1. B2B E-COMMERCE Concepts, characteristics, and models of B2B e-commerce
One-to-many: Sell-side e-marketplaces
One-from-many: Buy-side e-marketplaces and e-procurement
Buy-side e-marketplaces: Reverse auctions
Other e-procurement methods
B2B electronic exchanges: Definitions and concepts
B2B portals, directories, and ownership of B2B marketplaces
B2B in the Web 2.0 environment and social networking

2. Basic B2B Concepts Business-to-business e-commerce (B2B EC / eB2B)
“Transactions between businesses conducted electronically over the Internet, extranets, intranets, or private networks”.
Gain competitive advantage; collaborate between suppliers & buyers; save money; reduce delays; improve collaborate.
Market size & content of B2B
Dollar value of B2B > 85% of the total transaction value of e-commerce.
Items: Chemicals, computer electronics, utilities, agriculture, shipping & warehousing, motor vehicles, food, etc.

3. Generations of B2B E-commerce

4. The Basic Types of B2B Transactions and Activities

5. The Basic Types of B2B E-Marketplaces and Services
One-to-many and many-to-one: Private e-marketplaces
Company-centric EC
“E-commerce that focuses on a single company’s buying needs (many-to-one / buy-side) or selling needs (one-to- many / sell-side)”.
Many-to-many: Exchanges
Exchanges (trading communities / 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”.
Supply chain improvements and collaborative commerce
Collaborative commerce: Communication, design, planning, and information sharing among business partners.

6. B2B Characteristics Parties: Sellers, buyers, intermediaries
2 types of transactions
Spot buying: Purchase when needed, at market prices.
Strategic sourcing: Purchases involving long-term contracts, based on private negotiations between sellers & buyers.
2 types of materials traded
Direct materials: For the production of a product (e.g. steel in a car).
Indirect materials: Support production (e.g. office supplies).
The direction of the trades
Vertical marketplaces: Deal with one industry / industry segment (e.g. electronics, cars).
Horizontal marketplaces: Concentrate on a service, material, or a product that is used in all types of industries (e.g. office supplies, PCs).

7. The Benefits of B2B Benefits For
Creates new sales (purchase) opportunities
Eliminates paper, reduces administrative costs
Expedites processing, reduces cycle time
Lowers search costs & time for buyers to find products & vendors
Increases productivity of employees dealing with buying/selling
Reduces errors, improves quality of services
Makes product configuration easier
Reduces marketing & sales costs
Reduces inventory levels & costs
Enables customized online catalogs with different prices for different customers
Increases production flexibility, permitting just-in-time delivery
Reduces procurement costs
Facilitates customization via configuration
Provides for efficient customer service
Increases opportunities for collaboration
Both

8. The Content of the B2B Field

9. One-To-Many: Sell-Side E-Marketplaces
“A Web-based marketplace in which one company sells to many businesses buyers from e-catalogs/auctions, frequently over an extranet”.
3 marketing models
Selling from electronic catalogs
Selling via forward auctions
One-to-one selling

10. Sell-side configuration intermediations in B2B
E.g Intel, Dell
(Value-added retailer)

11. One-To-Many: Sell-Side E-Marketplaces
Sales from catalogs
One catalog for all customers; a customized catalog for each large customer; a buyer-customized shopping cart.
Selling via E-Auctions
Using auctions on the sell side
For large & well-known companies.
Benefits offered by forward auctions to B2B sellers:
Revenue generation
Support & expand online & overall sales; quickly & easily disposing of excess, obsolete, returned products.
Cost savings
Reduce the costs of selling the auctioned items ➡ Increase the seller’s profits.
Increased “stickiness”
Increase the customer loyalty.
Member acquisition & retention
Increase the no. of registered members; sellers search & report on every relevant auction activity for future analysis & use.

12. One-To-Many: Sell-Side E-Marketplaces
Using intermediaries in auctions
Benefits:
No additional resources (e.g. hardware, IT personnel) are required.
No hiring costs / opportunity costs associated with the redeployment of corporate resources.
Offer fast time-to-market: The robust, customized auction is ready.
Show the branding of the merchant who owns & controls the auction information.
Billing & collection efforts are handled by the intermediary, e.g. charging customers for shipping of auctioned items.
Examples of B2B forward auctions
Whirlpool Corp. sold $20 millions in scrap metal in 2003 via asset-auctions.com, increasing the price received by 15%.

13. One-From-Many: Buy-Side E-Marketplaces and E-Procurement
“A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method”.
Invite sellers to browse, offer to fulfill orders.
Procurement methods
A Traditional Procurement Process
Inefficient: Time & effort spent

14. E-procurement methods
“The electronic acquisition of goods and services for organizations”

15. The e-procurement process: The buyer’s view

16. Goals & Benefits of E-Procurement
Increase the productivity of purchasing agents.
Lower purchase prices (volume discounts).
Improve information flow & management.
Minimize the purchases from noncontract vendors.
Improve the payment process & savings.
Establish efficient, collaborative supplier relationships.
Ensure delivery on time, every time.
Slash order-fulfillment & processing times.
Reduce the skill & training needs of purchasing agents.
Reduce the no. of suppliers.
Streamline the purchasing process.
Streamline invoice reconciliation & dispute resolution.
Reduce the administrative processing cost per order by 90%.
Find new suppliers & vendors faster & cheaper.
Integrate budgetary controls into the procurement process.
Minimize human errors in the buying/shipping processes.
Monitor & regulate buying behavior.

