intro2e_ch05.ppt

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Chapter 5

B2B E-Commerce

Chapter 5

Copyright © 2009 Pearson Education,Inc. Publishing as Prentice Hall 1

Learning Objectives

1. Describe the B2B field.

2. Describe the major types of B2B models.

3. Discuss the characteristics of the sell-side

marketplace, including auctions.

4. Describe the sell-side models.

5. Describe the characteristics of the buy-side

marketplace and e-procurement.

6. Explain how reverse auctions work in B2B.



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Chapter 5


Learning Objectives

7. Describe B2B aggregation and group

purchasing models.

8. Describe other procurement methods.

9. Define exchanges and describe their major

types.

10. Describe B2B portals.

11. Describe third-party exchanges.

12. Describe partner relationship management

(PRM).

Chapter 5


Concepts, Characteristics,

and Models of B2B EC

BASIC B2B CONCEPTS

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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Chapter 5


Concepts, Characteristics,and Models of B2B EC

Chapter 5




THE BASIC TYPES OF B2B

TRANSACTIONS AND ACTIVITIES

Sell-side

Buy-side

Exchanges

Supply chain improvements and

collaborative commerce



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Chapter 5




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 buyingneeds (many-to-one, or buy-side) or selling needs (one-to-many, or sell-side).

private e-marketplaces

Markets in which the individual sell-side or buy-sidecompany has complete control over participation in theselling or buying transaction.



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Many-to-Many: Exchanges

exchanges (trading communities or trading

exchanges)

Many-to-many e-marketplaces, usually owned and runby 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

Chapter 5




B2B CHARACTERISTICS

Parties to the Transaction: Sellers,

Buyers, and Intermediaries

online intermediary

An online third party that brokers a transactiononline between a buyer and a seller; may be

virtual or click-and-mortar.



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Chapter 5



Types of Transactions

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 thatusually are based on private negotiations

between sellers and buyers.

Chapter 5




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 materialsMaterials 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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Chapter 5



Direction of Trade

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 typesof industries (e.g., office supplies, PCs).

Chapter 5




SUPPLY CHAIN RELATIONSHIPS IN

B2B

VIRTUAL SERVICE INDUSTRIES IN

B2B

THE BENEFITS OF B2B



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Chapter 5


One-to-Many:Sell-side E-Marketplaces

SELL-SIDE MODELS ANDACTIVITIES sell-side e-marketplace

A Web-based marketplace in which onecompany sells to many business buyersfrom e-catalogs or auctions, frequently

over an extranet. B2B Sellers

Customer Service

Chapter 5


One-to-Many:

Sell-side E-Marketplaces



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Chapter 5


One-to-Many:Sell-side E-Marketplaces

DIRECT SALES FROM CATALOGS

Configuration and Customization

Benefits and Limitations of Direct Sales

from Catalogs

DIRECT SALES: THE EXAMPLE OF

CISCO SYSTEMS

Chapter 5


Selling Via

Intermediaries and Distributors

Manufacturers frequently use

intermediaries to distribute their

products to a large number of buyers.

The intermediaries (known as

distributors) usually buy products from

many vendors and aggregate them into

one catalog from which they sell.



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Chapter 5


Selling Via Auctions

USING AUCTIONS ON THE SELL

SIDE

Revenue generation

Cost savings

Increased “stickiness”

Member acquisition and retention

Chapter 5


Selling Via Auctions

AUCTIONING FROM THE

COMPANY’S OWN SITE

USING INTERMEDIARIES IN

AUCTIONS

EXAMPLES OF B2B FORWARD

AUCTION



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Chapter 5


One-from-Many: Buy-SideE-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.

