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Business to Business E-Commerce

Types of E-Commerce
1. B2B (Business to Business)
2. B2C (Business to Consumer)

3. C2B ( Consumer to Business)


4. C2C ( Consumer to Consumer)
5. B2G (Business to Government)

B2B and B2C E-Commerce

B2B E-Commerce
B2B deals with companies who are doing business with each other.

It is simply defined as commerce transactions between businesses, such


as between a manufacturer and a wholesaler, or between a wholesaler
and a retailer. About 80% of e-commerce is of this type.
Examples:
1. Intel selling microprocessor to Dell
2. Heinz selling ketchup to Mc Donalds
3. Manufacturers who are selling their product to distributors, and the
wholesalers are selling it to retailers. Thus, the pricing can be based on
the number of orders and is negotiable.

B2C E-Commerce
Business-to-consumer typically involves selling products and
services to the general public or consumers through the use of
catalogs utilizing shopping cart software.
With the help of ecommerce, you can easily purchase many
things at time without having human interaction.
Example:
Dell selling me a laptop

C2B (Consumer-to-Business)
An example of C2B is when a consumer posts his projects or assignments in the
Internet and web site. The consumer sets a budget online where within hours many
companies reviews the requirements needed by the consumer and then bid on the
project. It empowers the customers around the globe by providing the meeting
ground and platform for that certain transaction.

C2C (Consumer-to-Consumer)
Consumer-to-consumer e-commerce or C2C is simply commerce between private
individuals or consumers
1. A very good example for C2C is the eBay. It is where consumers sell their
products to other consumers through bidding. Thus, the one who bids the
highest can buy the product.
2. Another example is the sites offering free classified ads, auctions, and forums
where consumers can buy and sell products to other consumers. They use
PayPal as a tool for online payment system where they can send and receive
money with ease through online.
3. Mary buying an iPod from Tom on eBay
4. Me selling a car to my neighbour

B2G E-Commerce
Business-to-government e-commerce or B2G is generally defined
as commerce between companies and the public sector.
It refers to the use of the Internet for public procurement,
licensing procedures, and other government-related operations
Example:
Businesses pay taxes, file reports, or sell goods and services to
Govt. agencies.

B2B E-Commerce
Buyer and seller are both business entities and does not
include an individual customer.
B2B E-commerce is being used in a variety of items such as
electronics, computers, utilities, shipping and warehousing, food,
agriculture and many more.
B2B e-commerce covers a broad spectrum of applications
that enable an enterprise or business to form electronic
relationships with their distributors, resellers, suppliers and other
partners.

B2B applications will offer enterprises access to following sorts


of information:
a) Product-specifications, prices, sales history

b) Customer-sales history and forecasts


c) Supplier-product line and lead times( For example, the lead time
between the placement of an order and delivery of material), sales
terms and conditions
d)

Product process-capacities, commitments, product plans

e) Transportation-carriers, lead times, costs

f)

Inventory- inventory levels, carrying costs, locations

g) Supply Chain Alliance- key contacts, partners, roles and


responsibilities
h) Competitor-benchmarking, competitive product offerings, market
share
i)

Sales and marketing-promotions

j) Supply Chain Process and performance-process description,


performance measures, quality, delivery time, customer
satisfaction

Role of B2B in Supply Chain


Supply chain can be broken down into 3 parts:
1. Upstream activities material and service inputs from
suppliers
2. Internal Activities manufacturing and packaging of goods
3. Downstream activities Involving distribution and sale of
products to distributors and customers.
Many processes specially upstream and downstream activities are
managed with paper transactions(purchase orders, invoices
etc.). This is where B2B Ecommerce applications help.

Entities in B2B E-Commerce


B2B e-commerce can contribute to lower purchase costs, reduced
inventory, enhanced efficiency as well as increased sales and lower
sale and marketing costs.
The key entities in B2B e-commerce are following:
1. Selling Company: concerned with selling products/services in B2B ecommerce transaction(electronic marketing)
2. Buying Company: Concerned with buying products/services
(procurement).
3. Electronic Intermediary: Which is the third party intermediating
service provider when selling and buying companies are not interacting
with each other directly. The scope of service of the intermediary may
be restricted to only marketing of products/service or may be extended
to order fulfillment.

