COLLEGE OF COMPUTER STUDIES AND MULTIMEDIA ARTS

IT0041
(E-COMMERCE AND DIGITAL MARKETING)

EXERCISE

4
Module 4: Business To Business E-Commerce

Student Name / Group

Name:
Name Role
Members (if Group):

Section:

Professor:
I. PROGRAM OUTCOME/S (PO) ADDRESSED BY THE LABORATORY EXERCISE
1. Apply knowledge of computing appropriate to the discipline. PO: a
2. Understand best practices and standards and their applications. PO: m
II. COURSE LEARNING OUTCOME/S (CLO) ADDRESSED BY THE LABORATORY EXERCISE
1. Describe digital marketing methods organizations can use in combination with other marketing
methods and integrate into their international sales and marketing plan. CLO: 2
2. Assess organizational readiness to set up and support an e-commerce operation serving
international markets. CLO: 4

III. INTENDED LEARNING OUTCOME/S (ILO) OF THE LABORATORY EXERCISE

At the end of this exercise, students must be able to:
 Describe the B2B field.
 Describe the major types of B2B models.
 Discuss the models and characteristics of the sell-side marketplace, including auctions.
 Describe sell-side intermediaries.
 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.
 Define exchanges and describe their major types.
 Describe B2B portals.
 Describe third-party exchanges.
 Describe how B2B can benefit from social networking and Web 2.0.
 Provide an overview of the major B2B support services

IV. BACKGROUND INFORMATION

The B2B field
The B2B field comprises e-commerce activities between businesses. B2B activities account for 77 to 95%
of all EC. B2B e-commerce can be done by using different models.

The major B2B models

The B2B field is quite diversified. It can be divided into the following segments: sell-side marketplaces (one
seller to many buyers), buy-side marketplaces (one buyer from many sellers), and trading exchanges
(many sellers to many buyers). Each segment includes several business models. Intermediaries play an
important role in some B2B models.

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The characteristics and models of sell-side marketplaces
Sell-side B2B EC is the online direct sale by one seller (a manufacturer or an intermediary) to many buyers.
The major technology used is electronic catalogs, which also allow for efficient customization, configuration,
and purchase by customers. In addition, forward auctions are becoming popular, especially for liquidating
surplus inventory. Sell-side auctions can be conducted from the seller’s own site or from an intermediary’s
auction site. Sell-side activities can be accompanied by extensive customer service. E-commerce allows
customization of products and services in personalized catalogs.

Sell-side intermediaries.
The primary role of intermediaries in B2B is to provide value added services for manufacturers and
business customers. Intermediaries can also group buyers, conduct auctions, and aggregate catalogs of
many sellers.

The characteristics of buy-side marketplaces and e-procurement.

Today, companies are moving to e-procurement to expedite purchasing, save on item and administrative
costs, and gain better control over the purchasing process. Major procurement methods are reverse
auctions (bidding systems), buying from web stores and catalogs, negotiation, buying from an intermediary
that aggregates sellers’ catalogs, internal marketplaces and group purchasing, desktop purchasing, buying
in exchanges or industrial malls, and e-bartering. E-procurement offers the opportunity to achieve
significant cost and time savings.

B2B reverse auctions.

A reverse auction is a tendering system used by buyers to get better prices from suppliers competing to
fulfill the buyers’ needs. Auctions can be done on a company’s website or on a third-party auction site.
Reverse auctions can lower buyers’ costs dramatically, both in product costs and in the time and cost of the
tendering process.

B2B aggregation and group purchasing

Increasing the bargaining power and efficiency of companies can be done by aggregating either the buyers
or the sellers. Aggregating suppliers’ catalogs into a buyer’s catalog, for example, gives buying companies
better control of purchasing costs. In desktop purchasing, employees are empowered to buy up to a certain
limit without the need for additional approval. Employees view internal catalogs with pre-agreed-upon
prices with the approved suppliers and then buy within their budget. Industrial malls or large distributors
specialize in one industry (e.g., computers) or in industrial MROs.
They aggregate the catalogs of thousands of suppliers. A purchasing agent can place an order for parts or
materials and shipping is arranged by the supplier or the mall owner. Buyer aggregation through group
purchasing is very popular because it enables even SMEs to get better prices on their purchases. In
addition to direct purchasing, items can be acquired via bartering.

Exchanges defined and the major types of exchanges

Exchanges are e-marketplaces that provide a trading platform for conducting business among many
buyers, many sellers, and other business partners. Types of public e-marketplaces include B2B third party
trading exchanges and consortium trading exchanges. Exchanges may be vertical (industry oriented) or
horizontal.

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B2B portals.
B2B portals are gateways to B2B community-related information. They are usually of a vertical structure, in
which case they are referred to as vortals. Some B2B portals offer product and vendor information and
even tools for conducting trades, sometimes making it difficult to distinguish between B2B portals and
trading exchanges.

Third-party exchanges.
Third-party exchanges are owned by an independent company and usually are operated in highly
fragmented markets. They are open to anyone and, therefore, are considered public exchanges. They try to
maintain neutral relations with both buyers and sellers.

B2B in Web 2.0 and social networks.

Although considerable B2C social networking activities exist, B2B activities are just beginning. A major
success has been seen in the use of blogs and wikis to collaborate with suppliers and customers. Large
companies use social networking to create and foster business relationships. Smaller companies use social
networking for soliciting expert opinions. Other companies use it for finding business partners, cultivating
business opportunities, recruiting employees, and finding sales leads.

B2B Internet marketing and other support services.

Marketing methods and marketing research in B2B differ from those of B2C. A major reason for this is that
the buyers must observe organizational buying policies and frequently conduct buying activities as a group
(committee). Organizations use modified B2C methods such as affiliate marketing. The purchasing is
controlled by rules and constraints as well as by the purchasing agent’s behavior.

V. LABORATORY ACTIVITY

Read the following number and perform the following instructions.

1. Explain how a catalog-based sell-side e-marketplace works and describe its benefits.
2. Discuss the advantages of selling through online auctions over selling from catalogs. What are the
disadvantages?
3. Discuss and compare all of the mechanisms that group-purchasing aggregators can use.
4. Should desktop purchasing only be implemented through an internal marketplace?
5. Compare and contrast a privately owned exchange with a private e-marketplace.
6. Compare external and internal aggregation of catalogs.
7. Relate social commerce to B2B group buying.
8. Compare an organizational buyer to an individual consumer.

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VI. REFERENCES

 Martin Kütz, 2016.Introduction To E-Commerce Combining Business And Information

Technology-1st Edition
 Efraim Turban, 2015. Electronic Commerce: A Managerial and Social Networks Perspective -
8TH Edition. Springer International Publishing Switzerland

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