Chapter 4

B2B E-Commerce
Learning Objectives
1. Describe the B2B field.
2. Describe the major types of B2B 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.
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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.

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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

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Concepts, Characteristics,
and Models of B2B E-Commerce
THE BASIC TYPES OF B2B TRANSACTIONS AND
ACTIVITIES
Sell-side
Buy-side
Exchanges
Supply chain improvements and collaborative
commerce

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Concepts, Characteristics,
and Models of B2B E-Commerce
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, or buy-side) or selling needs (one-to- many, or
sell-side)

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Concepts, Characteristics,
and Models of B2B E-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)
Supply Chain Improvers and Collaborative
Commerce

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Concepts, Characteristics,
and Models of B2B E-Commerce
B2B CHARACTERISTICS
Parties 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

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Concepts, Characteristics,
and Models of B2B E-Commerce
Types 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

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Concepts, Characteristics,
and Models of B2B E-Commerce
Types 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

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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)

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Concepts, Characteristics,
and Models of B2B E-Commerce
SUPPLY CHAIN RELATIONSHIPS IN B2B
SERVICE INDUSTRIES ONLINE IN B2B
PARTNER AND SUPPLIER RELATIONSHIP
MANAGEMENT
 partner relationship management (PRM)
Business strategy that focuses on providing comprehensive
quality service to business partners
 supplier relationship management (SRM)
A comprehensive approach to managing an enterprise’s
interactions with the organizations that supply the goods and
services it uses.
THE BENEFITS AND LIMITATIONS OF B2B
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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
B2B Sellers
Customer Service

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One-to-Many:
Sell-Side E-Marketplaces
SALES FROM CATALOGS: STOREFRONT
Customization and Self-Configuration
Benefits and Limitations of Online Sales from
Catalogs
COMPREHENSIVE SELL-SIDE SYSTEMS

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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.
The intermediaries buy products from many
manufacturers and aggregate them into one catalog
from which they sell to customers or to retailers.

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Selling Via E-Auctions
USING AUCTIONS ON THE SELL SIDE
Revenue generation
Cost savings
Increased “stickiness”
Member acquisition and retention
AUCTIONING FROM THE COMPANY’S OWN SITE
USING INTERMEDIARIES IN AUCTIONS
EXAMPLES OF B2B FORWARD AUCTIONS

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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

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