E-commerce Platform Performance, Digital Marketing and Supply Chain Capabilities

Anna Amalyah Agus 1,2, Gatot Yudoko 1, Nur Budi Mulyono 1, and Taliya Imaniya 2 1 School of Business and Management, Bandung Institute of Technology, Bandung, Indonesia 2 Faculty of Economics and Business, Universitas Indonesia, Depok, Indonesia S A R I P A T I Vol. 13 | No. 1 ISSN: 2089-6271 | e-ISSN: 2338-4565 | https://doi.org/10.21632/irjbs

By using Indonesian case studies, this research plan to fill the research gap in the theories of transaction cost economics, multi-attribute utility theory, agency theory and information-processing theory, through variable based modeling. For business and industry stakeholder point of view, this research is expected to be useful for Indonesian e-commerce platform ecosystem stakeholders especially regulators, to give insights towards dynamics within e-commerce platform ecosystem. This paper originality lies on proposing e-commerce conceptual model by using multidisciplinary approach through combining four main constructs, which consists of relative e-commerce platform performance, digital promotion capability, customer experience review rating and supply chain capabilities. The model also accommodates seasonal pricing and logistic outsourcing as intervening variables to examine model sensitivity. With sample size of 1288 people who have purchased items in at least two e-commerce platform, collected data is processed using Structural Equation Modeling (SEM) method by LISREL software.

INTRODUCTION
E-commerce has changed the faces of many industries trading activities process that influenced and/or supported by technology. As part of digital economy, e-commerce platform has become apparent not only in developed nations but also developing nations. (Hsiao & Chen, 2013) found that the largest variation channels strategies to cope with e-commerce development was mainly the result from the manufacturers' competitive strategies. Channel substitution may in fact boost the manufacturer's incentive to adopt the dual channel strategy to win the market by closer proximity to consumers. (Hortaçsu & Syverson, 2015)  Because of hypothetical believe that e-commerce practice in developing countries should be different compare to leading developed nations, (Boateng, Hinson, Heeks & Molla, 2008) tried to find facts on e-commerce in developing countries. (Boateng, et al, 2008) found that there were limited discussions toward e-commerce in developing countries yang setidaknya pernah berbelanja di dua platform e-dagang, data yang diperoleh dari sampel diolah melalui permodelan persamaan struktural dengan piranti lunak LISREL.
context based on academic articles review. Beside that, as (Boateng, et al, 2008) found that there were also lack of e-commerce literature diversity, which mainly focused on potential firm-level opportunities and benefits, compared with the contribution of e-commerce to development and how it could be achieved.
Indonesia is recently considered as one of the biggest e-commerce markets in Asia from the context of its e-commerce retail growth trend.
With increasing GDP per capita and smartphone penetration and internet affordability, Indonesia had created a huge e-commerce market potential.
According to TechinAsia (as one of the leading publications of technology publication) 2016, with smartphone penetration reaching more than 100 million units, Indonesia having favorable period of home of growing e-commerce sector.
By 2020, according to Group M presentation 2017, Indonesia digital economy size is projected to reach US$130 Million, and making Indonesia the 3rd largest e-commerce market behind China and India. In 2025, Southeast Asia's digital economy (which include e-commerce, online games, and online advertising) will surge to USD $200 billion.
Indonesia forecasted to have account for 40.5% or USD $81 billion of its total market region, and half of it come from Indonesian e-commerce.
In regards of digital economy projection, TechinAsia 2016 predicts that e-commerce in Indonesia could grow more than tenfold just within 10 years. On-line travel which current size is bigger that e-commerce is predicted to grow 5 times in 10 years. Meanwhile smaller size category of digital economy like on-line rides and digital ads, also predicted will have strong growth in the next 10 years. Therefore, Indonesia is becoming one of prominent market of e-commerce due to its large customer based, internet penetration and not to mention almost 60% of Indonesian economy rely on consumer spending which much higher compare to government expenditure, investment and net-export.
However, based on initial data finding through expert interview, specific/operational level regulation toward e-commerce has not been addressed, due to different flavor of "market openness" within actors. Moreover, according to Indonesia Ministry of communication and informatics 2016, the roadmap only expressing that e-commerce regulation will be applied for three type of business segments: Technology by (Cegielski, Allison Jones-Farmer, Wu & Hazen, 2002), consumers, and marketing point of view by (Luo, Ba & Zhang, 2012) and (Wong, Tan, Tan & Ooi, 2015). Supply chain domain have more emphasize on how the flow of goods, information and money within e-commerce transactions.
Meanwhile IT domain have more emphasize on consumer big data and how to create system that make the consumer loyal visiting the e-commerce platform/online store.