4.

Deliverer: Who should fulfill just in time delivery

5.

Network Platform: Network platform used for B2B transactions may


be Internet, Intranet or Extranet

6.

Communication Protocols: Most B2B transactions rely on EDI for


data exchange as processing of orders, invoicing, payments, inventory
management etc.

7.

Backend Information Systems: Behind the scene management of


B2B transaction is implemented using ERP systems and DBMS
systems.

ERP is an enterprise wide application software that can provide a


centralized repository of information for massive amount of transaction
details generated daily. It integrates business processes such as planning,
production, distribution and sales.

Electronic Marketing
B2B platform can be used to sell companys products
and services to business customers on the Internet.
This business model can be termed as seller oriented
marketing because customers visit the website which
the seller has prepared.

Eg: Walmart online sells to both individual customer


as well as businesses(Via Sams club).

The concept of electronic marketing in case of


businesses is same as for individual customers only
difference being:

1. The customers are companies not individuals


2. Each corporate will have his own catalogue
3. Behavior of corporate buyer differs from individual
customer.

1. Models of B2B EC
Based on who controls the market place: the
supplier, the customer or the intermediary
Others: Virtual corporation, networking
between headquarter and subsidiaries, online
services to businesses

Models of B2B EC

Supplier Customer Intermediary


oriented oriented
oriented

Depending on who control


market place

Virtual
corporation

Networking
between HQ
and Sub.

Online
services to
business

Other important business


models

1.1 Supplier Oriented Marketplace


Supplier oriented market place is one which is supplier driven.

Both individual customers and business buyers use the same market
place.
The suppliers electronic store maintains the following information:
product catalog, order and transaction information and customer
database.

A customer may access the supplier server for information, order,


payment, querying or any other purpose.
The supplier may also contact the customer for product promotion,
delivery schedule, billing etc.

Supplier-oriented
Marketplace
Buyer 1
Buyer 2
Buyer 3

Supplier

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Example
Cisco Connection Online(CCO) which operates Ciscos electronic
marketplace. The various services that the website offers to
customer is:
1. Customer Service: The website is accessed million times in a
month by individual and organizational customers to receive
technical assistance, check order status or download software.
Nearly 70% of inquiries and 90% of software updates are delivered
online.

2. Online Ordering: Cisco accepts the orders from customer and


sends it to procurement department. Cisco has not only automated
its transactions with customer but the internal activities as well
which saves time and improves overall productivity.

3. Track Order Status


Cisco gives tools on website to its customers to track the status
of their order. It keeps a record of shipping date, method of
shipment and current location of each product. Also, the
companies freight forwarders regularly update the database
electronically with the status of each shipment using EDI. As
soon as the order is shipped, the customer is notified by fax or
email.
Benefits Achieved by supplier oriented marketplace
a) Reduced operating costs
b) Enhanced technical support and customer services
c) Reduced technical support staff cost
d) Reduced distribution cost for digital products
e) Greater customer loyalty

1.2 Buyer Oriented Market Place


Supplier oriented market place demands that the customer search
various e-stores and email sites to find and compare information
on suppliers and products.
This can be very costly for companies like GE, who purchase
thousands of items on the Internet.
Such big buyers would prefer to open their own marketplace on
their server and invite potential suppliers to send information on
requested products and services.
The suppliers bid on the requested RFQs. The information sent
by various suppliers is compared and the best deal is chosen.

Example of buyer oriented market place: Boeing Inc. ,


www.shoppoint.co.kr

In buyer oriented market place , buyers announce the RFQ(Request


for Quotation) to potential suppliers for competitive purchasing.
Under this model the seller need not wait for visits from buyers.

1.

2.
3.
4.
5.

Bidding Process.
Buyers prepare the bidding information and post it on
Internet(RFQ)
Buyers identify the potential suppliers and invite them for
bidding
Suppliers submit their bids for projects
Buyers evaluate the suppliers bids and may negotiate
electronically to get the best deal.
Buyers accept the bids that best meet their requirements.

