marketing and e-commerce
Feb 13) this page has not been updated for several years because the
content has been eclipsed by newer
developments in how businesses do business with other businesses - which are discussed in a conventional lecture
(Nabeela noted that the fastparts.com link is broken cause the company no longer is extant)
used in the following courses taught by Prof. Richardson
November through December 1999 and into January and February 2000 there
were a lot of newspaper and magazine reports, offline and online about
B2B being the new focus of e-business and how this area would grow very
We can find many newspaper articles about B2B issues and many of them include projections as to how big the market will grow - which may not be meaningful since since whether it is $5 trillion or $7 trillion - it's still a lot of money
In the following space, you
will find separate articles on B2B at three separate times from E-commerce
Times. Each story has a different perspective on B2B. Why?
Mary Hillebrand wrote an article in E-Commerce Times in January 2000
in which she noted several of these B2B projections and also commented on how important it would be in the business commuity in general.
"The Stamford, Connecticut-based
GartnerGroup sees the online B2B market reaching seven percent of a predicted
$105 trillion in total global sales transactions.... The study reports
that companies who develop B2B marketplaces -- so-called "e-market
makers" -- will be a key
is based on a report by a U.S. trade association called National Association of Manufacturers
"A nationwide poll of U.S. industrial firms shows that most are not engaging in extensive business-to-business (B2B) e-commerce, according to the National Association of Manufacturers (NAM). .. The study echoed a recent report from Deloitte and Touche showing that 70 percent of U.S. retailers lack a cohesive e-commerce strategy."
"No one questions the importance of B2B e-commerce, yet relatively few manufacturers are participating in it," said NAM president Jerry Jasinowski.
Glitter Than Gold in B2B Portals"
Brady writes "companies in nearly every industry are launching slick new Internet portals -- but many have failed thus far to rise above the functionality of plain old Web sites ... As the list of new portals continues to lengthen, it is nevertheless becoming increasingly clear that a portal launch does not necessarily augur immediate B2B success. Customers are not flocking to the portals as quickly as expected and even those who make the trip are often unwilling or unable to make transactions."
Ventures Losing Their Allure"
Dembeck writes in a more "sober" way about the B2B hype, noting "when a leading Web incubator announced earlier this week [11Apr2000] that it would stop investing in business-to-business (B2B) companies, it reinforced concern that the dot-com shakeout in the business-to-consumer arena may be spreading to the realm of B2B."
"What seems like a sudden
about face was actually expected by some industry analysts. In general,
valuation and the projected size of the B2B market
have gotten so big they have become hard to fathom...,"
"...the proliferation of
B2B marketplaces is being fueled by the desire to improve business processes,
it is also being driven by hype"
for B2B Apps Still Soft"
Cox writes, "Sales of B2B software, the applications needed to establish online marketplaces, bolster supply chains and allow for collaboration among companies, continue to be soft, and Goldman, Sachs analysts are lowering estimates for some of the prime players in the field."
Payments Crucial for B2B Success"
"... with many B2B payments: Oftentimes, a buyer has to tie up its line of credit before the goods are even shipped just to provide the seller with the assurance that the bill will be paid. Other payment mechanisms, such as credit insurance or letters of credit, can be very costly -- and still, a buyer's credit line is usually hamstrung for the duration of the transaction."
"An easy payment process is the foundation of any customer-friendly operation."
"In the B2B community, however,
payment is still largely paper-based despite -- or perhaps because of --
the large amounts of cash exchanged."
E-Commerce Takes a Global View, Cautiously"
"Smart companies are using the Internet to shorten the time it takes to get materials from suppliers, to communicate with third-party manufacturers and, in some ways, to turn business culture on its head, Deloitte & Touche e-commerce consultant Aran Nathanson told the E-Commerce Times."
"But for many businesses, the motivation to overcome those hurdles is greater than the obstacles posed. Analysts have predicted that the fastest growing markets in coming years will be the overseas markets. For example, Gartner has estimated that B2B sales in the Asia-Pacific region will rise from US$9 billion in 1999 to $992 billion by 2004."
we can conclude from these 2000-2001 B2B articles ?
True Path of B2B E-Commerce"
Hensell explains "When it comes to buying and selling products, companies seem to have turned away from each other -- and the bigger the companies are, the less they want to talk. This decline in personal interaction during the sales process may be due partly to the rise of business-to-business, or B2B , exchanges. These automated online marketplaces have moved past early stumbles and now can help companies reach new levels of accuracy, efficiency and profitability. In fact, many large corporations have begun requiring their trading partners to conduct sales ordering, payment and fulfillment online or not at all. However, although conducting B2B transactions online has become standard operating procedure, the way these exchanges are designed and run is anything but standardized."
Hensell further explains that there is a wide variety of platforms and software within which companies conduct B2B and therefore there is little standardization.
