread
The rise of e-commerce worldwide
represents an indisputable and sustainable all over the world, and today it is a real
alternative to classic trading processes. There
process of transformation of previously
is a strong trend of transformation of online
known market relationships. It has led to the shopping into a sustainable practice for many
development and continuous improvement of consumers in Europe and around the world.
a number of processes related to the efficient Now, e-commerce is growing mainly because
management of material flows in the supply of the increased internet access, but this
chain. E-commerce platforms can in general is not the only reason and there are other
be considered as specialised software factors. Some of these are the increased
solutions that, in addition to presenting proportion of buyers who are using mobile
products in digital space, can play a significant phones to access the internet and the fact
that the main volume of e-commerce trade
role in organising logistics, marketing and
comprises small orders (PostNord, 2017).
financial processes. This complex logistics These facts are important because they affect
management problem can be studied through the parameters of modern e-commerce. Now,
several indicators related to integration of the customers have complete freedom when they
inner supply chain and to the management of do their shopping and they can send and
relationships with product suppliers, buyers receive their orders in any way they prefer.
and trade partners, and logistics services Any other business model is inadequate.
providers. The article outlines the results of There are some quantitative measurements
a study of the logistics functionalities of some of the e-commerce market that could be
discussed. In the EU-28 (European Union of
leading e-commerce platforms and reveals
28 countries), during the period 2008 to 2016,
some trends in their evolution and their
the percentage of enterprises that had e-sales
readiness for supporting some of the supply increased by 7% and company turnover
chain management processes. realised from e-sales increased by 6%
Keywords: SCM, logistics, e-commerce (Eurostat 2017). Unfortunately, there is a wide
JEL: M15, M19 variance in the proportion of e-sales among
*
University of National and World Economy - Sofia, Department of Logistics and Supply Chains

250 Economic Alternatives, Issue 2, 2020

 Articles
countries and in the proportion of enterprises are hundreds of solutions to do that and it is
conducting e-sales and in the turnover from impossible to cover the variety of all platforms.
e-sales according to enterprise size - small, In general they can be classified according
medium and large (Eurostat, 2017). to several criteria, mainly by the functionality
of the platform and the ownership of the
E-commerce Platforms supporting infrastructure. The e-commerce
This process of market transformation solutions can be classified as (Retail Sector
cannot be implemented without e-commerce Group of Enterprise Europe Network, 2018,
platforms that are responsible for the pp. 11–13):
automation of a lot of trade and customer y Open-source e-commerce software and
service functions. They make it possible for self-hosted platforms.
digital marketplaces to work 24 hours a day y Hosted e-commerce platforms.
and seven days a week, even without human y E-marketplaces.
support. However, this is not enough for a In the first two cases the seller has his
successful business model; an adequate own domain name, which is redirected to a
supporting infrastructure for the management hosting account where the software solution is
of the logistics activities is needed to ensure the physically located. There are plenty of software
movement of the material flows (Dragomirov, products based on this principle. The open-
2014) in the supply chain. It is important to source platforms are particularly important
mention that e-commerce is not just a new due to their numerous advantages. Some of
distribution channel; it is a change which in them are WordPress and Joomla that can be
a revolutionary way impacts warehousing used to create fully functional e-commerce
processes and inventory management (Żurek, platforms by upgrading with additional cart
2015). plugins to add functionalities for transaction
Clearly, easy internet access and users processing, for example, the former platform
having the necessary devices are very can be upgraded with WooCommerce and
important but there is something else which the second one with Virtuemart. There are
can solve the problems related to the also many software alternatives which are
management of the virtual marketplace. It fully operational solutions and they are not
can be done by the information platform for based on this upgrade principle. They are
the e-commerce that connects the buyer tightly focused on e-commerce and in their
and the seller in the digital space. Then we basic installations cover the main trading
can go further with the management of real processes. For instance, we could mention
processes, mainly the logistics of material Magento, PrestaShop, Opencart etc.
