B2B E-COMMERCE

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

8. The Content of the B2B Field

9. One-To-Many: Sell-Side E-Marketplaces • Sell-side e-marketplace • “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:

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

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

25. Services Provided by Exchanges

26. Advantages & Limitations of Exchanges

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

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.