Chapter 5


One-from-Many: Buy-Side

E-Marketplaces and E-Procurement

PROCUREMENT METHODS

e-sourcing

e-tendering

e-reverse auctioning

e-informing Web-based ERP (electronic resource

planning)

e-MRO (maintenance, repair, andoperating)



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Chapter 5



INEFFICIENCIES IN TRADITIONAL

PROCUREMENT MANAGEMENT

Procurement management

The planning, organizing, and coordinating of allthe activities relating to purchasing goods and

services needed to accomplish the organization’s

mission. maverick buying

Unplanned purchases of items needed quickly,

often at higher prices, not pre-negotiated.

Chapter 5




THE GOALS AND BENEFITS OF E-

PROCUREMENT

e-procurement

The electronic acquisition of goods and

services for organizations.



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Chapter 5






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Chapter 5


Buy-Side E-Marketplaces:Reverse Auctions

request for quote (RFQ)

The “invitation” to participate in a

tendering (bidding) system.

CONDUCTING REVERSE AUCTIONS

E-Tendering by Governments

GROUP REVERSE AUCTIONS

Chapter 5


Buy-Side E-Marketplaces:

Reverse Auctions



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Chapter 5


Other E-Procurement Methods

internal procurement marketplace

The aggregated catalogs of all approved

suppliers combined into a single internal

electronic catalog.

Benefits of Internal Marketplaces

desktop purchasing

Direct purchasing from internal marketplaces

without the approval of supervisors and without the

intervention of a procurement department.

Chapter 5



BUYING AT E-AUCTIONS

group purchasing

The aggregation of orders from several

buyers into volume purchases so that better

prices can be negotiated.

Internal Aggregation

External Aggregation



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Chapter 5



Chapter 5



BUYING FROM E-DISTRIBUTORS

PURCHASING DIRECT GOODS

ELECTRONIC BARTERING

bartering exchange

An intermediary that links parties in a barter; acompany 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.



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Chapter 5


B2B Electronic Exchanges:Definitions and Concepts

Chapter 5


B2B Electronic Exchanges:

Definitions and Concepts

dynamic pricing

A rapid movement of prices over timeand possibly across customers, as aresult of supply and demand matching.

FUNCTIONS OF EXCHANGES Matching buyers and sellers

Facilitating transactions

Maintaining exchange policies andinfrastructure



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Chapter 5


B2B Electronic Exchanges:Definitions and Concepts

Chapter 5


B2B Electronic Exchanges:

Definitions and Concepts

Revenue Models of Exchanges Transaction fees

Fee for service Membership fees

Advertising fees

Other revenue sources B2B portals

Information portals for businesses.

vortals

B2B portals that focus on a single industry or industry segment; “vertical portals”.



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Chapter 5


B2B Portals, Directories, andTrading Exchanges

THIRD-PARTY AND DIRECTORIES

EXCHANGES

consortium trading exchange (CTE)

An exchange formed and operated by a

group of major companies in an industry to

provide industry-wide transaction services.

Chapter 5


Partner and Supplier

Relationship Management

partner relationship management

(PRM)

Business strategy that focuses on

providing comprehensive quality service

to business partners.

E-COMMUNITIES AND PRM



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Chapter 5


Managerial Issues

1. Can we justify the cost of B2B applications?

2. Which vendor(s) should we select?

3. Which B2B model(s) should we use?

4. What are the ethical issues in B2B?

5. Will there be massive disintermediation?

6. How can trust and loyalty be cultivated in B2B?

7. Will joining an exchange force restructuring?

8. Which exchange to join?

9. What are the benefits and risks of joining anexchange?

Chapter 5


Summary

1. The B2B field.

2. The major B2B models.

3. The characteristics of sell-side marketplaces.

4. Sell-side intermediaries.

5. The characteristics of buy-side marketplaces

and e-procurement.

6. B2B reverse auctions.



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Chapter 5


Summary

7. B2B aggregation and group purchasing.

8. Other procurement methods.

9. E-marketplaces and exchanges defined and

the major types of exchanges.

10. B2B portals.

11. Third-party exchanges.12. Good relationship with business partners is

critical to the success of B2B.

Chapter 5


All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.

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