flows. E-commerce platforms are information The last alternative for e-business is to
products that give the sellers solutions to use an e-marketplace where the seller can
offer their products and services in the digital find everything needed. In this case the
space, and if there is interest expressed by information infrastructure is already built and
the buyer to support the selling process by the seller uses the solution in most cases as
closing the sale and finishing the transaction. it is, without customisation or any adoptions
The availability of products and services in for his business model needs. A popular
e-commerce makes customers change their example of this approach is Ebay. No domain
preferred form of trading and choose internet name and hosting account is needed; the
sales (Kadłubek, 2015). In practice, there only requirement is that a transaction fee is
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Articles Functionalities Study
paid for a real order received. Also the selling Nevertheless, the different types of
process is protected by the privacy and legal e-commerce platforms are important for
regulations in the different countries. All of many logistics and supply chain management
these functionalities are included and offered activities including these for the internal and
to the online seller. external supply chains. This approach for
There are other interesting aspects of dividing the supply chain into internal and
e-commerce sales. One of them is the ability external supply chains is used in different
to add selling capabilities to any website research frameworks (Rakovska, 2011;
that has no selling cart functionalities. This Rakovska, Stratieva, 2018) and in all of these
process is usually simple and adoptable for parts of the supply chain the management
any website, but unfortunately it has many of the information flow for management of
limitations. One of these popular solutions is material flow is a metric for the level of supply
giving online sellers the ability to add selling chain management integration. Information
functions to (BigCommerce Pty., 2019a): is a key element that holds together the
y Facebook, Instagram and Google structure of all businesses (Evans, Wurster,
shopping. 1997). Supply chain management is an
y Any web page by adding buy buttons. important evolution stage of the competition
and could be reviewed as the management of
In fact it is possible to find the most upstream and downstream relationships with
appropriate solution for every specific suppliers and customers in order to deliver
business need and for any trading case. superior customer value at less cost to the
It could be mentioned that there is a trend supply chain as a whole (Christopher, 2011,
towards the integration of many sales p.3). The e-commerce platforms are also
channels into one platform, as seen in the a significant resolution to the appearance
integration possibilities of Ebay, Amazon, problems of digital firms. These companies
Facebook, online messengers, points of sale could be defined: in which nearly all of
etc., which are common functionalities for the the organisation’s significant business
leading platforms, such as Shopify (Shopify, relationships with customers, suppliers,
2019). It could be questioned whether and employees are digitally enabled and
platforms that resemble free classified ads mediated, and core business processes
and do not process transactions, but also are accomplished through digital networks
offer functionality related to the preparation of spanning the entire organisation or linking
bills of lading to courier organisations, which multiple organisations (Laudon, 2013, p.41). In
is a form of integration with a logistics service many practical cases the main collaborative
provider. Another very forward-looking and processes for these companies and the other
promising trend in e-commerce is using an supply chain members can be managed
outsource fulfilment service, which usually through e-commerce platforms.
minimises the costs associated with logistics
and can allow more time to be dedicated Methodology
to marketing, branding, etc. (Kawa, 2017). The main purpose of the article is to
In this case the company outsources the research the current status of the leading
logistics to another company, and this form e-commerce platforms and to evaluate
of collaboration is not covered by the current their ability to integrate logistics and supply
research. chain management processes. The research
252 Economic Alternatives, Issue 2, 2020
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covers mainly the platforms designed for self- Each solution was installed in a hosting
hosting and maintenance without covering account covering the system requirements
the complete solutions offered as SaaS for these products - PHP up to 7.2, MySQL
(Software as a Service). The selection of up to v.5.7 (MariaDB v10.2), 50GB disc
space, 1GB RAM and 3000 min/m CPU time.
the e-commerce platforms to include in
The functionality of the products was studied
the research is based on analysis of the by considering different indicators related
platform’s market share in the web space to the internal and external supply chain
(BuiltWith 2019; Statista 2017). The research management covered by the e-commerce
focus is set on the main platforms that cover platform: 1) Customer relationship
more than 50% of web shops in the digital management; 2) Relationship management
space. These are: with trade partners; 3) Integration with logistics
service providers; 4) Integration with payment
y Magento systems; 5) Relationship management with
y Opencart suppliers and 6) Integration of internal supply
y Prestashop chain processes as represented in Figure 1.
y Virtuemart/Joomla The research was conducted at the end of
y Woocommerce/Wordpress 2018.

Figure 1. Research framework for e-commerce platforms and supply chain management
For the customer relationship management for future research projects on the marketing
indicator there are two important interfaces - side of the problems and for integration with
logistics and marketing. While marketing payment systems.
includes analysis of markets, product The research also considers an important
development, communication and sales, aspect of e-commerce platform customisation -
logistics must ensure that materials flow in an the availability of extensions for upgrading
efficient way along the supply chain, complying
the systems. Most of the solutions offer a
with customer requirements, at reduced cost
(Dragomirov 2015) and the marketing and central database to find appropriate software
logistics interaction is very important for the and some of them reveal the number of
success of the business organisation. In the active installations. This metric discovers the
current research the focus is mainly directed extension popularity within the online stores,
towards the logistics and supply chain which is relevant to the real market needs for
management side and this reveals alternatives such solutions.