Hensell suggests B2B exchanges have grown and improved since the early 2000's, but that "...B2B exchanges are not entirely problem-free. While the front-end trading portion of such marketplaces has been refined over time, in many cases the back-end processes -- ranging from handling purchase orders and credit references to billing and shipping -- have not lived up to their potential."
|During our discussions of B2B aspects we refer to an article written by Mohanbir Sawhney and Steven Kaplanw, titled " Let's Get Vertical . This article appeared in Business 2.0 in 1999.|
|Sawhney and Kaplanw explain
that "The great untold story of online commerce is that business-to-business
sales have already eclipsed the higher-profile business-to-consumer market
by a long shot. Annual B-to-B ecommerce is projected to soar from $43 billion
in 1998 to $1 trillion by 2003, according to Forrester Research, while
the consumer market swells from $7.8 billion to $108 billion in the same
- from page 217 in Turban Text - 2nd ed.
How is B2B conducted?
B2B commerce can be conducted directly between a buyer and seller or via an online intermediary. The intermediary can be
Types of Transactions
The key entities in B2B EC,
The Information Processed in B2B
- meaning what you have to expect will be sent back and forth between the buyer, seller and intermediary
|Supplier Oriented Marketplace|
Cisco Connection Online
Customer Service Software downloads defect tracking technical advice Online Ordering Cisco builds most of its products for custom orders Custom orders can be facilitated more precisely through online menus Finding Order Statusempowers the customer to know when order is arriving and specific details
|Buyer Oriented Marketplace|
This is usually for large companies that buy a large volume, and wide variety of products, so they open up a web site to inform companies what they require, and invite businesses to submit bids on what they wish to supply. A lot of this is being done in the form of an Extranet.
One of the new terms used in this consideration is "Procurement Management" - which is a fancy way of "figuring out best how to buy stuff"
example companies are
|Intermediary Oriented Marketplace|
|Boeing's PART case demonstrates the intermediary oriented B2B marketplace. Boeing plays the role of intermediary in supplying maintenance parts to airlines (most of which own Boeing planes)|
"Boeing views the Internet
as an opportunity to encourage more of its customers to order parts electronically"
|CASE STUDY of a B2B e-commerce business model: FastParts.com|
FastParts.com was founded in 1991 to bring buyers and sellers of semiconductors and other electronic components together directly and anonymously to negotiate 'trade' transactions. The company brought its trading expertise onto the Internet upon receiving venture capital funding in 1996. OEMs, contract assemblers, part makers, and distributors can trade components quickly and cost effectively at www.fastparts.com. They offered exchange brokerage between buyers and sellers, and an auction service. They also sell memory and some equipment of an authorized distributor/reseller of certain manufacturers. In 2005 their URL was no longer active.
In FastParts words www.fastparts.com
"FastParts.com is a leading business-to-business e-commerce net marketplace for the Electronics manufacturing industry. We facilitate the global trading of electronic inventory over the Internet with our ComponentConnectTM and EquipmentConnectTM trading exchanges, SOLD! AuctionTM and Century Catalog services. Membership assures participants they are dealing with pre-qualified trading partners."
from formerly www.fastparts.com/about/about_us.html
"It was founded in 1991 as an electronic bulletin board-based trading exchange, to serve the needs of procurement professionals who faced the dual challenges of excess inventories on cancelled jobs and inventory shortages for unforecasted orders." "became an e-commerce pioneer in 1996 launched the first B2B Internet marketplace for buyers and sellers of electronic inventory"
EC is the engine behind the EC revolution. The genesis of B2B EC was technologies
such as Electronic Data Interchange (EDI) and Electronic Fund Transfer,
which were typically the exclusive domain of larger organizations.
However, with the advent of the Internet and its open network, small
and medium size companies are now also able to start participating in B2B
formerly from http://www.fastparts.com/about/b2b.html
"Key benefits of B2B EC [according to FastParts.com] include:
|Just how diverse can the
B2B market be?
It does not have to be limited
to conventional manufacturing and service industries. Many other aspects
of business can be involved, such as the "business of" sports and entertainment.
journalist Patricia Zyska
at Plesman wrote a story in the August 2000 issue of the eBusiness Journal
|Zyska noted that accounting
firm PricewaterhouseCoopers has been hired by the NHL to do a study on
"the feasibility of implementing a B2B initiative for the National Hockey
Craig Harnett, chief financial officer of the NHL was quoted by Zyska as saying that "We have a lot of vendor relationships, a lot of suppliers at the team levels, as well as league level, that run anything from pencils and paper clips to Jumbotrons and zambonis,"
"Many of the individual teams buy their own products and services on an individual basis rather than in any aggregated form, and this is going to bring them all together," said Patrick McDonnell, management consulting services partner with PricewaterhouseCoopers.
NOTE: a Google search in May 2005 could not find any hits for NHL and B2B that were dated in 2003, 2004 or 2005 so it appears as if the NHL dropped this. A check on the NHL site did not reveal any B2B activity - however, it should be noted thatthe NHL was closed down in 2004/2005 due to the strike by the Players !
On this page there are several quotes from ecommercetimes.com. Permission was given by Richard Kern, Associate Publisher of the E-Commerce Times, in an email to Prof. Richardson 2004 Dec 10th, a hard copy of the email is kep on file in Richardson's permissions binder.
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