DRIVER FOR CUSTOMIZATION ON DIGITAL COSMETICS INGREDIENT PLATFORM FOR INGREDIENT SUPPLIERS, RESEARCH INSTITUTES, COSMETICS MANUFACTURERS AND BRAND OWNERS. In this article, the researcher will investigate what will be the success factors of this digital ingredient platform. The research question is "What are the drivers of adaptability on the Digital Cosmetics Ingredient Platform for ingredient suppliers, research institutes, cosmetics manufacturers and brand owners?".
To investigate how the digital ingredient platform will be adapted by foreign ingredient manufacturers or authorized distributors in the market. To study how cosmetic manufacturers and cosmetic brand owners will adapt this digital ingredient platform instead of purchasing the ingredient in the traditional way.
Expected Benefit
LITERATURE REVIEW
- Digital Platforms
- Digital Platform for Cosmetics Ingredients in Thailand
- Digital Platforms and Sharing Economy
- Theory of Disruptive Innovation
- Drivers of Digital Platform
- High degree of scalability
- Lower transaction costs
- Strong network effects
- Hypothesis and Framework
- Success Factors of Digital Platform
- Platform Function
- Sales and revenue concept
- Openness to Digital Platform
- Platform Independence
Two well-known digital platforms have conquered the transportation (Uber) and short-term accommodation (Airbnb) markets, but sharing economy businesses are emerging in virtually every sector of the economy. Some excellent digital platforms when it comes to the ingredients marketplace include Trading Table, which connects restaurant operator distributors and suppliers to simplify and speed up the process of buying and selling; Biolinked, which connects organic food suppliers with wholesale buyers around the world; and CaterNation, an online B2B food ordering marketplace that brings together restaurants, caterers, universities and government agencies. In this chapter, the researcher has collected relevant key factors for the success of digital platforms from previous studies. The following chapters will discuss how this will be applied and adapted for Thailand's first digital ingredients platform.
In order for digital platforms to be successful, many researchers have studied and identified the key success factors of digital platforms. Previous research has identified what the characteristics of digital multilateral markets should be (von Engelhardt, Wangler, & Wischman, 2017). This means that platform providers who have yet to establish themselves in the market (newcomers) face one particular strategic challenge, the so-called chicken-and-egg problem: their platform is only liked by one group, if many players from another group use the platform and vice versa (Peitz, 2006, S. 323).
The previous subsections discussed the empirical results and theory on the drivers of digital platforms leading to the identification of the key success factors that will be discussed in the following subsections. For digital platforms to be successful, special market forces that dominate in digital two-sided markets must be recognized. The properties of digital two-sided markets can be used to derive key factors for the successful creation of digital platforms.
The services the platform offers to players determine the basic function of a digital platform. Most digital platforms enter the market by providing low prices for immediate gain. It can regulate and scan products and services according to their quality before it can be allowed in the platform as well as its technical requirements.
RESEARCH METHODOLOGY
Research Setting
Sample and Data Collection
This target sample size for this study consists of 12 participants who will be classified in this paper as: salespeople; which includes ingredient manufacturers and research institutes and buyers; which includes cosmetics manufacturers and cosmetics brand owners.
Instrument
7 What premium feature will keep you using this ingredient platform and are you willing to pay for it? 2 What do you think is the importance of these ingredients for their application in the global cosmetic industry? 5 How can this platform help you sell some small-scale ingredients, patents and/or other intellectual properties.
7 How will this platform help your institute and your researchers to benefit from your research reports and data results if a user wants to buy some data and formulations. 5 If there is a digital ingredient platform that allows you to explore new ingredients, how likely are you to use it. How a limited range of ingredients affects the product life cycle (PLC) for your brand owners.
9 What premium feature will keep you using this ingredient platform and are you willing to pay for it. 6 If there is a digital ingredient platform that allows you to explore new ingredients, how likely are you to use it. How a limited range of ingredients affects the product life cycle (PLC) of your products.
