B2B E-commerce Presented by: Sean Sullivan and Bobby Parizi

B2B E-commerce n B2B and B2C –Definitions and differences n B2B Market –Growth and future projections n Fundamentals of success –Primary attractions to B2B commerce

B2B: What is it? n Entities, not people n Intranets, Extranets, and Portals Portal TypesExample Function Multiple industries VerticalNet.com B2B infomediary for 50+ industries; hosting site for firms, industry sectors Single industry e-steel.com B2B exchange & portal designed to service needs of the steel industry. Sector of single industry Harddollar.com Construction industry portal specifically focused on roads and bridges infrastructure. (COURTEY: B2B How to Build a Profitable E-commerce Strategy)

B2B: Digital Markets n Procurement –Reduced costs of procured items –Increased availability –Ability to reduce inventory for buyers –Controlled procurement processes –More effective quality-control standards –Improved cash management –Expanded and improved control over suppliers

B2B: Digital Markets n Exchanges –A place where suppliers, buyers, and intermediaries can congregate and offer products to one another within a predefined set of business rules. Business ModelTransaction Type Membership or subscription Fixed annual fee or usage subscription base. Percentage of transaction Shave of transaction based on pre-agreed model. Referral fee Percentage based on agreed-fee basis. Auction Based on auction rules for buyers and sellers of products in the exchange. Purchase of products/service Based on transaction rules determined before entering and participating in the exchange. (COURTESY: B2B How to Build a Profitable E-commerce Strategy)

B2B: Digital Markets n The Supply Chain Reasons companies use supply-management systems: - To reduce manufacturing cycle times. - To shorten the product development and manufacturing cycles. - To shorten sales and delivery times. - To reduce inventory. - To increase revenues. - To reduce the cost of goods. Examples: GM, Dell

B2B: Differences between B2B and B2C n Relationships n Branding n Industry and the Supply Chain

B2B Markets Present value and future growth

B2B: Market growth n Forrester Research now estimates that the B2B marketplace will exceed more than $2.7 trillion dollars by (COURTESY: B2B How to Build a Profitable E-commerce Strategy)

B2B: Market growth n Compare with estimates for the B2C market over the same period, B2B shows a 10:1 revenue ratio. n The growth of B2B e- commerce in the U.S. alone is larger than the GNP of many small countries. (COURTESY: B2B How to Build a Profitable E-commerce Strategy) U.S. E-commerce Transactions (billions)

B2B: Market Growth n Question for Jeanne M. Lewis, President of Staples.com: What was your go to market strategy and how has it changed? “ Initially Staples.com focused on selling office supplies. Through the new Staples.com Business Solutions Center, we have begun to significantly build out our small business service offerings. We are now truly the place where business does business and provide everything a small business needs from supplies, to essential business services, community and a RFQ marketplace where our customers have access to over 20,000 vendors and can participate as sellers” (COURTESY: B2B How to Build a Profitable E-commerce Strategy)

B2B: Market growth (COURTESY: B2B How to Build a Profitable E-commerce Strategy) B2B Volume by industry (billions)

B2B: Market growth n E-commerce business relationships will account for $7.2 trillion in sales by 2003 n B2B marketplaces and exchanges will allow companies to save between $180 and $480 billion (COURTESY: The eMarketplace Strategies for Success in B2B e-commerce)

B2B: Fundamentals of Success n Security n Best Practices n Business Structure n Focus on Core Competancies

B2B: Strategies for Success n Security - You are not safe!! - Architectures Firewall Virtual Private Network Encryption, authentication, & Message Intetrity

B2B: Strategies for Success n Best Practices - Think fast, work fast - Think fast, work fast - Partnerships are essential - Partnerships are essential - Leverage existing relationships - Leverage existing relationships - Add value - Add value - Ditch old market & development plans - Ditch old market & development plans - Develop your own practices - Develop your own practices - Build the base first and then leverage it - Build the base first and then leverage it - Understand supply chains - Understand supply chains - Leverage your brand - Leverage your brand - Multiheaded business model - Multiheaded business model - Go international early - Go international early - Be prepared to invest $$ - Be prepared to invest $$

B2B: Strategies for Success n Business Structure - Two different types of B2B companies Vertical Vertical Horizontal Horizontal

B2B: Strategies for Success n Focus on Core Competencies - Reduced purchasing costs - Increased market efficiency - Greater market intelligence - Decreased inventory levels