Buyer oriented marketplace has benefits to both buyers


and sellers.

Benefits to Buyers
1. Identify and build relationship with new suppliers
2. Rapidly distribute information and specifications
3. Cutting down on cost
4. Quickly receiving and comparing bids from large number of
suppliers to negotiate better prices
5. Strengthening relationships with existing partners

Benefits to Sellers
1. Boosted sales
2. Expanded market reach
3. Lowered costs for sales and marketing activities
4. Shortened selling cycle
5. Improved productivity
6. Streamlined bidding process

Buyer-oriented
Marketplace
Supplier 1

Buyer

Supplier 2
Supplier 3

Challenges in Buyer Oriented Market Place


An example of a successful case of this category is GE as
illustrated earlier. Boeing Inc. is another example. As the number
of such sites increases, suppliers will not be able to trace all
such tender sites.
- The situation will be improved with the introduction of online
directories that list the open RFQs.
- Another way to solve this problem is the use of software
agents, which can reduce the human burden in the bidding
process.

1.3 Intermediary Oriented


Market Place
Intermediary oriented B2B E-commerce is that
where an electronic intermediary is established.
The business buyers and sellers meet on the
intermediary site.
The intermediary marketplace must maintain
relevant information on buyer and seller and update
it regularly.

Intermediary-oriented
Marketplace
Supplier 1

Buyer 1
Buyer 2
Buyer 3

Third Party

Supplier 2
Supplier 3

33

In most cases, intermediaries are concerned with full order


fulfillment starting from providing information to order taking
and processing and finally payments.
Eg: The purpose of electronic intermediary, Boeings PART, is to
link airlines who need maintenance parts with suppliers who are
producing parts for Boeings aircraft. Boeing strategy is to
provide a single point of online access through which the airlines
(the buyers of Boeings aircraft) and maintenance providers can
access data about the parts needed to maintain and operate
aircraft regardless of whether data is airframe builder, component
supplier, engine manufacturer or airline itself. Thus Boeing is
acting as an intermediary between the airlines and about 300
suppliers of Boeings airplane parts. With its intermediary site,
Boeing provides its customers with one stop shopping, online
maintenance information and ordering capability.

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1.4 Virtual
Corporations(Networking between
business partners)
A virtual corporation is an organization consisting of several
business partners or businesses which are sharing costs and
resources for the purpose of producing a product or service.

E-Commerce platforms like Internet and extranet(A


computer network that allows controlled access from the
outside, for specific business or educational purposes)
provide the backbone for virtual corporations by supporting
communication and collaboration among dispersed business
partners through emails, video conferencing, EDI etc.

Examples of virtual corporation would business


partnership between many partners each producing a
portion of product or service in which it has expertise or
offers low cost. A classic case of virtual corporation is
business alliance between Cisco and Hamilton for
manufacture and marketing of network equipments.

Businesses may agree to enter virtual corporation


alliances for following reasons:
1. Excellence : Partners may have expertise in diverse
areas so the competence of each partner can be utilized
to its maximum. Other businesses may need to appoint
people who are experts in the area.

2. Utilization: The resources of individual business


are often wasted due to under utilization. A virtual
corporation can utilize more effectively.
3. Low Cost: Sharing resources and expertise with
business partners requires lesser amount of
infrastructure on part of each partner hence
reducing the overall production cost.

4. Opportunism: Virtual corporation can find and


meet the market opportunity better then individual
company.

Example
Computer organizations that have successfully
implemented forms of this new structure include
Apple Computer . When Apple Computer linked
its easy-to-use software with Sony's manufacturing
skills in miniaturization, Apple was able to get its
product to market quickly and gain a market share
in the notebook segment of the PC industry.

Advantages
1. Virtual corporations require less individual investment in human
resources, manufacturing space, investment in tools, and
development time. Participating companies need not invest
heavily in fixed assets and thus can use scarce resources to
better advantage.
2. They focus on the core competencies of each participating
organization. Virtual corporations are beneficial to all partners
involved, as only win-win alliances are made.
3. They offer power and manufacturing flexibility Virtual
corporations make it possible to quickly respond to changes in
the manufacturing environment and to turn out new products in
a short time.

