Strategies to Predict E-Commerce Inventory and Order Planning

Introduction

The advance of e-commerce made the online shopping popular among the users. E-commerce brought a trade revolution by providing an information platform for all levels of firms to participate in the online market with the scope of instant communication. The visibility of transaction, abundant information, low investment and low manpower, quick start-up and reduced inventory are the main attraction for the e-commerce growth. The accurate prediction of e-commerce merchandise plays an important role in business success. In particular, demand prediction in the e-commerce market has the task to efficiently decipher the rhythm of the popularity, market trend and customer expectation. As evident, the businesses use networks for buying and selling goods and services, share information, transfer data and funds on the web system. E-commerce provides many benefits to both sellers and buyers and due to these advantages of the online business model over the traditional physical retailers, the expectations on e-commerce are increasing (Lee et al., 2007). On time delivery- and cost-intensive inventory set-up processes in the e-commerce industry provide the major motivation for customers to purchase their goods online in a more continuous way.

The challenge in e-commerce business is to find applicable inventory management policy to replenish items to meet consumer expectation. Technology is a key enabler to create real-time inventory demand pattern and replenishment policy by transforming traditional inventory practices to strategic point-of-sale e-commerce function. As technology advances, e-commerce business policy should be robust to replenish inventory at right time and at right quantity to keep the business growth effective. The service activities of all delivery requirements upheld on time, whereby priorities for customer orders can be achieved. Several ways e-commerce plays an important role as a business medium. E-commerce operations involve four major markets segments: business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), and consumer to business (C2B). It has allowed firms to establish a market presence by providing a cheaper and more efficient distribution chain for their products or services. However, the central focus of this study is the business-to-customer e-commerce, as defined by Grandon and Pearson (2004): the process of buying and selling products or services using electronic data transmission via the Internet and the www. The study refers to the actual prediction process specific to the consumer demand and therefore falls in the area of operational decisions.