Transaction-cost Economics (TCE) Theory
Transaction-cost Economics (TCE) is central theory in the field of strategy. The main question of TCE is why firms exist in the first place, how firm define their boundaries and how they ought to govern operations. (Williamson, 2009) explained that TCE derived from pragmatic views of business practice which include keep it simple, get it right, make it plausible, prediction and empirical testing.

Agency Theory
Agency theory is a supposition that explains the relationship between principals and agents in business. The theory is relevant for the situations where one party (the principal) delegates authority in terms of control and decision making about uncertain task -to another party or the agent (Fayezi, O'loughlin & Zutshi, 2012)

Information Processing Theory
Information processing theory is based on the idea that humans process the information they receive, rather than responding to stimuli. Information processing theory consists of three elements, information processing requirement, information processing, capabilities and finally, the fit between requirements and capabilities.

Multi-Attribute Utility Theory (MAUT)
The attribute-based or multi-attribute theory is often used to analyse the influences over consumer decision making. The theory suggests that each choice alternative is constructed from several attributes. The consumer then evaluates the attributes of each alternative and assumes an overall utility, depending only on a subjective value of the alternative. The consumer then needs to use the ability to calculate which alternative maximize the value. The highest scoring alternative, the one with the highest utility function will then be purchased, (Sirkeci & Magnúsdóttir, 2011).

E-commerce Consumer Conversion Rate
Conversion rate is defined as the ratio of transaction to traffic. In electronic commerce, conversion marketing is the phrase used to describe the act of converting a customer who browses website into a paying consumer. Conversion marketing is measured by conversion rate -the percentage of visitors who take the desired action.
(Benera, 2011) explains that the items which mostly affect the desire to purchase are: the width of the set being compared to traditional stores, security of payment, the convenience of price, the cost of shipping, the preference of the specific site in relation to others and the frequency of purchase made online. Meanwhile the constructs that affect the intention to purchase are: playfulness, e-trust and perceived usefulness.

E-commerce Digital Promotion Capability
By using data 58 counties sampling t-test, (Gong,2009)

E-commerce Supply Chain Capability
Logistics capabilities relates with 1) Activities managed under the logistics umbrella provide an area of unique organizational skills and process that can provide the firm competitive advantage, or; 2) managing activities of the logistics functional area to provide sustainable competitive advantage. Dimension of this capability include process capabilities and value-added service (Defee & Fugate, 2010).