4. Virtual corporations increase responsiveness to customer needs


and allow customers to participate in the design and production
process. This leads to increased customer satisfaction and
profits.

5. They provide operation flexibility, since partners can be


changed readily Partnerships are not long-lasting; alliances
come to an end as soon as the intended objectives are attained.
For this reason, organizations can be involved in many alliances
that would not be possible otherwise.

Disadvantages
1. First, participating partners have access to each other's trade
secrets, technology, and data.
2. Second, virtual organizations need a new breed of managers and
workers.
3. Power and authority that play an important role in classic
organizations do not have the same place in virtual organizations.
4. Differences in the corporate cultures of participating companies
can be an obstacle.
Because of the serious limitations and complexity of the partnership,
not all virtual corporations are successful.

1.5 Networking between


headquarters and intermediaries
B2B platform can help the communication and
collaboration between the headquarter and subsidiaries
or franchiser and franchisee by providing email,
message boards and chatrooms, and online corporate
data access around the globe no matter what the time
zone is.
Advanced extranets can link headquarters to
franchisees and approved suppliers making it easier for
them to do business and reduce overhead and
duplication.

Example
Marriott Internationals Extranet Links Global
Franchisees
1. Marriott International has 1500 hotels in 50
countries and 600 of them are franchisees.
2. The company first went on the internet in 1995 with
an online brochure with the marketing strategyWhatever the customer wants to buy, we make that
available which helped it achieve a revenue of $10
billion in 1998.

3. They started a website-www.marriott.com which


got them orders worth $3 million in the very first month.
4. They adopted corporate intranet for the companys 20,000
management employees worldwide.
5. This intranet was extended to an extranet to help
worldwide franchisees which could access Marriotts corporate
intranet for better communication and operation.
Thus we see what started with an online brochure, got developed
into an EC initiative aimed at linking corporations, franchisees,
partners and suppliers as well as customer around the world.

1.6 Online Services to Businesses


There can be many online services available for businesses although
individual customers can share some of the services. Some of them
are:
1. Travel and tourism services: Many large corporations
have special discounts arranged with travel agents To further
reduce costs, companies can make special arrangements that enable
employees to plan and book their own trip online. Eg: Carlson
Travel Network of Minneapolis provides agent less service to
corporate clients like GE. GE employees can fill out the application
at their intranet which gives them special rate for employees
reserving airline tickets, rental cars and hotels.

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2. Real Estate: Since business real estate investment can be


very critical, the Web site cannot replace the existing agents.
Instead, the Web site helps in finding the right agents.

3. Electronic Payments: Banking on the Internet is an


economical way of making business payments. The EFT using
financial EDI on the Internet is the most popular method
business uses. The payment transaction cost on the Internet is
cheaper than that of any other alternatives.
4. Online Stock Trading: Since the fees for online trading are
very low and fixed, regardless of the trading amount, the online
trading brokerage service is a very attractive option to business
investors.

5. Electronic Auction to Business Bidders: Some


electronic auctions are open only to dealers , for instance,
used cars and foreclosed real estate sold by the
government.
The comprehensive list of auction sites is available at
www.usaweb.com/auction.html.

6. Online publishing and education: Online publishing


is not the monopolistic(exclusive control) asset of
business. The on-demand electronic education program
can provide a useful training opportunity for busy
employees.

7. Online Loan and Capital Markets: Sites like


www.garage.com provide information about venture
capital.

8. Other Online Services: Business is the major user of


online consulting, legal advice, health care etc.

2. Procurement Management using


Buyers Internal Market Place
In buyers internal marketplace, procurement department needs to
define the scope of projects or products to buy and invite vendors to
bid.

The main problem in traditional procurement management


system is that a high percentage of time is spent on non value added
activities such as performing data entry, correcting errors in
paperwork, expediting delivery or solving quality issues. Due to this
they were not able to focus on, qualifying suppliers, building rapport
with strategic suppliers , carrying out supplier evaluation etc.

