1. Describe the B2B field.

2. Describe the major types of B2B models.

3. Discuss the characteristics and models 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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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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• 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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• 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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– 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).
– Supply Chain Improvers and Collaborative
Commerce

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• 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.
• direct
seller sells their product / service directly to the buyer

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– 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 that usually are
based on private negotiations between sellers and
buyers.

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• 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 lightbulbs).
– maintenance, repair, and operation (MRO)
Indirect materials used in activities that support
production.

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 – 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).
• SUPPLY CHAIN RELATIONSHIPS IN B2B

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• SERVICE INDUSTRIES ONLINE IN B2B
– Travel and hospitality services
– Real estate
– Financial services
– Online financing
– Other online services

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• THE BENEFITS OF B2B to Buyers (B), Sellers (S), or Both (J)

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• 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
• SELLING FROM CATALOGS
– Configuration and Customization
– Benefits and Limitations of Online Sales from
Catalogs
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• Benefits and Limitations of Online Sales from Catalogs
– Benefits:
• Lower order-processing costs
• Faster ordering cycle
• Fewer errors in ordering and product configuration
• Lower search costs for buyers
• Lower search costs for sellers
• Lower logistics costs
• Ability to offer different catalogs and prices to different customers and
to customize products and services efficiently
– Limitation:
• Channel conflicts with distribution systems
• High cost when traditional EDI used
• Large number of business partners is needed to justify system
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• Manufacturers 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.
• Now, many of these distributors also are
selling online via Webstores.

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• USING AUCTIONS ON THE SELL SIDE
– Revenue generation
– Cost savings
– Increased “stickiness”
– Member acquisition and retention
• AUCTIONING FROM THE COMPANY’S OWN
SITE
• AUCTION RULES

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• USING INTERMEDIARIES IN AUCTIONS
– Example: Liquidation.com
• EXAMPLES OF B2B FORWARD AUCTIONS
– Sam’s Club (samsclub.com) auctions thousands of
items
– ResortQuest (auctionanything.com) auctions
rental space for vacation rentals
– At governmentauctions.org, businesses can bid on
foreclosures, seized items, abandoned property,
and more

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• Public e-marketplaces (public exchanges)
– trading venues open to all interested parties (sellers
and buyers) and usually run by third parties
• Exchange
– a many-to-many e-marketplace. Also known as e-
marketplaces, e-markets, and trading exchanges

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• FUNCTIONS OF EXCHANGES
– Matching buyers and sellers
– Facilitating transactions
– Maintaining exchange policies and infrastructure

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• Systematic sourcing
– purchasing done in long-term supplier-buyer relationships
• Spot sourcing
– unplanned purchases made as the need arises
• Vertical exchange
– an exchanges whose members are in one industry or industry
segment
• Horizontal exchange
– an exchanges that handles materials traded in several
different industries
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• Ownership of Exchange
– An industry giant (IBM’s patent exchange
delphian.com)
– A neutral entrepreneur—a third-party
intermediary (ChemConnect.com)
– The consortia (or co-op)—several industry players
set up an exchange (Covisint.com)

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• B2B portals
Information portals for businesses.
• vortals
B2B portals that focus on a single industry or
industry segment; “vertical portals.”
– Thomas Global
– Alibaba.com Corporation
– Directory Services and Search Engines
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• OWNERSHIP OF B2B MARKETPLACES
– Third-Party 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.

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• The Internet
– a public, global communications network that
provides direct connectivity to anyone over a local
area network (LAN) via an Internet service
provider (ISP) or directly via an ISP

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• Intranets
– a corporate LAN or wide area network (WAN)
that uses Internet technology and is secured
behind a company’s firewalls
– Is a private network
• Links various servers, clients, databases
and application programs
within a company
• Limited to information pertinent
to the company
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• Extranets
– a network that uses a virtual private network
(VPN) to link intranets in different locations over
the Internet; an “extended intranet”
• Provide secured connectivity between a corporation’s
intranets and the intranets of its business partners
• protected environment of an extranet allows
• Allows partners to securely collaborate and share
information

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• Virtual private network (VPN)
– a network that creates tunnels of secured data
flows, using cryptography and authorization
algorithms, to provide secure transport of private
communications over the public Internet

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• BENEFITS OF EXTRANET:
– Enhanced communications
– Productivity enhancements
– Business enhancements
Time, design, cost, client relationship, new business, opportunities
– Cost reduction
– Information delivery
Low-cost publishing, delivery system, paper-based, mailing cost

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1. Which B2B model(s) should we use for e-
procurement?
2. Which exchange to join?
3. What is the organizational impact of B2B?
4. What are the characteristics of B2B
exchange?
5. How businesses get an advantages using an
intranet, extranet and VPN in their business?
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