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B2B E-Commerce Chapter 2

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.

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B2B E-Commerce Chapter 2

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  1. B2B E-CommerceChapter 2

  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. • 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.

  3. Concepts, Characteristics, and Models of B2B E-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. • BASIC TYPES OF B2B TRANSACTIONS AND ACTIVITIES • Sell-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.

  4. Concepts, Characteristics, and Models of B2B E-Commerce • THE BASIC TYPES OF B2B 1-Private E-Marketplaces 2- Many-to-Many: Exchanges 3- Supply Chain Improvers and Collaborative Commerce • THE TRANSACTIONS OF B2B 1-Spot 2-Strategic • THE PARTIES OF B2B 1-Seller 2-Buyer 3-Intermediary • THE DIRECTION OF TRAD OF B2B 1-Vertical 2-Horezontal • THE MATERIALS TRADED OF B2B 1-Direct 2-Indirect 3-MRO

  5. Concepts, Characteristics, and Models of B2B E-Commerce • THE BASIC TYPES OF B2B 1- 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) Example 1-A pharmacy buys a medications from different online drug companies . 2-Heinz selling ketchup to the fast food restaurants

  6. Concepts, Characteristics, and Models of B2B E-Commerce • 2 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) • 3 Supply Chain Improvers and Collaborative Commerce Third-party called also intermediary

  7. Concepts, Characteristics, and Models of B2B E-Commerce • B2B CHARACTERISTICS • Parties to the Transaction: • Sellers, Buyers, and Intermediaries • B2B commerce is conducted directly by customer and manufacturer OR through online intermediary. • online intermediary An online third party that brokers a transaction online between a buyer and a seller; may be virtual or click-and-mortar

  8. Concepts, Characteristics, and Models of B2B E-Commerce • Types of Transactions • spot buying The purchase of goods and services as they are needed, usually at prevailing market prices Example : buying fire extinguisher • strategic (systematic) sourcing Purchases involving long-term contracts that usually are based on private negotiations between sellers and buyers Example : buying coffee beans for a coffee shop

  9. Concepts, Characteristics, and Models of B2B E-Commerce • 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 light bulbs) • MRO (maintenance, repair, and operation) Indirect materials used in activities that support production

  10. Concepts, Characteristics, and Models of B2B E-Commerce • The 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)

  11. Concepts, Characteristics, and Models of B2B E-Commerce • THE BENEFITS AND LIMITATIONS OF B2B • Benefits: sellers (S), buyers (B), both (J)

  12. One-to-Many: Sell-Side E-Marketplaces • 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.

  13. Sell-side methods • SALES FROM e-CATALOGS • Configuration and Customization: self-configure, pricing, submit orders • Benefits and Limitations of Online Sales from Catalogs : ?? (on your own !?)

  14. Selling Via E-Auctions • USING AUCTIONS ON THE SELL SIDE • Forward auctions offer the following benefits to B2B sellers: • Revenue generation • Cost savings • Increased “stickiness” • Member acquisition and retention • E-Auctions options : • AUCTIONING FROM THE COMPANY’S OWN SITE • USING INTERMEDIARIES IN AUCTIONS • EXAMPLES OF B2B FORWARD AUCTIONS ????

  15. 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.

  16. One-from-Many: Buy-Side E-Marketplaces and E-Procurement • PROCUREMENT METHODS • E-Procurement Methods ( as in Figure 5.5) • E-Procurement Organizations and Types • E-sourcing • E-tendering • E-reverse auctioning • E-informing • Web-based ERP • E-marketsites • E-MRO

  17. One-from-Many: Buy-Side E-Marketplaces and E-Procurement • THE GOALS AND BENEFITS OF E-PROCUREMENT • e-procurement The electronic acquisition of goods and services for organizations

  18. Buy-Side E-Marketplaces: Reverse Auctions • Reverse 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

  19. Other E-Procurement Methods • Internal procurement marketplace The aggregated catalogs of all approved suppliers combined into a single internal electronic catalog • Benefits of Internal Aggregated (Consolidated) Catalogs • Quickly find what desired offering, check availability and delivery times, and complete electronic requisition forms, using fewer suppliers

  20. Other E-Procurement Methods • Desktop purchasing • Direct purchasing from internal marketplaces without the approval of supervisors and without the intervention of a procurement department • 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

  21. Managerial Issues • Which 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 suppliers

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