.
Consider the scenario where an employee used to fill
out requests for various office supplies and then wait
weeks for delivery due to paperwork involved. Using eprocurement, the employee browses the catalog from
approved vendor list makes selections and drops them in
his shopping basket. The e-procurement system
automatically gets purchase order approved and ships the
production.
E-procurement has shifted the procurement paradigm
from paper based processes to automation, thereby
increasing efficiency and effectiveness.

Efficiency includes lower procurement costs, faster cycle times,


elimination of unauthorized buying and highly organized
information. Effectiveness includes increased control over supply
chain and higher quality purchasing decisions within
organizations. The goals of e-procurement are:
1. Reduction in purchase cycle time and cost.
2. Enhancement in budgetary control(establishing budget,
comparison, corrective action, budget revision).
3. Elimination of administration errors
4. Increase in buyers productivity
5. Reduction in prices due to approved vendor lists
6. Improvement information management supplier information
and pricing information.
7. Improvement in payment process.

Product
Selection

Approval
Cycle

Requisition

E-Procurement Chain

Purchase
Order

E-Payments

Supplier
Fulfillment
Product
Received

Product
Shipped

E-procurement is integration of various procurement


functions in following manner:
1. Management Control: Deals with decisions on which products
are available to the employees, who are the approved vendors,
who is authorized to approve an order and so on. With this, the
company can decide the level of empowerment(give power/
authority) for buying to be given to different employees,
departments and projects.
2. Online Product Selection: Online catalogs make product
selection easier and less expensive besides saving time. All
suppliers should be accessible from the system and they should
have full control over how their products are presented.
Employees can quickly find out what they need and place the
order without necessarily knowing who the supplier is.

3. Electronic Ordering: E-procurement system should facilitate


the order placement via online forms, fax or email in a
systematic manner.
4. Application Integration: A good e-procurement system should
be integrated with the existing applications such as general
ledger, accounts payable, purchasing and HR applications. If
such integration is not done, duplicate efforts will be required.

5. Information and Reporting: A good procurement system


should be able to track what is purchased, by whom, from
whom, at what price and how long it took to complete each step
of the cycle. This information is requited for supplier negotiation
and month-end reconciliation.

3. Just in Time Delivery


Business customers who run their factories according to JIT
manufacturing principle critically need JIT delivery. In such
cases, delivering materials and parts on time is must.
A number of delivery and logistics companies including
Fedex, UPS etc are using Internet in key business processes.
Fedex delivers 2.5 million packages daily to 211 countries
around the world with an on-time delivery rate of 99%
How use of Internet Helps FEDEX?
1. Customer tracking request: Fedex.com customer can
request a parcel pickup or find the nearest drop-off point,

compute shipping cost, print packaging labels, request


invoice adjustments and track status of their deliveries
without leaving the site.

2. Using Proprietary Network : FEDEXs own proprietary


network, FedEx COSMOS handles millions of transactions
everyday and keeps track of any packages till they reach the
final destination. When customer enter a pickup request, a
courier is notified electronically of the time and location.
Once at the customers office, courier scans the bar code on
the package, recording that package has been picked. Fedex
records and track the package progress electronically from
van to Fedex plane to a sorting center, where it gets sorted
and then loaded in truck and finally delivered t 0 customer.

3. Supporting Customer Tailored Track System: If


the customer wants to buy a router from website by
Cisco and wants to know when it is supposed to
arrive, instead of making a phone call, the customer
can directly go to Ciscos website, enter the order
number and find out the status of your parcel.

BENEFITS TO FEDEX

1. Avoided Costs: FedEx Powership is an e-shipping


tool which helps in automating routine tasks from
FedEx to customer. Couriers spend less time
recording information at customers site, phone

spend lesser time taking calls from customers,, who can


now place the orders directly and also track them.
2. Lower operating costs: Customers use Fedex
InterNetShip to track over 1 million packages per month.
Without this system, half of these calls would have gone
to Fedexs toll free number resulting in high expenses.