17. Buy-Side E-Marketplaces: Reverse Auctions
Request for quote (RFQ)
“The “invitation” to participate in a tendering (bidding) system”.
E-tendering by governments
Group reverse auctions
B2B reverse auctions done at an aggregator’s site for a group of buying companies.

18. The reverse auction process

19. Other-Procurement Methods
An internal purchasing marketplace: Aggregating suppliers’ catalogs & desktop purchasing
Internal procurement marketplace
“The aggregated catalogs of all approved suppliers combined into a single internal electronic catalog”.
Good for large organization with purchasing agents in different departments & locations.
Desktop purchasing
“Direct purchasing from internal marketplaces without the approval of supervisors and without the intervention of a procurement department”.
Effective for MRO (maintenance, repair, operating) purchases.
Buying at sellers’ e-auctions

20. Other-Procurement Methods
The group purchasing process
Group purchasing
“The aggregation of orders from several buyers into volume purchases so that better prices can be negotiated”.

21. Other-Procurement Methods
Buying at sellers’ sites and collaborative commerce
Purchasing direct goods
Take place in the sell-side of large vendors.
Use e-purchasing to acquire direct goods.
Electronic bartering
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”.
Items, e.g. office space, idle facilities & labor, products, banner ads.

22. B2B Electronic Exchanges: Definitions and Concepts
Exchange (E-marketplaces / e-markets / trading exchanges / trading communities / exchange hubs / Internet exchanges / Net marketplaces / B2B portals)
Electronic meeting places for many sellers, buyers, business partners.
Support community activities, e.g. industry news, online discussion groups, blogs, research, services (payments, logistics).

23. B2B Electronic Exchanges: Definitions and Concepts
The 3rd party that operates & owns the exchange

24. 3 Major Functions of Exchanges
Matching buyers & sellers
Establish product offerings
Aggregate & post different products
Provide price & product information
Organize bids, bartering, auctions
Match supplier offerings with buyer preferences
Enable price & product comparisons
Support negotiations & agreements
Provide directories of buyers & sellers
Facilitating transactions
Provide the trading platform & mechanisms, e.g. arrange logistics of delivering goods to buyers
Provide billing & payment information
Define terms & other transactions values
Input searchable information
Grant exchange access to users, identify company users for using the exchange
Settle transaction payments, collect transaction fees, provide other escrow services
Register & qualify buyers & suppliers
Maintain security
Arrange for group purchasing
Maintaining exchange policies & infrastructure
Ascertain compliance with commercial code, contract law, export & import laws, intellectual property law for transactions made
Maintain technological infrastructure to support volume & complexity of transactions
Provide interface capability to standard systems of buyers & suppliers
Obtain site advertisers, collect advertising & other fees

25. Services Provided by Exchanges

26. Advantages & Limitations of Exchanges
For buyers
For sellers
Potential gains
One-stop shopping, huge
Search & comparison shopping
Volume discounts
24/7 ordering from any location
Make one order from several suppliers
Huge, detailed information
Access to new suppliers
Status review & easy reordering
Community participation
Fast delivery
Less maverick buying
Better partner relationship management
New sales channel
No physical store is needed
Reduced ordering errors
Sell 24/7
Reach new customers at little extra cost
Promote the business via the exchange
An outlet for surplus inventory
Can go global more easily
Efficient inventory management
Potential risks
Unknown vendors: may not be reliable
Loss of customer service quality
Loss of direct CRM & PRM
More price wars
Competition for value-added services
Must pay transaction fees
Possible loss of customers to competitors

27. B2B Portals
Information portals (directories of products offered by each seller; lists of buyers and what they want, etc.).
Get commission for referrals, derive revenue from advertisements, offer additional services (e.g. shipments) for a fee.
Horizontal, offers a wide range of products of different industries; or
Vortals, focuses on a single industry / industry segment, as vertical portals.
E.g. Thomas Global (thomasgobal.com) - An information portal
A directory of over 700,000 manufacturers & distributors from 28 countries, encompassing over 11,000 products & service categories in 9 languages.
E.g. Alibaba.com Corporation.

28. Ownership of B2B Marketplaces
Third-party exchanges
Neutral, presents catalogs, matches buyers & sellers.
Team up with partners (e.g. financial institutions, logistics companies)
Consortium exchanges
Consortium trading exchange (CTE)
“An exchange formed and operated by a group of major companies in an industry to provide industry-wide transaction services”.

29. Comparing the Many-to-Many B2B Models
Name
Major Characteristics
Types
B2B portals & directories
Community services, news, information
Communication tools
Classified ads
Employment markets
May support selling (buying)
Fixed prices
May do auctions
Vertical (vortals), horizontal
Shopping directory, usually with hyperlinks
B2B trading exchanges
Matches buyer/seller orders at dynamic prices, auctions
Provides trading-related information & services (payment, logistics)
Highly regulated
May provide general information, news, etc.
May provide for negotiations
Vertical, horizontal
Forward auctions
Reverse auctions
Bid/ask exchanges

30. B2B in the Web 2.0 Environment and Social Networking
Corporations are using social networks to:
Create brand awareness
Advertise products & services, promote new ones
Create buzz about upcoming product releases
Drive traffic to online Web properties.
Encourage discussions among business partners ➡ Feedback
Recruit new talent, to obtain more insight into potential new hires.
3 suggested strategies for B2B social networking
Participate: Executives become bloggers & social media participants.
Monitor: Assign a team to report on how the company is mentioned in social media.
Use existing applications: Create a private B2B network / work with one of the public networks.