Lesson 04
Business-to-Business
E-Commerce
ISM 41113, Electronic Commerce
By:
M. Fathima Rashida
Lecturer in MIT
Department of MIT
Faculty of Management and Commerce, SEUSL
Learning Objectives
1.
2.
3.
Describe the B2B field.
4.
5.
Describe the sell-side models.
6.
7.
Explain how reverse auctions work in B2B.
Describe the major types of B2B models.
Discuss the characteristics of the sell-side marketplace,
including auctions.
Describe the characteristics of the buy-side
marketplace and e-procurement.
Describe B2B aggregation and group purchasing
models.
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Learning Objectives
8. Describe other procurement methods.
9. Define exchanges and describe their major types.
10.Describe partner relationship management (PRM).
11.Describe how B2B can benefit from social networking
and Web 2.0.
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Concepts, Characteristics,
and Models of B2B E-Commerce
• business-to-business e-commerce (B2B EC)
•
Transactions between businesses conducted electronically
over the Internet, extranets, intranets, or private networks;
also known as eB2B (electronic B2B) or just B2B
THE BASIC TYPES OF B2B TRANSACTIONS AND
ACTIVITIES
•
•
•
•
Sell-side
Buy-side
Exchanges
Supply chain improvements and collaborative commerce
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Concepts, Characteristics,
and Models of B2B E-Commerce
•
THE BASIC TYPES OF B2B E-MARKETPLACES AND SERVICES
•
One-to-Many and Many-to-One: Private E-Marketplaces
E-commerce that focuses on a single company’s buying needs (many-to-one,
or buy-side) or selling needs (one-to-many, or sell-side)  company-centric
EC
•
Many-to-Many: Exchanges
•
•
•
exchanges (trading communities or trading exchanges)
Many-to-many e-marketplaces, usually owned and run by a third party or a
consortium, in which many buyers and many sellers meet electronically to
trade with each other
public e-marketplaces
Third-party exchanges open to all interested parties (sellers and buyers)
Supply Chain Improvers and Collaborative Commerce
Business deal with other business for purpose beyond just selling or buying.
Eg: Collaborative
Commerce
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Concepts, Characteristics,
and Models of B2B E-Commerce
• B2B CHARACTERISTICS
•
•
Parties to the Transaction: Sellers, Buyers, and Intermediaries
Types of Transactions
•
spot buying
The purchase of goods and services as they are needed, usually at
prevailing market prices
•
strategic (systematic) sourcing
Purchases involving long-term contracts that usually are based on
private negotiations between sellers and buyers
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Concepts, Characteristics,
and Models of B2B E-Commerce
•
Types of Materials Traded
•
direct materials
Materials used in the production of a product (e.g., steel in a car or
paper in a book)
•
indirect materials
Materials used to support production (e.g., office supplies or light
bulbs)  MRO (maintenance, repair, and operation) called as
nonproduction materials
•
The Direction of the Trades
•
vertical marketplaces
Markets that deal with one industry or industry segment (e.g., steel,
chemicals)
•
horizontal marketplaces
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Markets that concentrate on a service, material, or a product that is
used in all types of industries (e.g., office supplies, PCs)
Concepts, Characteristics,
and Models of B2B E-Commerce
• SUPPLY CHAIN RELATIONSHIPS IN B2B
• SERVICE INDUSTRIES ONLINE IN B2B
•
•
•
•
•
Travel and hospitality services
Real estate
Financial services
Online financing
Other online services
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Concepts, Characteristics,
and Models of B2B E-Commerce
•
THE BENEFITS OF B2B
•
Benefits: sellers (S), buyers (B), both (J)
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One-to-Many:
Sell-Side E-Marketplaces
• SELL-SIDE E-MARKETPLACE
A Web-based marketplace in which one company sells to
many business buyers from e-catalogs or auctions,
frequently over an extranet
•
•
B2B Sellers
Customer Service
•
•
Configuration and Customization
Benefits and Limitations of Online Sales from Catalogs
• SALES FROM CATALOGS
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Selling Via E-Auctions
• USING AUCTIONS ON THE SELL SIDE
•
Forward auctions offer the following benefits to B2B sellers:
•
•
•
•
Revenue generation
Cost savings
Increased “stickiness”
Member acquisition and retention
• AUCTIONING FROM THE COMPANY’S OWN SITE
• USING INTERMEDIARIES IN AUCTIONS
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One-from-Many:
Buy-Side E-Marketplaces and E-Procurement
• buy-side e-marketplace
A corporate-based acquisition site that uses reverse
auctions, negotiations, group purchasing, or any other eprocurement method
• PROCUREMENT METHODS
•
E-Procurement Organizations and Types
• E-sourcing
• E-tendering
• E-reverse auctioning
• E-informing
• Web-based ERP
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•ISME-marketsites
• E-MRO
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One-from-Many:
Buy-Side E-Marketplaces and E-Procurement
• INEFFICIENCIES IN TRADITIONAL PROCUREMENT
MANAGEMENT
•
•
procurement management
The planning, organizing, and coordinating of all the activities
relating to purchasing goods and services needed to accomplish
the organization’s mission
maverick buying
Unplanned purchases of items needed quickly, often at non–prenegotiated higher prices
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One-from-Many:
Buy-Side E-Marketplaces and EProcurement
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One-from-Many:
Buy-Side E-Marketplaces and E-Procurement
• THE GOALS AND BENEFITS OF E-PROCUREMENT
•
•
e-procurement
The electronic acquisition of goods and services for organizations
what are the goals of e-procurement?
