B2B E-Commerce Chapter 2

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B2B E-Commerce Chapter 2. Learning Objectives. Describe the B2B field. Describe the major types of B2B models. Discuss the characteristics of the sell-side marketplace, including auctions. Describe the sell-side models. - PowerPoint PPT Presentation

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B2B E-CommerceChapter 2Learning Objectives Describe the B2B field.Describe the major types of B2B models.Discuss the characteristics of the sell-side marketplace, including auctions.Describe the sell-side models.Describe the characteristics of the buy-side marketplace and e-procurement.Explain how reverse auctions work in B2B.Describe B2B aggregation and group purchasing models.Describe other procurement methods.

1Concepts, Characteristics, and Models of B2B E-CommerceBusiness-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.

BASIC TYPES OF B2B TRANSACTIONS AND ACTIVITIESSell-side: one seller to many buyers.Buy-side: one buyer from many sellers.Exchanges: Many sellers to many buyers.Supply chain improvements and collaborative commerce: including additional activities such as ,communicating, sharing information for joint design.2

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4Concepts, Characteristics, and Models of B2B E-CommerceTHE BASIC TYPES OF B2B1-Private E-Marketplaces2- Many-to-Many: Exchanges3- Supply Chain Improvers and Collaborative Commerce

5THE PARTIES OF B2B1-Seller 2-Buyer3-Intermediary

THE TRANSACTIONS OF B2B1-Spot2-Strategic THE MATERIALS TRADED OF B2B1-Direct 2-Indirect3-MROTHE DIRECTION OF TRAD OF B2B1-Vertical2-Horezontal

Concepts, Characteristics, and Models of B2B E-CommerceTHE BASIC TYPES OF B2B1- One-to-Many and Many-to-One: Private E-Marketplacescompany-centric ECE-commerce that focuses on a single companys buying needs (many-to-one, or buy-side) or selling needs (one-to-many, or sell-side)

Example 1-A pharmacy buys a medications from different online drug companies .2-Heinz selling ketchup to the fast food restaurants 6Concepts, Characteristics, and Models of B2B E-Commerce2 Many-to-Many: Exchangesexchanges (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 otherpublic e-marketplacesThird-party exchanges open to all interested parties (sellers and buyers)3 Supply Chain Improvers and Collaborative Commerce7Third-party called also intermediaryConcepts, Characteristics, and Models of B2B E-CommerceB2B CHARACTERISTICSParties to the Transaction: Sellers, Buyers, and IntermediariesB2B commerce is conducted directly by customer and manufacturer OR through online intermediary. online intermediaryAn online third party that brokers a transaction online between a buyer and a seller; may be virtual or click-and-mortar8Concepts, Characteristics, and Models of B2B E-CommerceTypes of Transactionsspot buyingThe purchase of goods and services as they are needed, usually at prevailing market pricesExample : buying fire extinguisher strategic (systematic) sourcingPurchases involving long-term contracts that usually are based on private negotiations between sellers and buyersExample : buying coffee beans for a coffee shop 9Concepts, Characteristics, and Models of B2B E-CommerceTypes of Materials Tradeddirect materialsMaterials used in the production of a product (e.g., steel in a car or paper in a book)indirect materialsMaterials used to support production (e.g., office supplies or light bulbs)MRO (maintenance, repair, and operation)Indirect materials used in activities that support production10Concepts, Characteristics, and Models of B2B E-CommerceThe Direction of the Tradesvertical marketplacesMarkets that deal with one industry or industry segment (e.g., steel, chemicals)

horizontal marketplacesMarkets that concentrate on a service, material, or a product that is used in all types of industries (e.g., office supplies, PCs)11Concepts, Characteristics, and Models of B2B E-CommerceTHE BENEFITS AND LIMITATIONS OF B2BBenefits: sellers (S), buyers (B), both (J)

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13One-to-Many: Sell-Side E-MarketplacesSell-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.

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15VAR: Value-added-retailers Sell-side methodsSALES FROM e-CATALOGSConfiguration and Customization: self-configure, pricing, submit orders Benefits and Limitations of Online Sales from Catalogs : ??(on your own !?)

16Selling Via E-AuctionsUSING AUCTIONS ON THE SELL SIDEForward auctions offer the following benefits to B2B sellers:Revenue generationCost savingsIncreased stickinessMember acquisition and retentionE-Auctions options :AUCTIONING FROM THE COMPANYS OWN SITEUSING INTERMEDIARIES IN AUCTIONS

EXAMPLES OF B2B FORWARD AUCTIONS ????17Stickiness : it is a characteristics that describes the customer loyalty to a site, demonstrated by number and length of visits to the site. One-from-Many: Buy-Side E-Marketplaces and E-ProcurementBuy-side e-marketplaceA corporate-based acquisition site that uses reverse auctions, negotiations, group purchasing, or any other e-procurement method.

18One-from-Many: Buy-Side E-Marketplaces and E-ProcurementPROCUREMENT METHODSE-Procurement Methods ( as in Figure 5.5)E-Procurement Organizations and TypesE-sourcingE-tenderingE-reverse auctioningE-informingWeb-based ERPE-marketsitesE-MRO19

20One-from-Many: Buy-Side E-Marketplaces and E-ProcurementTHE GOALS AND BENEFITS OF E-PROCUREMENTe-procurementThe electronic acquisition of goods and services for organizations

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22Buy-Side E-Marketplaces: Reverse AuctionsReverse Auction: is a tendering system in which suppliers are invited to bid the fulfillment of an order and the lowest bid wins.

Request for Quote (RFQ)The invitation to participate in a tendering (bidding) system

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24Other E-Procurement MethodsInternal procurement marketplaceThe aggregated catalogs of all approved suppliers combined into a single internal electronic catalog

Benefits of Internal Aggregated (Consolidated) CatalogsQuickly find what desired offering, check availability and delivery times, and complete electronic requisition forms, using fewer suppliers25Other E-Procurement MethodsDesktop purchasingDirect purchasing from internal marketplaces without the approval of supervisors and without the intervention of a procurement departmentGroup purchasingThe aggregation of orders from several buyers into volume purchases so that better prices can be negotiatedInternal Aggregation of Purchasing OrdersExternal Aggregation for Group Purchasing26

27Managerial IssuesWhich 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 suppliers28