E-commerce Seasonal Pricing
Pricing Strategies could be formed by switching cost philosophy to opportunistic approach from corporation. (Yen, 2010)  In the other hand, according (Cho et al.,2018) aspects that stay the most relevant for firm performance is the logistic capability. It could be explained that company superior logistic capability will keep on fulfilling customers interests/needs as well as have Figure 1. Conceptual framework -variable based modelling closer relationship with customers, something that could not be delivered by logistics outsourcing, that has lower service culture/mentality. (Cho et al., 2018) findings is contrary with (Yu et al., 2016) which emphasize on the importance of outsourcing for e-commerce for lower cost and/or increasing profitability.
These different approaches will contribute to Agency Theory, especially on how E-commerce supply chain capability affected consumer decision making and purchasing process, which will derived through these hypothesis below: Based on the model, that for an average e-tailer, (Gudigantala, Bicen, and Eom, 2016) also explain that one unit increase in website satisfaction score is expected to increase average monthly revenue by $14.26 million.
Meanwhile, (Yu et al., 2016) classify that there are two main E-commerce Logistic model: First, Selfsupport model, that perform better in controlling and executing strategy, but has higher costs consequences. Second, Outsourcing model is also a quite important model in E-commerce logistics, which has lower cost but in the other hand lower control of business operation. (Gudigantala et al., 2016) approach that used within this study will contribute to multi Attribute utility theory especially on how consumer decision making process journey in e-commerce platform.
This study will also contribute to Information processing theor y especially on how digital marketing process from affected the consumer decision making purchasing process, which will derived into this hypothesis below H3: Customer experience (review rating) has positive correlation with (relative) e-commerce platform performance (Gong, 2009)  Meanwhile, (Yu et al., 2016) classify that there are two main E-commerce Logistic model: First, Selfsupport model, that perform better in controlling and executing strategy, but has higher costs consequences. Second, Outsourcing model is also a quite important model in E-commerce logistics, which has lower cost but in the other hand lower control of business operation.
The triad impact by (Hartmann and Herb, 2014) approaches will contribute to multi Attribute utility theory especially on how consumer decision making process journey in e-commerce platform, as well as Information processing theory on How digital marketing process from affected the consumer decision making purchasing process, which derived through these hypothesis below :  3, it is shown that perceived digital promotion capability is significant affected to (relative) e-commerce platform performance but in negative way. As one of (Karjaluoto, Mustonen & Ulkuniemi, 2015) finding, it is known that firms use digital marketing channel (dmc) to enhance customer relationship communications, support sales and create awareness. So, it is assumed because as third preference of e-commerce platform to use, digital promotion capability will be not affected in accordance e-commerce platform 3 as they (user) have first and second preference in their mind.
Giving some awareness and enhance customer relationship will be not working to them (who made a certain e-commerce platform as third preference) and decreasing the platform performance.
Another results show that seasonal discount pricing has intervening effect on relationship between perceived digital promotion and (relative) e-commerce platform performance for the case of all the e-commerce platform (1-3). This is in-line with the study from (Yen, 2010)

Perceived digital promotion capability & perceived supply chain capabilities
T-value result from structural model processed data e-commerce platform 1-3 has shown that perceived digital promotion capability has positive correlation with perceived supply chain capabilities.
One of motivation according to (Sahney, Ghosh & Shrivastava, 2013) is situational motivation which include time pressure, lack of mobility, geographical distance need for special items. Therefore, marketing campaign regarding with supply chain capability is needed to attract customers.

MANAGERIAL IMPLICATION
There are 4 (four) keys highlights for managerial implication form this research: 1. Perceived digital promotion capability which reflecting perceived capability on push-pull mobile promotion, online key opinion leader utilization and ad-personalization / consumer analytics, is the main key-factor to increase (or sustain) e-commerce performance.

Combining digital promotion capability and
Seasonal discount pricing will sthrengten/ increase e-commerce performance, since seasonal discount pricing has intervening effect on relationship between perceived digital promotion and (relative) e-commerce platform performance for the case of all the e-commerce platform 3. As predicted, customer experience (review rating) has positive correlation with (relative)

CONCLUSION
In several cases, for e-commerce platform 2 and 3 as second and third preference, the results shows that it is not significant or significant but in negative way not just like in e-commerce platform 1 as first preference which is significant. It is in the case among perceived digital promotion capability and (relative) e-commerce platform performance, also perceived supply chain capabilities, customer experience, and logistics outsourcing. Because customers have their first preference to be prioritized, that's why for e-commerce platform to be the second and third preference are just an option if the first e-commerce platform could not meet customers' expectation.
Another cases show that because of the role from moderation such logistics outsourcing among perceived supply chain capability and (relative) e-commerce platform performance, also seasonal discount pricing among perceived digital promotion capability and customer experience (review rating) make the result not significant or significant but in negative way. The result will be significant affect each other if there is no moderation role among them.
It is important for the e-commerce platform provider/ player to consider they marketing campaign and supply chain capability to fit in the case if they are as the first, second, or third preference in customers' mind. Other than that, not to infer the seasonal discount pricing among digital promotion capability and e-commerce platform performance.
The limitation of this research problem is lying on e-commerce platform market place and end customers only. For further research, it is suggested to be focussing on Small Medium Enterprises (SME) within e-commerce marketplace, as another customer of e-commerce platform. Another recommendation to be considered is to use research on time frames to see long-term simulations.