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Buy-Side E-Marketplaces:
Reverse Auctions
• Reverse auction is a tendering system in which suppliers
are invited to bid on the fulfillment of an order and the
lowest bid wins
• In B2B, a buyer may open an electronic market on its own
server and invite potential suppliers to bid on the items the
buyer needs
• Request For Quote (RFQ)
The “invitation” to participate in a tendering (bidding)
system
• CONDUCTING REVERSE AUCTIONS
•
•
•
Online directories that list open RFQs
Use of software agents  auctionsniper.com, auctionflex.com
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E-Tendering by Governments
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Other E-Procurement Methods
• Internal Procurement Marketplace
The aggregated catalogs of all approved suppliers combined into a
single internal electronic catalog
• Benefits of Internal Aggregated (Consolidated) Catalogs
•
Quickly find what desired offering, check availability and delivery
times, and complete electronic requisition forms, using fewer
suppliers, lower price, financial control
• desktop purchasing
Direct purchasing from internal marketplaces without the approval of supervisors and
without the intervention of a procurement department
• group purchasing
The aggregation of orders from several buyers into volume purchases so that better prices
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can be negotiated
•
Internal Aggregation of Purchasing Orders
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Other E-Procurement Methods
• BUYING AT SELLERS’ SITES AND COLLABORATIVE
COMMERCE
•
•
PURCHASING DIRECT GOODS
bartering exchange
An intermediary that links parties in a barter; a company
submits its surplus to the exchange and receives points of
credit, which can be used to buy the items that the
company needs from other exchange participants
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B2B Electronic Exchanges:
Definitions and Concepts
•
1.
2.
3.
FUNCTIONS OF EXCHANGES
Matching buyers and sellers
Facilitating transactions
Maintaining exchange policies and infrastructure
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B2B Electronic Exchanges:
Definitions and Concepts
• DYNAMIC PRICING
•
A rapid movement of prices over time and possibly across
customers, as a result of supply and demand matching
Revenue Models
•
•
•
•
•
Transaction fees
Service fees
Membership fees
Advertising fees
Other revenue sources
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Partner and Supplier
Relationship Management
• Partner Relationship Management (PRM)
Business strategy that focuses on providing comprehensive
quality service to business partners
• E-COMMUNITIES AND PRM
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B2B in the Web 2.0 Environment
and Social Networking
• THE OPPORTUNITIES
•
•
•
•
•
Discover new business partners
Improve recruitment
Enhance ability to learn about new technologies, competitors, etc.
Find sales prospects
Improve participation in industry association activities
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B2B in the Web 2.0 Environment
and Social Networking
• Corporations are using social networks to:
•
•
•
•
•
•
Create brand awareness
Advertise product and services and promote new ones
Create buzz about upcoming product releases
Drive traffic to their online web properties in hopes of enticing
users to engage with their sites, products, or solutions
create social communities to encourage discussion among
business partners about their products and /or act as a feedback
mechanism about their products/ services
Use social networks, such as Facebook and LinkedIn, to recruit
new talent. Some HR departments are using social networks to
obtain more insight into potential new hires
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B2B in the Web 2.0 Environment
and Social Networking
• STRATEGY FOR B2B SOCIAL NETWORKING
•
•
•
•
Participate
Monitor
Use existing applications
The Future of Social Networking
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Managerial Issues
1.
2.
3.
4.
5.
6.
7.
8.
Which B2B model(s) should we use for e-procurement?
Which B2B model(s) should we use for online B2B sales?
Which exchange to join?
Which solution vendor(s) should we select?
What is the organizational impact of B2B?
What are the ethical issues in B2B?
How shall we manage the suppliers
Which type of social network? Private (proprietary) or public?
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