1. 1.Describe the B2B field. 2.Describe the major types of B2B models. 3.Discuss the characteristics and models of the sell- side marketplace, including auctions. 4.Describe the sell-side intermediaries. 5.Describe the characteristics of the buy-side marketplace and e-procurement. 6.Explain how reverse auctions work in B2B. 7.Describe B2B aggregation and group purchasing models. 5-0 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

2. 8.Describe other procurement methods. 9.Define exchanges and describe their major types. 10.Describe B2B portals. 11.Describe third-party exchanges. 12.Describe how B2B can benefit from social networking and Web 2.0. 13.Describe Internet marketing in B2B, including organizational buyer behavior. 5-1 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

3. 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. 5-2 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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6. 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 or buy-side) or selling needs (one- to-many or sell-side). 5-5 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

7. – 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 E.g. collaborative commerce,which is communication, design, planning, and information sharing among business partners 5-6 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

8. B2B CHARACTERISTICS  Parties to the Transaction: Sellers, Buyers, and Intermediaries – online intermediary: An online third party that brokers a transaction online between a buyer and a seller; may be virtual or click-and-mortar.  Types of Transactions – spot buying: The purchase of goods and services as they are needed, usually at prevailing market prices. (public exchange ) – strategic (systematic) sourcing: Purchases involving long- term contracts that usually are based on private negotiations between sellers and buyers. (private marketplace) 5-7

9.  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 lightbulbs). – maintenance, repair, and operation (MRO) Indirect materials used in activities that support production. 5-8 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

10. SUPPLY CHAIN RELATIONSHIPS IN B2B B2B e-commerce can make supply chains more efficient and effective or it can change the supply chain completely, eliminating one or more intermediaries 5-9 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

11. SERVICE INDUSTRIES ONLINE IN B2B – Travel and hospitality services (corporate travel agents) – Real estate – Financial services – Online financing – Other online services consulting services, law firms, recruiting services …etc 5-10 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

12. THE BENEFITS OF B2B to Buyers (B), Sellers (S), or Both (J) 5-11 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

13. THE LIMITATIONS OF B2B Channel conflict, the operation of public exchange, eliminate the distributor or the retailer, and personal face-to-face interaction may be needed Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 5-12

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15. 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. – The seller can be a manufacturer(click-and-mortar) or intermediary (pure-play) such as a distributor selling to wholesaler,to retailers,or to business – Usually companies separate B2C orders from B2B orders because they have different order-fulfillment process and different pricing models – The one-to-many model has three marketing methods: 1.Selling from e-catalog 2.Selling via forward auctions 3.One-to-one selling, usually under a negotiated long-term contract – B2B Sellers – Customer Service FYI 5-14

16. Selling from catalogs – A company may offer one catalog for all customers or a customized catalog for each large customer e.g. Stapleslink.com Microsoft.com – Configuration and Customization – Benefits and Limitations of Online Sales from Catalogs How to find buyers Channel conflicts with existing distribution system If EDI is used Example: Cisco systems Is the world’s leading producer of routers, switches, and network interconnection services 5-15 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

17. Manufacturers use intermediaries to distribute their products to a large number of smaller buyers. The intermediaries buy products from many manufacturers and aggregate them into one catalog from which they sell to customers or to retailers. Now, many of these distributors also are selling online via Webstores. 5-16 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

18. USING AUCTIONS ON THE SELL SIDE – Revenue generation – Cost savings – Increased “stickiness” – Member acquisition and retention AUCTIONING FROM THE COMPANY’S OWN SITE USING INTERMEDIARIES IN AUCTIONS – Example: Liquidation.com asset-actions.com – Benefits : no additional resources are required, fast time to market, billing and collection efforts are handled by the intermediary 5-17 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

19. buy-side e-marketplace A corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method. Procurement is used to refer to the purchase of goods and services for organizations PROCUREMENT METHODS page 228 5-18 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

20. E-Procurement Organization and Types – E-Sourcing: identifying new suppliers for a specific category of purchasing requirements using internet technology – E-Tendering: sending requests for information and prices to known suppliers and receiving the suppliers’ responses and bids using internet technology – E-forward auctioning: using internet technology to buy goods and services from a number of known or unknown suppliers – E-Informing: gathering and distributing purchasing information both from and to internal and external parties using internet technology 5-19

21. E-Procurement Organization and Types – Web-based ERP (electronic resource planning) :creating and approving purchasing requisitions, placing purchase orders, and receiving goods and services by using a software system based on internet technology – E-Marketsites: buying communities access favored suppliers’ products and services, add products to shopping carts,create requisitions, seek approval,receive purchase orders,and process e-invoices,integrating them into suppliers and buyer systems – E-MRO (maintenance, repair, and operating): the same as web- based ERP except that goods and services ordered are non- product-related MRO supplies 5-20

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23. INEFFICIENCIES IN TRADITIONAL PROCUREMENT MANAGEMENT – procurement management The planning, organizing, and coordinating of all the activities related 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. 5-22 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

24. The goals and benefits of e-procurement e-procurement The electronic acquisition of goods and services for organizations. 5-23 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

