How the growth of Asian e-commerce platforms will impact established global fashion brands and fast fashion brands’ business strategy in China?

How the growth of Asian e-commerce platforms will impact established global fashion brands and fast fashion brands’ business strategy in China?

Chapter One

Introduction

The context of my project is that established fashion brands have been stimulated to adapt themselves to a new Asian environment by altering their different business strategy in China due to the increasing expansion of Asian e-commerce platforms. According to the state of fashion (2020), the year ahead is going to be a huge challenge and opportunity at the same time for every fashion company and fashion retailer. Especially under the massive influence of the shrinking global economy and stressful time since the coronavirus outbreak (the state of fashion, 2020), people are required to stay at home, which is called self-isolation.

The self-isolation policy has proved to be an opportunity for the e-commerce boom; a generation of world-class e-commerce platforms has a chance to emerge in people’s daily life (Wang et al., 2019), leading the outcome that people are more and more reliable on online shopping.

The corresponding number of online stores in China in 2012 was 3.7745 million, while the number jumped to 10 million in 2019 merely on Alibaba’s Taobao platform, which is one of the most popular Asian e-commerce platforms in recent years (Wang et al., 2019). Similarly, there were more than 37 trillion yuan in the amount of Chinese e-commerce transactions in 2019 compared with approximately 5.88 trillion yuan in 2011 (Li and Ku, 2019).

This research aims to understand and add knowledge to the already existing literature on the impact of the rapid development of e-commerce platforms in China in the case of Taobao for famous global fashion brands and fast fashion brands in different ways. Consequently, the research will find out how these two types of fashion brands take effective action to enhance their competitiveness facing cross border challenges in the Asian market by using an assessment of differences between the business strategies of established global fashion brands and fast fashion brands.

The research’s general objective is to examine how the growth of the Asia e-commerce platform will impact established global fashion brands and fast fashion brands’ business strategy in China. The specific objectives of the study are: (1) To assess how rapid development of e-commerce platforms is impacting on global fashion brands and fast fashion brands’ business strategy in China. (2) To examine how e-commerce models platforms are impacting on global fashion brands and fast fashion brands’ business strategy in China, and (3) To determine how e-commerce niche platform changes will impact on global fashion brands and fast fashion brands’ business strategy in China.

Although several research studies have been conducted to determine the impact of e-commerce on business strategies, however, none have addressed the growth of e-commerce platforms on fashion brands. The research by Shahjee, (2016) analyzed the electronic commerce on business organization and concluded that e-commerce and business integration brings market function renaissance. Additionally, Alzahrani (2019) e-commerce impact on business strategy focusing on S.M.E.s found out that the introduction of e-commerce in markets usually change business strategies and plans. Therefore, the researcher proposes to study how the growth of Asian e-commerce platforms will impact established global fashion brands and fast fashion brands’ business strategy in China.

Chapter Two

Literature Review

E-commerce Platforms

The development of an e-commerce platform is on the rise with the evolution of business intelligence, big data, and machine learning (Kinda, 2019). In the Asian Market, especially in China, the growth of e-commerce has led to the development of various platforms, which facilitates trade development (Kinda, 2019). For instance, the development of O2O e-commerce mode. Online-to-Offline (O2O) e-commerce platform is an integration of offline business opportunity with the internet, thus presenting the internet as a front counter of offline trade (Du & Tang, 2014). Further, according to World Economic Forum (2018), China is the global leader in e-commerce, an opportunity presented to it not only by the transaction made in it but also the rapid development of tech champions that facilitates the e-commerce ecosystem (Fan & Backaler, 2018).

The China’s holistic e-commerce ecosystem comprises of e-commerce tech champions such as Alibaba Group, Tencent, and J.D. (Fan & Backaler, 2018). For China products to have access to the global market, the tech companies present commerce with a platform that facilitates cross-border e-commerce and exclusive trade zone e-commerce (Fan & Backaler, 2018). To explore cross-border, the consumers are given with platforms such as Alibaba’s TMall Global and J.D.’ sJ.D.’s J.D.J.D. Worldwide and also daigou. Daigou is agents residing in foreign markets to purchase authentic merchandise and reach consumers through China local platforms such as Taobao and WeChat (Fan & Backaler, 2018).