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Articles Functionalities Study

Results and Discussion better security, following new trends, etc. (Hill
2017; Noyes, 2010).
After conducting a detailed study of the
Definitely all the solutions in the
covered e-commerce platforms, it is possible
e-commerce platforms market can satisfy
to conclude in general that they cover the
most of the needs of online sellers. Also,
main processes for e-commerce. This is the
they are able to cover the variety of problems
reason why they have a leading position in the
encountered in the different evolution stages
market. Although there are several variations
of e-commerce in a business organisation
in the functionality of the different platforms,
(Dragomirov, 2014, p. 254) as represented in
there are also some common trends in their
Figure 2. They are able to represent products
evolution.
and services, process orders, achieve
Customer Relationship Management integration with logistics service provides and
finally integration with suppliers.
Each of the platforms, including the different
upgrade versions, is mainly focused on the
sales and customer relationship management
- these are core elements. All of them can
represent products in the virtual space and
they can process transactions. Their evolution
and functionality improvement is a significant
milestone which is a result of common
technical trends such as using mobile devices,
social media integration and mixed-reality
(Augment, 2016). An important alternative
for the platforms is the possibility to upgrade
every solution using plugins/extensions. This Figure 2. E-commerce evolution within the
organisation
gives a great opportunity to the seller to add
other additionally needed functionality. This is This model reveals strong potential for
important because the extension market offers expanding the logistics activities that can be
thousands of alternatives for customisation. integrated and automated by the e-commerce
For WooCommerce, for example, there are platform. In the first stages, the organisation
thousands of active plugins on the market point of view and focus on e-commerce is
and some of them have thousands of real traditional, and the software is used only to
installations. With these upgrade options, represent the products like in an e-catalogue,
every e-commerce platform could be and for processing transactions. In the future
transformed into a fully functional customer stages the organisation will look for better
relationship management system. The plugins efficiency in the supply chain activities,
market is very competitive and this makes mainly regarding backward integration with
it possible for every seller to customise the the product suppliers. Presenting products
platform in the needed way. This freedom is an important basic functionality for all of
to upgrade with many alternatives is very the researched platforms. They do so by
common for all open-source solutions, where classification of products into categories and
the user is totally independent on the software they also add the ability to process customers’
developer and there are also other benefits orders for these products. In the basic
related to the lower budgets for development, installations of the platforms, there are no
254 Economic Alternatives, Issue 2, 2020
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significant differences between the platforms there are many delivery practices, especially
for the product’ presentation, but for the in the final stage that is called Last-mile
orders we can find variations, usually related Logistics. This is a part of the supply chain
to user registration, anonymous orders, one which links directly to the end user, and
click checkout, wish lists, etc. according to the results of logistics activity the
consumer assesses logistics services that he
Relationship Management with Trade receives from both his supplier and the entire
Partners supply chain (Kochubei, Lysa, 2018). The
A specific functionality evolution is when main alternatives in the distribution channel
the e-commerce platform is integrated with could be classified as (Lim, Srai, 2015):
other platforms and the purpose is to reach y Push-Centric System: N-Tier Direct to
more potential customers. This is innovative Home.
partnership in the supply chain which is y Pull-Centric System: Customer Self-
based on different practices for information Help – taking the delivery from a
integration, usually called drop-shipping. As collection point.
y Hybrid system – N-Tier to Customer
a result these integrated platforms process
Self-Help Location.
the customers’ orders and they trigger the
movement of the material flows in the supply For the self-service systems there is an
chain. These partners work only with data important alternative – using parcel lockers
and information and they do not have direct that reshape the delivery and return process
access to the management of the material and create value for the customer (Vakulenko
flows in the supply chain. These cases could et al., 2018). These automated systems give
a variety of benefits and opportunities for
be described as customer service activities
improving the delivery and return processes
that could be carried out by other supply chain
and they could be seen as marking the
partners (Hayes, Youderian, 2013, p.8). The
beginning of automated delivery systems.