25. Reverse auction: a tendering system in which suppliers are invited to bid on the fulfillment of an order and the lowest bid wins Request for quote (RFQ) The “invitation” to participate in a tendering (bidding) system. Reverse auctions: may provide considerable savings, the process is faster and less expensive, help in locating the cheapest possible products or services Conducting reverse auctions: As the number of reverse auction sites increase, suppliers will not be able to manually monitor all relevant tendering sites Solution: online directories,monitoring software agents,intermediaries may run the e-bidding E-tendering by governments 5-24

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27. An internal purchasing marketplace: aggregating suppliers’ catalogs and desktop purchasing – internal procurement marketplace The aggregated catalogs of all approved suppliers combined into a single internal electronic catalog. Benefits of Internal Aggregated Catalogs – Corporate buyers can use search engines to look through internal aggregated catalogs to quickly find what they want, check availability and delivery times, and complete electronic requisition forms – The company can reduce the number of suppliers it uses how ? – They allow for easy financial controls. how ? 5-26 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

28. Desktop purchasing Direct purchasing from internal marketplaces without the approval of supervisors and without the intervention of a procurement department. this is usually done by using a payment card (purchasing card) It reduces the administrative cost and cycle time involved in purchasing urgently needed or frequently purchased items of small dollar value It is especially effective for RMO purchases Buying at sellers’ e-auctions Provide an opportunity for buyers to find inexpensive or unique items fairly quickly Auctions can be conducted at the seller’s site, at an auctioneer’s site, or at an exchange 5-27

29. Group purchasing The aggregation of orders from several buyers into volume purchases so that better prices can be negotiated. – Internal Aggregation of Purchasing Orders – External Aggregation for Group Purchasing Buyerzone.com higpa.com The idea is to provide SMEs with better prices, selections, and services by aggregating demand online and then either negotiating with suppliers or conducting reverse auctions 5-28 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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31. BUYING AT SELLERS’ SITES AND COLLABORATIVE COMMERCE ACQUISITION VIA 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. 5-30 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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33. Exchanges are electronic trading-community meeting places for many sellers and many buyers Many exchanges support community activities, such as distributing industry news, sponsoring online discussion groups, blogging, and providing research. some provide support services such as payments & logistics Functions of exchanges – Matching buyers and sellers – Facilitating transactions – Maintaining exchange policies and infrastructure Dynamic pricing in B2B exchanges: The market makers match supply and demand in their exchanges, and this matching determines prices 5-32

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35. B2B portals Information portals for businesses. They usually include directories and may get commissions for referrals or only derive revenue from advertisements Many information portals are beginning to offer additional services that support trading such as escrow and shipments – Thomas Global – Alibaba.com Corporation Directory Services and Search Engines 5-34 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

36. OWNERSHIP OF B2B MARKETPLACES – Third-Party Exchanges :electronic intermediaries not only presents catalogs, but also try to match buyers and sellers and encourage them to make transactions – They are two types: 1.neutral, they don’t favor either sellers or buyers 2.Try to team up with partners, such large seller or buyers, or financial institutions and logistics companies – Consortium trading exchange (CTE) – An exchange formed and operated by a group of major companies in an industry to provide industry-wide transaction services. – The type of environment indicates which type of exchange is most appropriate 1.Fragmented markets 2.Seller-concentrated markets 3.Buyer –concentrated markets 5-35

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38. THE OPPORTUNITIES FYI THE USE OF WEB 2.0 TOOLS IN B2B More companies are using blogs,wikis,RSS feeds,and other tools in B2B EC SOCIAL NETWORKS IN THE B2B MARKETPLACE FYI EXAMPLES OF OTHER ACTIVITIES OF B2B SOCIAL NETWORKS FYI 5-37 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

39. ORGANIZATIONAL BUYER BEHAVIOR Organizations buy large quantities of direct materials and indirect materials The number of organizational buyer is much smaller, their transaction volumes are larger, and the terms of negotiations and purchasing are more complex The purchasing process itself is more complex The organization’s buyer may be a group THE MARKETING AND ADVERTISING PROCESSES IN B2B Traditionl B2B marketers use methods such as physical trade shows, advertisements in industry magazines, paper catalogs, and salespeople In the digital world, organizations use a variety of online methods such as online directory services, matching services, the marketing and trade shows, online marketing services 5-38 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

40. METHODS FOR B2B ONLINE MARKETING How can a company reach new customers? – Targeting Customers Contact all targeted customers individually when they are part of a well-defined group Affiliation services – Electronic Wholesalers AFFILIATE PROGRAMS, INFOMEDIARIES, AND DATA MINING 5-39 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

41. 1.Which B2B model(s) should we use for e- procurement? 2.Which exchange to join? 3.What is the organizational impact of B2B? 4.What are some ethical issues in B2B? 5.How shall we manage our suppliers? 6.Which type of social network? Private (proprietary) or public? 5-40 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

42. 5-41 In order to gain CH 5 point, you need to do one of the following : 1.Answer one of the chapter cases except the opening case Or 2.Choose two of the internet exercises (page 253) and answer them I recommend number 2,4,10,11,12,13