Theoretical Framework

The rapid development of e-commerce platforms

The research by Kabango and Asa (2015) explains that the rapid growth of e-commerce platforms is compelled through its advantages such as greater trade flexibility, faster transaction, lower cost structures, and broader scope and scale of service. For the e-commerce platforms’ growth to be sufficient, technology effectiveness, and issues such as economic, human, and organizational must be taken into consideration (Kabango & Asa, 2015). Moreover, the rapid development of e-commerce platforms in China is attributed to information infrastructure construction, commercial circulation transformation, and upgrading and traditional business e-commerce combination innovation promotion (Wang & Wang, 2019). For proper analysis of the rapid growth of e-commerce platforms in China, grounded theory is used for data synthesis and analysis.

Grounded theory is a comparative and inductive methodology that provides some systematic guidelines for qualitative data gathering, synthesis, analysis, and conceptualization (DePoy & Gitlin, 2020). Through the grounded theory, the study by Kabango and Asa (2015) reveals that some essential factors facilitate the rapid growth of e-commerce platforms. Since platforms are the enablers and facilitators of e-commerce development, the discovery of personal, technological, and transactional levels’ attitudes and perceptions are essential to e-commerce proliferation and advancement (Kabango & Asa, 2015). The enhancement of electronic commerce platform development entirely lies in the business development facets such as accessibility and awareness, trust and loyalty, quality and benefits, and security and privacy (Kabango & Asa, 2015).

E-commerce model platforms

The increasing trend in online shopping has developed rapidly due to the development of electronic commerce and social media, which has resulted in social business development and emergence (Hou et al., 2016). In the study of Hou et al. (2016) on the business model of e-commerce platforms, the researchers reveal that users and enterprise social business value creation are the pivots to e-commerce models. Therefore, to analyze the e-commerce model platforms, Value Co-creation theory needs to be considered. The study by Hou et al., (2016), through its empirical analysis, reveals customer value-creating behavior in the e-commerce model platforms will only be impacted when the platform has enough website quality, altruism, and reciprocity. Value Co-creation theory brings all shareholders of e-commerce on board. Therefore, the holistic view of value co-creation theory incorporates enterprise and customer communication, consumer role in strategic business change and business environment (Hou et al., 2016).

E-commerce niche platform change

The e-commerce niche usually represents the small chain into which e-commerce platforms fall (Chang et al., 2019). The research study by Chang et al. (2019) explains that the Chinese market is full of fierce competition from internet-based platforms. Therefore, the e-commerce niche has been segregated into two large e-commerce platforms; Alibaba and Tencent, which makes it difficult for changes in the e-commerce platform niche (Chang et al., 2019). With the introduction of the Pinduoduo platform, strategically positioning itself within the constraints of e-commerce platforms, the e-commerce platform niche has expanded a notch higher. Therefore, to understand the dynamics in the e-commerce platform niche, risk theory should be utilized to understand the customer resistance to e-commerce platform change (Chang et al., 2019).

Business strategy

Alzahrani (2019) explains business strategy according to Andrews (1971), who defines business strategy as a company decision patterns that aims at determining and revealing objectives, goals, and purposes of producing policy principles and plans of achieving the economic and human intents. Porter (1998) segregates business strategy into three generic strategies; focus cost leadership and differentiation strategies. With the introduction of the digital economy that shifts the public sector and business management, the market place has significantly experienced dynamic changes to the enhancement of e-commerce (Alzahrani, 2019). Torres et al., (2014) explains that business strategy is all about value creation and plan designation, which is a subject to future business competitiveness. Therefore, to understand the business strategy approach to e-commerce platform growth, resource-based view theory needs to be considered (Alzahrani, 2019).

