B2B E-Commerce

CIS 579 – Technology of E-Business

Joseph H. Schuessler, PhD

joseph.schuesslersounds.com
Tarleton State University
Stephenville, Texas
schuessler@tarleton.edu
Learning Objectives
1. Describe the B2Bfield.
2. Describe the major types ofB2B models.
3. Discuss the models and characteristics 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.
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-2
Learning Objectives
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.

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-3
Concepts, Characteristics,
and Models of B2BE-Commerce
 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

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-4
Concepts, Characteristics,
and Models of B2BE-Commerce
 T H E BASIC TYPES OF B2B TRANSACTIONS AND
ACTIVITIES
 Se l l - s ide
 Buy - s i de
 Exchanges
 S u p p l y chain improvements and collaborative
commerce

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-5
Concepts, Characteristics,
and Models of B2BE-Commerce
 T H E BASIC TYPES OF B2BE-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)

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-6
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-7
Concepts, Characteristics,
and Models of B2BE-Commerce
 Many-to-Many: Public 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)
 S u p p l y Chain Improvers and Collaborative
Commerce

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-8
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-9
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-10
Concepts, Characteristics,
and Models of B2BE-Commerce
 B 2 B CHARACTERISTICS
 P a r t i e s 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

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-11
Concepts, Characteristics,
and Models of B2BE-Commerce
 Ty p e s of B2B Transactions: How Do Firms Buy?
 spot buying
The purchase of goods and services as they are needed,
usually at prevailing market prices
 strategic (systematic) sourcing
Purchases involving long-term contracts that usually are
based on private negotiations between sellers and buyers

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-12
Concepts, Characteristics,
and Models of B2BE-Commerce
 Ty p e s of Materials Traded: What Do Firms Buy?
 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 light bulbs)
 MRO (maintenance, repair, and operation)
Indirect materials used in activities that support
production

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-13
Concepts, Characteristics,
and Models of B2BE-Commerce
 T h e Direction of the Trades
 vertical marketplaces
Markets that deal with one industry or industry segment
(e.g., steel, chemicals)
 horizontal marketplaces
Markets that concentrate on a service, material, or a
product that is used in all types of industries (e.g., office
supplies, PCs)

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-14
Concepts, Characteristics,
and Models of B2BE-Commerce
 SUPPLY CHAIN RELATIONSHIPS IN B2B
 SERVICE INDUSTRIES ONLINE IN B2B
 PARTNER AND SUPPLIER RELATIONSHIP
MANAGEMENT
 p a r t n e r relationship management (PRM)
Business strategy that focuses on providing comprehensive
quality service to business partners
 s u p p l i e r relationship management (SRM)
A comprehensive approach to managing an enterprise’s
interactions with the organizations that supply the goods
and services it uses.
 T H E BENEFITS AND LIMITATIONS OF B2B
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-15
One-to-Many:
Sell-Side E-Marketplaces
 s e l l - s i d e e-marketplace
AWeb-based marketplace in which one company sells
to many business buyers from e-catalogs or auctions,
frequently over an extranet
 B 2 B Sellers
 C u s t o m e r Service

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-16
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-17
One-to-Many:
Sell-Side E-Marketplaces
 SALES FROM CATALOGS:STOREFRONT
 Customization and Self-Configuration
 B e n e f i t s and Limitations of Online Sales from
Catalogs
COMPREHENSIVE SELL-SIDE SYSTEMS

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-18
Selling Via Distributors
and Other Intermediaries
 Manufacturers can sell directly to businesses, and
they do so if the customers are large buyers.
 Frequently they use intermediaries to distribute their
products to a large number of smaller buyers.
 T h e intermediaries buy products from many
manufacturers and aggregate them into one catalog
from which they sell to customers or to retailers.

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-19
Selling Via E-Auctions
 U S I N G AUCTIONS ON THESELL SIDE
 Revenue generation
 C o s t savings
 Increased “stickiness”
 M e m b e r acquisition and retention
 AUCTIONING FROM THE COMPANY’S OWN SITE
 U S I N G INTERMEDIARIES INAUCTIONS
 EXAMPLES OF B2B FORWARDAUCTIONS

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-20
One-from-Many: E-Procurement
at Buy-Side E-Marketplaces
 b u y - s i d e e-marketplace
A corporate-based acquisition site that uses reverse
auctions, negotiations, group purchasing, or any other
e-procurement method

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-21
One-from-Many: E-Procurement
at Buy-Side E-Marketplaces
INEFFICIENCIES IN TRADITIONAL
PROCUREMENT MANAGEMENT
 proc ure m e nt management
The planning, organizing, and coordinating of all the
activities relating to purchasing goods and services
needed to accomplish the organization’s mission
 m a v e r i c k buying
Unplanned purchases of items needed quickly, often at
non-prenegotiated higher prices

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-22
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-23
One-from-Many: E-Procurement
at Buy-Side E-Marketplaces
 e - proc ure m e nt (electronic procurement)
The electronic acquisition of goods and services for
organizations via the Internet, EDI, etc.
 T H E GOALS AND PROCESS OF E-PROCUREMENT
 Ty p e s of E-Procurement
 E-sourcing
 E-tendering
 E-reverse auctioning
 E-informing
 Web-based ERP
 E-market sites
 E-MRO

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-24
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-25
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-26
One-from-Many: E-Procurement
at Buy-Side E-Marketplaces
 T H E BENEFITS AND LIMITATIONS OF E-
PROCUREMENT
 T h e Benefits of E-Procurement
 T h e Limitations and Challenges of E-Procurement