11 Which premium feature will keep you using this component platform and are you willing to pay for it.
DATA ANALYSIS
Drivers of Adaptability on Digital Ingredients Platform
- Disintermediation of Middleman
- Platform Functions
- Ease of Finding Ingredients
- Platform Reliability
- Cost Reduction
- Strong Network Effects
Answer the questions: "What difficulties do you usually have in finding ingredient suppliers/buyers?" and "What are your usual problems when dealing with your distributor?", 7 of the respondents said that their middlemen are usually late in responding to their inquiries. The answers provided were a confirmation of the great potential of this digital ingredient platform for these future users' adaptation in their respective organizations. However, this paper will further analyze the answers of the respondents about what functions they are looking for from this platform.
Notably, the majority of respondents surveyed said they are willing to pay for premium subscription fees as long as they can access the necessary documents and information they need and fulfill their intention to use the platform. Another platform feature that the researcher learned from respondents is the addition of a live chat feature to the platform. All six buyer-side respondents (cosmetics manufacturers and brand owners) usually have difficulty finding ingredients they need for a specific formulation.
Cosmetic manufacturers, on the other hand, wait for the intermediary and also from the suppliers for some feedback of the required ingredients and usually, the response is delayed creating a lost opportunity for both buyers. When asked “Which online platform/website have you used to find ingredient suppliers?”, the majority of buy-side respondents said they currently only use Google to search for ingredients. Efficient use of resources such as providing an ease of finding ingredients can be linked to a better matching of the demand and supply gap between buyers.
The platform users are at the center of the mechanism around which this sharing economy revolves. When users of the platform are likely to create and leave reviews and/or ratings, the trust issue can also be addressed. Usually, users relate to digital platform, and since these groups of players want to connect with each other, the accessibility of the platform to potential partners is also important.
CONCLUSIONS AND RECOMMENDATIONS
Conclusions
Findings from the interviews also show that for ingredient suppliers, addressing the issue of language barriers is an important factor for them to adapt the platform. For research institutes, we can conclude that the commercialization of their formulations and researchers tends to be the most decisive factor for the organization. From the buyer's side, the research studied that for cosmetics manufacturers and brand owners to adapt the ingredient platform, its function plays a vital role.
The success of this platform may depend on the features it will offer its users and how reliable it will be. These functions, as per respondents, include; ease of data access, where users can view a wide variety of ingredients list and/or research publications; back-end functions, where users can sort or customize their pages; Multilingual support, where platform can provide services and content in other languages; trading channel, rating and review system, price comparison function, and very interesting, pool system. Also based on the interview, the promising range of strong network that the digital ingredients can offer speaks a strong appeal for all the buyers and sellers.
In the case of research institutes, they believe that they can better communicate and propose their formulations, while gathering potential research partners. Importantly, the findings show that the sharing economy concept, such as the ingredient bundling system, will be of great importance in the adaptation of this platform, especially by cosmetic manufacturers and brand owners. It will solve and improve the pain of overstocking, which usually leads to dead stocks and short product life cycles.
Recommendations
The researcher also wants to recommend that ingredient suppliers and cosmetics manufacturers reduce or remove the middleman during the buying and selling of cosmetic ingredients. The researcher would also recommend that cosmetics suppliers and ingredient suppliers use an affiliate system where their offers can be reviewed by influencers, researchers or even bloggers. For both buyers who are cosmetics manufacturers and brand owners, the researcher wants to recommend that they create a good network within the platform.
A good relationship with other players on the platform will easily allow them to communicate and interact with each other once they need to use the ingredient pooling system feature. The researcher also recommends the research institutes to use this digital ingredients platform for easier and faster commercialization of their research and formulations. Through this platform, the commercialization of some formulations can also bring them some profit while continuously promoting Thai cosmetics ingredients in the value chain.
Finally, the researcher recommends that respondents should consider revising their value chain by simplifying some processes by adapting this digital ingredient platform. This study is mainly about how the digital ingredient platform will be adapted by ingredient suppliers, research institutes, cosmetic manufacturers and brand owners. For future research, the researcher suggests conducting another qualitative interview on focus groups consisting of digital platform users with a possible addition.
It would also be interesting to further explore and research why some buyer-seller relationships failed in cosmetic ingredients as noted by the researcher while listening to interviews of the respondents.