Fast Fashion Brands

The China fast fashion market is controlled by brands such as Uniqlo, Zara, and H&M and supplemented by textile brands (Ge et al., 2019). A brand in the fashion industry is considered fast when its market structure, market behavior (Conduct) and market performance (S.C.P.) analysis reveals a market relationship characteristic (Ge et al., 2019). Therefore, based on the S.C.P. theory, fashion brands enterprises are ranked through the consideration of fast fashion textile market sales volume. S.C.P.’s approach performs a critical analysis of a brand with a focus on market structure analysis, which portrays a relationship between industrial monopoly and competition (Ge et al., 2019). Ge et al. (2019) suggest that China’s fast fashion industry market structure analysis can take place in three-dimension; product differentiation degree, market concentration degree, and explicit and implicit barriers to the fast-fashion clothing industry.

Chapter Three

Methodology

From the conceptual and theoretical perspective of business strategy, e-commerce platform growth entirely depends on the growth of e-commerce procedures that impacts the industrial setup in terms of quality service and customer experience. As a result, the rapid development of e-commerce platforms through technological infrastructure development usually has implications on the business growth of global and fast fashion brands. In addition to the rapid development of e-commerce platforms, factors like e-commerce model platforms and e-commerce platform changes tend to influence a brand’s business strategy development. In the assessment of e-commerce platforms impacts brands business strategy, the study wishes to seek answers to the following research questions:

1. How does the rapid growth of e-commerce platforms impact global fashion brands and fast fashion brands’ business strategy in China?

Throughout the technological innovation cycle, e-commerce platforms have been on the rise, with individuals shifting from traditional commerce processes to online-to-offline practices to improve their fashion brand competitiveness. However, what is not yet clear is how these developments of e-commerce platforms such as Alibaba and J.D.J.D. are impacting the business strategy development of fashion brands. Therefore, this study wishes to seek empirical pieces of evidence on how the rapid growth of e-commerce platforms affects fashion brands’ business strategy.

2. How do e-commerce model platforms impact global fashion brands and fast fashion brands’ business strategy in China?

In the commerce framework, there are several e-commerce models such as business to consumer (B2C), business to business (B2B), consumer to consumer (C2C) and peer to peer (P2P) just to mention a few that platforms operate. These models of e-commerce platforms tend to influence business strategy formulation as it acts as an enabler to brand communication. Therefore, the study seeks to understand how the e-commerce model platforms impacts on fashion brands’ business strategy formulation process.

3. How do e-commerce platform changes impact fashion brands and fast fashion brands’ business strategy in China?

There are several platforms available for different businesses across several industries. However, the big players tend to have more influence in the market than the new entrances. With the diverse e-commerce platforms, marketing tends to be confused, which platform change should they embrace. Therefore, the study will analyze the link between e-commerce platform change and brand business strategy in China.

Research plan

The research study is on how the growth of Asian e-commerce platforms will impact established global fashion brands and fast fashion brands’ business strategy in China. The research study is motivated by the current global pandemic coronavirus that has impacted negatively on the commerce processes. Therefore, there is a need for businesses, especially then fashion businesses, to come up with new business strategies to embrace the e-commerce platform as a potential platform of engaging with consumers.

The study seeks to give answers to the following research question (1) How does the rapid development of e-commerce platforms impact established global fashion brands and fast fashion brands’ business strategy in China? (2) How do e-commerce model platforms impact global fashion brands and fast fashion brands’ business strategy in China? (3) How do e-commerce platform changes impact established global fashion brands and fast fashion brands’ business strategy in China? To answer these research questions, the study will adopt a case study research methodology that incorporates prescriptive data analysis and grounded theory.

From the analysis, they were expected that the rapid development of e-commerce platforms, e-commerce model platforms, and e-commerce platform changes have a significant impact on the business strategy of the fashion brands. The finds of the study will be used to improve the status quo of the fashion brands and also help other businesses to embrace technology in their operations.

