Pan-Pacific Conference XXXIV. Designing New Business Models in Developing Economies

Online Factory Shops Option for Sewing Cooperatives: A Manufacturer-Retailer Model
Mkwanazi, Michael Sizwe
Department of Quality and Operations Management,
msmkwanazi@uj.ac.za
Mbohwa, Charles
Vice Dean Faculty of Engineering and Built Environment
cmbohwa@uj.ac.za
Mkwanazi, Sizwe, University of Johannesburg, Auckland Park-Johannesburg, 2006, South Africa
+2711 559 5059
ABSTRACT
Small manufacturing enterprises struggle continuously to
gain access to larger market bases, when they are only
accessible from a basic website or they work facilities.
Building a website is a good thing but no longer
sufficient to attract clients and for generating sales in this
digital age. In this project we propose a conceptual
framework on how can cooperatives build and implement
their online shops. Literature on cooperatives and e-
commerce has been engaged in this paper to support the
idea proposed here. The internal and external factors
influencing an online shop option are also investigated
here. E-commerce was pioneered by systems engineers
and it is important that engineers continue to direct the
ideas of how can E-commerce technology support the
establishment of e-factory shops which can enhance
market access for cooperatives.
Keywords – E-commerce, factory shop, sewing
cooperatives
I. INTRODUCTION
Selling of goods and services has become more
competitive given the online shops and online malls [23].
The growth of online stores and shops is due to the
advantage offered by these alternatives, which is to buy
products and services from the comfort of one’s home
and the ability to compare similar goods and services
from many online shops [24]. The above explains the
impact of e-commerce (electronic commerce), which is
defined transactions that are executed electronically
between companies, consumers and between consumers
[1], business and the public sector [2]. In 2012 the value
of e-commerce sales of manufacturers in the United
Kingdom risen to £157 billion pounds compared to £128
billion in 2008 [3] this shows that consumers have grown
into looking for goods and services online. The top 10 e-
commerce active countries are China, United States,
United Kingdom, Japan, Germany, France, South Korea,
Canada, Russia and Brazil [4]. Amongst the developing
economies is India with retail e-commerce which was at
a value of $ 5.2 billion in 2014, but still far too low
compared China, Brazil and Russia who are member
countries of BRICS [5]. Online catalogues which are
used by well-established enterprises to service a wider
market given the size of the online market. Clothing
manufacturers such as Cape Union Mart, Factory Shop
Hub and other international brands are generating
substantial revenues from online sales [6]. Some of the
online clothing factory shops sell corporate wear, which
is an attractive market. On the online factory shops a
customer is enabled to generate a quotation, place an
order and make a purchase. These also enable customers
or clients to specify their product designs with a minimal
need to be in contact directly with the factory staff [25].
Sewing cooperatives rely on customers who are within
their proximity or reach to generate sales, this advantage
may soon disappear as local businesses and consumers
are exposed to other products online which may offer
better quality clothing items [26], on this note e-
commerce has also led to an intensive competition.
Moreover, the emergence of smart cities gives an
opportunity for engagement in communities regarding
small business support and with government [7].
Although there is not yet a universal definition of a smart
city we refer to that of the Business Dictionary, which
defines a smart city as a “developed urban area that
creates sustainable economic development and high
quality of life by excelling in multiple key areas such as
economy, mobility, environment, people, quality of life
which can be done through strong human capital, social
capital and with sound ICT infrastructure [8]. This paper
presents approaches based on the review of reports on
smart cities project and it suggests ways in which sewing
cooperatives can engage in e-commerce in order to align
with the current economy and the city revitalization
strategies. Gauteng City Region in South Africa has a
Townships’ revitalization strategy which supports
manufacturing and production in townships [9]. In light
of creating a smart economy the Gauteng Department of
Economic Development supports local production
initiatives through cooperatives and other small
enterprises [10]. The strategy is obsessed with innovation
and ensuring success of the cooperatives, which are seen
to be vehicles for entrepreneurship [11]. Our research
question, is how can online factory shops support the
idea of city revitalization? This question is based on the
demand for local clothing and preferential procurement
of cooperatives by private companies, government
institutions and individual customers. The success of
cooperatives is still important in smart cities, but this can
only be achieved if they constantly adapt to changing
technology and provide some online shopping experience
[27]. The objectives of this paper thereof are;
To provide ideas about the role that e-commerce can
play in aligning sewing cooperatives with the current
landscape of the clothing industry in growing city
regions.
To identify the implications of online factory shops
to engineering and operations methods in sewing
cooperatives and factories.
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