Business benefits of B2B e-commerce

Written by: Jonathan Briggs

December 7, 2004 [18529 views]

This session will look at e-commerce from a business-to-business perspective and explore some of the benefits of integrating a business with its suppliers and other business customers.

What does a business (within a market) do?

In order to understand the opportunities for B2B e-commerce we need to look at how a business operates inside a market and identify where there are opportunities to introduce online communication tools to streamline the processes.

Example

Consider for example a producer of tinned products such as Heinz (tomatoes, fruit, soup etc). Who do they buy and sell from? What commodities do you think they need? How are they likely to manage inventory? What sorts of relationships do they engage in with suppliers, distributors and customers?

Take a look at www.efoods.com

Here is a list of some common business activities

1. Finding customers through sales and marketing
2. Obtain quotations, negotiate price, specifications and contracts
3. R&D. Product (or service) development
4. Sell to retail and wholesale customers and through distributors
5. Inventory control including disposal of distressed inventory and demand intelligence
6. Qualifying customers to prevent rogue transactions
7. Procurement of raw materials, components and supplies
8. Optimising business through negotiations with suppliers, distributors and customers
9. Manage IT Resources
10. Invoicing
11. Strategic planning
12. Project management
13. Managing finance, cash, debt and investments
14. Manage Human Resources (Staff)
15. Manage Property
16. Manufacturing or performing services
17. Warehousing

Negotiation online

• Initiated through requests or offers; Buyers want something, sellers have something to offer
• Sellers respond to buyers by offering products or services at a suggested price
• Buyers respond to sellers by offering a price for specific products or services
• Buying and selling can be via open or secret processes and may be for a fixed time
• Specifications can be negotiated instead of or as well as price

Features of B2B marketplace portals

• Registration of suppliers (or buyers in a demand marketplace)
• Suppliers offer products or services
• Suppliers provide additional details to allow buyers to select (qualify) potential suppliers
• Portal may provide additional checks to enable further qualification of its suppliers: credit, references, research
• Portal offers mechanism for searching suppliers
• May include public or secret forms of offer (bids, prices, estimates)
• Marketplace may hold deposits or payment on behalf of the buyer (escrow) until the seller releases goods or meets a delivery milestone
• May support contractual elements of transactions providing audit trail for purchase orders and invoicing
• May aggregate demand from multiple buyers
• Relationships may be short term or the basis for on-going trade
• Portals may charge fees to buyers or suppliers or a percentage of contracts negotiated
• Marketplaces may be created independently or within existing industry relationships

Creating communication channels for on-going relationships

1. Ordering
2. Invoicing
3. Shared planning, product development and problem solving
4. Reducing errors in communication
5. Enabling just-in-time, JIT, ordering/shipping and moving warehousing costs to your suppliers
6. Enabling distributors and customers to do your marketing for you
7. Making it harder for your competitors to work with your suppliers

Benefits of B2B

1. Outsourcing the unprofitable parts of your business
2. Speeding up your product development activities – reducing time to market
3. Improved business and market intelligence. Understanding your market better than your competitors
4. Cloning your business in further markets
5. Improving the speed of communication
6. Facilitating communication between your customers and suppliers
7. Reducing wastage through additional sales channels
8. Improved ability to experiment and learn
9. Higher customer retention rates
10. Lower customer acquisition costs
11. Reduced costs can be passed on in favourable pricing

Some interesting links

www.b2btoday.com
www.emarketservices.com

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