benefits of this approach of collaboration are
After receiving the order an important task
many, and the e-commerce platforms can be
is to ensure the on-time delivery because the
upgraded to support the data and information
success of the online seller is correlated with
interchange. Unfortunately, in practice, e-mails the logistics capabilities to do that (Wu, Lin,
are widely used because of their simplicity but 2018). For some product groups such as FMCG
they can offer only transactional exchange (fast moving consumer goods), although they
which has many negative aspects and is not currently represent a relatively low proportion
an efficient solution in modern logistics. of the e-commerce market (Nielsen, 2017),
Integration with Logistics Service the delivery process is the main objective
and challenge (Saskia et al., 2016). Also,
Providers and Payment Systems
in e-commerce the consumer behaviour is
Integration with logistics service providers dynamic, which motivates sellers to develop
is very important for the logistics management Omni-channels (multi-channel sales) which
because it is related to the management provides easy switching between online and
of the physical material flows in the supply offline (Kateva, 2017). These channels are
chain to ensure that the product will reach the working with each other (Atanasov, 2016) and
customer. Today, when the internet markets multichannel retailers are more efficient in
are growing and they are very competitive, logistics than pure players (Zeng, Bolz, 2017).
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The usual delivery practice is to deliver Supplier Relationship Management
to the customer’s preferred location using
Certainly, only order processing and
a logistics service provider. In that case the integration with trade partners and logistics
integration with this partner is very important service providers is not enough for success.
because there are several alternatives for Modern competition has created new
communication, especially for the generation business rules for efficient logistics and
of the postage label. It can be done manually material management in the supply chain.
or automatically. In both cases the order This explains why some of the platforms have
details about the recipient must be sent to the focused on efficient inventory management
logistics service provider, but with the former and supplier relationship management.
method, human interaction is needed, which As regards this functionality none of the
results in more time and more possibilities e-commerce platforms are very well organised
for errors, while with the latter method we in their basic installations, which is common
have fully automatic communication between for the other research indicators mentioned
the two systems which is fast, efficient and in the article. A positive aspect is that this
error free. When receiving a new order, the functionality can be added if it is necessary
e-commerce platform can communicate to satisfy the logistics needs. For the Magento
with the logistics service provider systems platform, for example, it is possible to find a
for obtaining actual delivery costs and when complete solution that covers functionalities
the order is fulfilled it can send all of the such as managing suppliers and assigning
data needed to ensure the delivery process products to them, sending product quotations,
proceeds smoothly. creating orders, tracking orders, managing
For the research indicator integration payment methods used to work with supplies
with logistics service providers and payment etc. (Magestore, 2019). These features of
systems it is possible to conclude that the the software give the Magento e-commerce
e-commerce platforms are very flexible platform a functionality that is typical of
enterprise resource planning software (ERP).
because they offer a variety of alternatives
Another example of such integration of
for upgrade. They can be extended with many
logistics functions and transformation into
additional functionalities for collaboration
ERP systems is the platform Prestashop which
with logistics service providers and payment
can be upgraded through many modules
systems. In the basic installations there are named Third-party Data Integration CRM
mainly alternatives for working with global (Customer relationship management) and ERP
leaders like UPS, FEDEX, PAYPAL etc. but (Enterprise resource planning) (Prestashop,
using an API (Application Programming 2019). When following this approach for
Interface) they can be integrated with any upgrading and integrating the systems the
other system. APIs allow different groups of possible solutions are endless and the price is
developers, both internal or external, and the greatest benefit the store owners receive.
partners to gain access to enterprise systems There are plenty of other examples and they
in a simple way (HCL, 2014). In practice the differ according to the business model of the
local logistics service providers develop developer. The important conclusion here
free extension modules for the most popular is that in the future, e-commerce platforms
e-commerce systems to integrate them within will be better prepared for integration with
their systems. other information systems and technologies
256 Economic Alternatives, Issue 2, 2020
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because the future will see high usage of Integration of Internal Supply Chain
connected networks such as the IoT (Internet Processes
of Things), Big Data analyses and cloud In the context of supply chain management,
technologies (Yu et al., 2016). From a logistics logistics serve to move and position inventory
point of view the link between material and to achieve desired time, place, and possession
information flows throughout the chain is of benefits at the lowest total cost (Bowersox
paramount importance (Rakovska, Stratieva, et al., 2002). To do that the related logistics
2018). This future will require massive data activities are: (1) order processing; (2)
and information interchange between the inventory; (3) transportation; (4) warehousing,
supply chain participants for efficient material materials handling, and packaging; and (5)
management, which is a typical external facility network design (Bowersox et al., 2002).
