Business to Business (B2B) E-commerce Model | Types of E-commerce

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b2bBusiness to Business (B2B) E-commerce type,
Fundamentals of E-commerce Notes | Sixth Semester,
BSc.CSIT | Tribhuvan University (TU)

Business to Business (B2B) E-commerce
Business to business model of e-commerce is a type of e-commerce which involves electronic transactions for ordering, purchasing, as well as other administrative tasks between business houses. It includes trading goods, such as business subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model, business may exist between virtual companies, neither of which may have any physical existence. In such cases, business is conducted only through the Internet.

B2B business model

Let’s take example of amazon.com. It is an online bookstore that sells books from various publishers. In this case, the publishers have the option of either developing their own site or displaying their books on the Amazon site or both. The publishers mainly choose to display their books on Amazon as it gives them a larger audience. This is supposed to be a huge opportunity area on the Web. Companies have by and large computerized all the operations worldwide and now they need to go into the next stage by linking their customers and vendors. This is done by supply chain software, which is an integral part of your ERP application. Companies need to set up a backbone of B2B applications, which will support the customer requirements on the Web. Many B2B sites are company and industry specific, catering to a community of users, or are a combination of forward and backward integration. Companies have achieved huge savings in distribution-related costs due to their B2B applications.

Major Advantages of B2B

  • Direct interaction with customers. This is the greatest advantage of e-business.
  • Focussed sales promotion. This information gives authentic data about the likes, dislikes and preferences of clients and thus helps the company bring out focussed sales promotion drives which arc aimed at the right audience.
  • Building customer loyalty. It has been observed that online customers can be more loyal than other customers if they are made to feel special and their distinct identity is recognized and their concerns about privacy are respected. It has also been found that once the customers develop a binding relationship with a site and its product, they do not like to shift loyalties to another site or product.
  • Scalability. This means that the Web is open and offers round-the-clock access. This provides an access never known before, to the customer. This access is across locations and time zones. Thus a company is able to handle many more customers on a much wider geographical spread if it uses an e-business model. The company can set up a generic parent site for all locations and make regional domains to suit such requirements. Microsoft is using this model very successfully.
  • Savings in distribution costs. A company can make huge savings in distribution, logistical and after-sales support costs by using e-business models. Typical examples are of computer companies, airlines, and telecom companies.

Processes for Business-to-Business Transactions and Models

  • review catalogues,
  • identify specifications.
  • define requirements,
  • post request for proposals (REP).
  • review vendor reputation.
  • select vendor.
  • fill out purchase orders (PO).
  • send PO to vendor,
  • prepare invoice,
  • make payment,
  • arrange shipment, and
  • organize product inspection and reception.

Due to the large number of transactions involved, business-to-business operations can be too risky if e-business sites cannot guarantee adequate quality of service in terms of performance, availability, and security.

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