Data collection

Data collection is a step by step process of collecting, measuring, and analyzing accurate insights for research using standard validated techniques (Sutton & Austin, 2015). The most appropriate data for this research is primary data; however, with the coronavirus global pandemic, it would rather be difficult. Therefore, the study will concentrate on collecting secondary data from official publications that used an experimental research design to come up with their conclusions. Secondary data are the readily available data documented in publications, articles, and data analysis frameworks (Juneja, 2015).

The research study will incorporate case study research methodology and explanatory research design. Case study research methodology analyzes a specific issue within the constraints of the particular situation, environment, or organization (Starman, 2013). Explanatory research design incorporates other researchers’ ideas and thoughts on a specific issue under investigation to come up with new findings on the particular area (Research Methodology, 2019). Therefore, case study explanatory research design that will be incorporated in this research will use evidence-based publications on e-commerce growth impacts on business strategies to explore the growth of e-commerce platforms’ impact focusing on the fashion brands’ business strategies.

The target population for this research will be published documents on the e-commerce areas like e-commerce platforms journal, e-commerce growth publications, and e-commerce effects on business strategies. All the articles to be considered as the target population in this study will be centralized in China so that it can give the real picture of how e-commerce happens in China. The case studies to be considered for this research must have utilized descriptive and explorative research designs that considered primary data.

Data analysis

Data analysis is a systematic process of applying logical or statistical techniques to the data collected for description, illustration, condensing, recapping, and evaluation (Sutton & Austin, 2015). Data analysis aims to discover useful information for inferencing and conclusion purposes. Since this research is qualitative research utilizing explanatory case study design, the most appropriate type of data analysis the study will use is prescriptive analysis. A prescriptive analysis is a type of data analysis that critically integrates insights of previous statistical analysis to determine the best approach to apply to the current issue under investigation (Sutton & Austin, 2015). For inferencing and conclusion purposes, the prescriptive analysis technique will focus on the holistic view of the relevant case study, thus synthesizing detailed information pertinent to the study subject.

For further analysis, the research study will adopt grounded theory as a data analysis technique. Grounded theory is a qualitative data analysis technique that commences by single case analysis to formulate the basis of arguments. The approach further, incorporates other finding and compare it to the foundation of evidence to the relevancy and appropriateness of the contributing case study (Research Methodology, 2019).

Timetable for completion and development plan

Timetable

The research study will be carried out for five months. The first two months will be for the formulation of the research topic, carrying out feasibility studies on the study objectives, and compiling the proposal sectional of the research project. The other three months will be for data collection, data analysis, presentation of findings, and concluding. Therefore, the timetable for the research study will be as follows:

Development Plan

The literature review section of this research study involves explanative outcomes of different literature. This approach to the literature review is a new trend of reviewing literature that requires specialized skills. Since the topic is a new area of discussion, there is limited literature, and thus the literature review section needs specialized techniques to get relevant information. Therefore, this section requires literature synthesis skills with the ability to carry out comprehensive research analysis on publications and dissertations (Byrne, 2016). Further, the section requires a holistic reading and analyzing skills to ascertain the relevancy of the literature in regards to studying aim. Additionally, the section requires coherent narrative writing and publication evaluation skills that help in evaluating relevant sources that can contribute effectively to the study topic (Byrne, 2016).

The data collection section also requires new skills as the explanatory case study research method utilized is not a conventional research data collection technique. The research technique considers the evaluation of secondary data that requires proper research source synthesis skills. The research methodology requires the researcher to have considerable expertise to perform a comprehensive data identification and analysis of different data resources. Additionally, the research method technique requires the individual to have the ability to interpret and analyze certain information in comparison to other data.

In the data analysis section, specialized skills are also required in prescriptive analysis and grounded theory. The researcher needs to be well equipped with comparison skills to compare pieces of evidence from one source with other sources to come up with appropriate conclusions based on empirical research reviews.

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