supply chain integration practice. Some of the order processing problems were
The informational integration of the discussed previously in the research. For
information systems of the supply chain the integration of the internal supply chain
members is definitely a prerequisite for supply processes research indicator from the point
chain management. This is an important of view of e-commerce platforms, the main
evolution stage because successful supply research areas are transport management,
chain management requires cross-functional warehousing and inventory management.
integration within the firms and across the The main conclusion for the internal supply
networks that comprise the supply chain chain integrations is that the functionalities of
(Lambert, 2008). Some of the most integrated e-commerce platforms are not sufficiently
areas in the business reality now are CRM developed for the management of transport,
warehousing and inventory activities. Again
and ERP systems, logistics services and
the focus of the platforms is generally on
payment gateways, client portals, Point of
the process of presentation of the products
Sale (POS), and Electronic Data Interchange
and receiving orders. If any functionality for
(EDI) solutions (Cross, 2018; Pirinsky, 2018).
integration of internal supply chain processes
Collaboration and information integration is
is available in the basic installation version,
important also for the outsourcing of logistics in most cases it needs to be upgraded
activities such as inventory management and by the installation of extension modules.
order shipping. Once a customer makes a Unfortunately, it is not so easy to do that
purchase, the outsource partner information because the market for such logistics
systems will know and they can send the solutions is not very large and there are only
package out quickly (BigCommerce Pty. a limited number of plugins with restricted
2019b). All of this means that there is additional functionalities, which is not the case for
potential for building more competitive models marketing solutions where the market offers
based on information systems. An important hundreds of alternatives. For Woocommerce
problem for the information integration is the number of inventory management plugins
the level of automation; unfortunately not is very low percentage of the overall number
all e-commerce platforms are ready for this of active plugins according to the data on the
because many of the integration models installations, although it is common for the
require human assistance and management other platforms.
but this could be defined as a potential area In practice, for the warehousing processes
for future development. the e-commerce platforms rely mainly on
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 E-Commerce Platforms and Supply Chain Management –
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ERP and WMS (warehouse management product location, automatic identification etc.
system) software integration. Nevertheless, Using these types of solutions for information
on the extension market there are extension collaboration is safe for the online seller
solutions mainly for order picking, and they because the entire logistics process is
cover simple problems such as printing controlled by a single information point.
picking lists and integration of information
For transport problems in logistics the
technologies for automatic identification
mainly printing barcodes. The reason for that e-commerce platforms are relying more
is that the most important selection criterion and more on integration with other software
for warehousing systems in e-commerce is products, which is reasonable. The seller can
picking performance (Boysen et al., 2018) use API integration or other database export
and picking is associated with the highest of the customers’ locations and their orders to
proportion of warehousing costs (Richards plan and organise deliveries. The reason for
2014). this is that the proportion of direct deliveries is
To solve the problems related to the still quite small, and in most cases the delivery
integration of internal supply chain processes is outsourced.
on the e-commerce solutions market there
are several trendy software solutions that Summarised research results
specialise in integrating the world's biggest
e-commerce platforms, marketplaces, Based on this study of e-commerce
shipping couriers, and accounting platforms platforms, it is possible to summarise that
(Veeqo, 2018), and their features cover they can satisfy the basic needs of online
a variety of warehousing activities and sellers for logistics management, and the
problems, including multiple warehouses, main findings can be represented in Table 1.
Table 1. E-commerce platforms and functionality coverage in the basic installations
Functionality coverage
Customer relationship management Fully covering the most popular sellers’ needs
Relationship management with trade Not fully supported in the basic installations but upgradable with
partners plugins/extensions
Integration with logistics service Integration support available with the leading logistics service
providers and payment systems providers and payment systems
Additional upgrade is needed for local providers and systems
Supplier relationship management Only some platforms offer built-in supplier relationship management
Upgradable/Low assortment of plugins available
Possible integration with ERP systems or addition of ERP capabilities
to the e-commerce platform
Integration of internal supply chain Available with limited functionalities
processes Additional upgrades available for the basic inventory and
warehousing needs, mainly picking and labelling
Basic integration with barcode systems

Most of the e-commerce platforms are Their main advantage is that they can be
focused primary on the product’s presentation upgraded by using external extensions. This is
in the web space and receiving orders, and a basic approach for most of the open-source
not so much on the related logistics activities products and it has many benefits. The market
and their management in the supply chain. for such solutions is very competitive and
258 Economic Alternatives, Issue 2, 2020
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