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-27
Reverse Auctions
at Buy-Side E-Marketplaces
 r e q u e s t for quote (RFQ)
The “invitation” to participate in a tendering (bidding)
system
 CONDUCTING REVERSEAUCTIONS
 E-Tendering by Governments
 G R O U P REVERSE AUCTIONS

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-28
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-29
Other E-Procurement Methods
 i n t e r n a l procurement marketplace
The aggregated catalogs of all approved suppliers
combined into a single internal electronic catalog
 B e n e f i t s of Internal Aggregated Catalogs
 d e s k t o p purchasing
Direct purchasing from internal marketplaces without
the approval of supervisors and without the
intervention of a procurement department

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-30
Other E-Procurement Methods
 g r o u p purchasing
The aggregation of orders from several buyers into
volume purchases so that better prices can be
negotiated
 I n t e r n a l Aggregation of Purchasing Orders
 External Aggregation for Group Purchasing

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-31
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-32
Other E-Procurement Methods
 BUYING AT SELLERS’SITES
 Purchasing Direct Goods
 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
SELECTING AN APPROPRIATE E-PROCUREMENT
SOLUTION Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-33
B2B Exchanges:
Definitions and Concepts
 F u n c t i o n s of Exchanges
1. Matching buyers and sellers
2. Facilitating transactions
3. Maintaining exchange policies and infrastructure
 Se r vice s Provided by Exchanges

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-34
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-35
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-36
B2B Exchanges:
Definitions and Concepts
 OWNERSHIP OF B2B EXCHANGES
 Third-Party Independent Marketplaces
 c o n s o r t i u m trading exchange (CTE)
An exchange formed and operated by a group of major
companies in an industry to provide industry-wide
transaction services

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-37
B2B Exchanges:
Definitions and Concepts
 DYNAMIC PRICING IN B2B EXCHANGES
 d y n a m i c pricing
A rapid movement of prices over time and possibly
across customers, as a result of supply and demand
matching
ADVANTAGES, LIMITATIONS, AND THE
REVENUE MODEL OF EXCHANGES
 R e v e n u e Models

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-38
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-39
B2B Portals and Directories
 B 2 B portals
Information portals for businesses
vortals
B2B portals that focus on a single industry or industry
segment; “vertical portals”

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-40
B2B Portals and Directories
 c o r p o r a t e (enterprise) portal
A major gateway through which employees, business
partners, and the public can enter a corporate website
 E x a mp l e s
 Ty p e s of Corporate Portals
 Portals for Suppliers and Other Partners
 Customer Portals
 Employee Portals
 Executive and Supervisor Portals
 mobile portals

Portals accessible via mobile devices, especially cell phones and

PDAs

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-41
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-42
B2B Portals and Directories
 T h e Functionalities of Portals
 information portals
Portals that store data and enable users to navigate and query
these data
 collaborative portals
Portals that allowcollaboration
 Corporate Portal Applications and Issues
 Directory Services and Search Engines
 T h o m a s Register and ThomasNet
 Alibaba.com

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-43
B2B In Web 2.0
and Social Networking
 E-COMMUNITIES IN B2B
 T H E OPPORTUNITIES OFSOCIAL COMMERCE
IN B2B
 T H E USE OF WEB 2.0 TOOLS IN B2B

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-44
B2B In Web 2.0
and Social Networking
 SOCIAL NETWORKING IN B2B
 EXAMPLES OF OTHER ACTIVITIES OF B
2
SOCIAL NETWORKS
 S u c c e s s Stories
STRATEGY FOR B2B SOCIALNETWORKING
 T H E FUTURE OF B2BSOCIAL NETWORKING

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-45
B2B Internet Marketing
 B 2 B marketing
Marketing by manufacturers and wholesalers along
the sell-side of the supply chain
ORGANIZATIONAL BUYER BEHAVIOR
 A Behavioral Model of Organizational Buyers
 T H E MARKETING AND ADVERTISING
PROCESSES IN B2B

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-46
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-47
B2B Internet Marketing
 METHODS FOR B2B ONLINE MARKETING
 Targeting Customers
AFFILIATE PROGRAMS, MARKET RESEARCH,
AND DATA MINING
 Affiliate Programs
 B 2 B Market Research

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-48
Managerial Issues
1. Which B2B model(s) should we use for e-procurement?
2. Which B2B model(s) should we use for online B2B sales?
3. Which exchange should we join?
4. Which solutions and vendor(s) should we select?
5. What is the organizational impact of B2B?
6. What are some ethical issues in B2B?
7. How shall we manage the suppliers?
8. Which type of social network should we use—private
(proprietary) or public?
9. Can we use B2C marketing methods and research in
B2B? Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-49
Summary
1. The B2B field
2. The major B2B models
3. The characteristics and models of sell-side
marketplaces
4. Sell-side intermediaries
5. The characteristics of buy-side marketplaces and e-
procurement
6. B2B reverse auctions
7. B2B aggregation and group purchasing
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall 4-50
Summary
8. Other procurement methods
9. Exchanges defined and the major types of exchanges
10. B2B portals
11. Third-party exchanges
12. B2B in Web 2.0 and social networks
13. B2B Internet marketing methods and organizational
buyers

Copyright © 2012 Pearson Education, Inc.

Publishing as Prentice Hall 4-51