3. Better Customer Service: Customers still have a in


how they interact with the company whether by phone,
fax or other means.

4. FROM TRADITIONAL TO
INTERNET BASED EDI
Majority of B2B transactions are conducted by EDI
using dedicated or leased telephone lines, private networks or
Internet.

Electronic Data Interchange(EDI) is the electronic exchange of


business documents in standard, computer process-able,
universally accepted format between business partners.
In EDI, the computer applications of both sender and receiver
have to agree upon a common format of business document
which is being sent as a data file over the communication channel.

Business documents like purchase orders,


invoices, payments, shipping schedules, delivery
schedules etc may be exchanged easily irrespective
of the computer application at the either end of
communication.

4.1 EDI Applications


Well known retailers like The Home Depot,
Wal-Mart would operate differently today
without EDI.
Thousand of global manufacturers like Proctor
and Gamble, Levi Strauss, Toyota and Unilever
have used EDI to redefine relationships with
their customers.

TRADITIONAL EDI
Translate
Business
Application
Application

Store and Forward


EDI
Formatted
Message

Value
Added
Network
NNetwork

Translate
EDI
Formatted
Message

Business
Application
Application

What is VAN(Value Added


Network)?
A private network provider hired by a company to facilitate
electronic data interchange (EDI) and/or provide other
network services.
A Value-Added Network (VAN) simplifies the
communications process by reducing the number of parties
with which a company needs to communicate
The ubiquity of the internet has lessened the attraction of
VANs, largely due to cost considerations, since it is much
more cost-effective to move data over the internet than to
pay the minimum monthly fees and per-character charges
included in typical VAN contracts.

Email

Phone
/Fax

Document

Sending
computer
Data
Entry

Post
Office

Document

By
Hand

EDI

EDI Vs TRADITIONAL METHODS

Receiving
Computer
Data
Entry

4.2 EDI Process


The limitations in traditional EDI have been significantly
reduced through the use of internet based EDI which can be
used to totally automate the exchange of documents between 2
partners communicating with each other.
Process:
1. Information produced by the source computer is converted
into an EDI format by a translation software and sent over
to receiving computer over digital network.

2. On receiving side, the translation software converts EDI


format into the form required by the business application at
that end.

Whereas in traditional methods, documents created at the


senders end were sent to the receiver either through e-mail,
fax, post or manually where the information was fed into the
computers manually.

4.3 EDI Enabled Procurement


Process
EDI consists of standardized electronic message
formats for common business documents such as
Request for Quotation(RFQ), Quotation, purchase
order, purchase order acknowledgement, shipping
notice, invoice, payment advice etc.
EDI enables the computer in one organization to
communicate with a computer in another organization
without producing any paper documents or human
intervention. An EDI enabled procurement process is
shown below:

Request for Quotation

Quotation

Purchase order
Purchase order acknowledgement

BUYER

Shipping Notice
Invoice
Status request/response

Payment Remittance Advice

SELLER

4.4 Benefits of EDI


Benefits from EDI implementation can be classified
into direct and long term strategic benefits:
Direct Benefits
1. No Need for re-keying information. Data is entered at
the source thereby decreasing the errors.
2. Cost of processing EDI documents is much less than
that of processing the paper documents.
3. Improved customer service is enabled.
4. Business documents move faster.
5. Information is managed more efficiently.

Strategic Benefits
1. Competitive edge is maintained and enhanced.
2. Reduction in product cost is achieved.
3. Better customer and supplier relations through
more effective and faster communication and
exchange of information.
4. More accurate forecasting and business planning is
achieved due to information availability at the
right place and right time and with the help of data
mining techniques.

4.5 Limitations of Traditional EDI


1. Significant initial investment needed
2. Restructuring of business processes is required
to fit EDI requirements
3. Long start up time needed
4. Use of expensive private VAN is needed
5. There are multiple EDI standards.
6. Complex to use system.
7. Need to use converter to translate business
transactions to EDI standards.

4.6 Internet Enabled EDI


Reasons for creating EDI ability over the internet:

1. Internet is a publicly accessible network with few


geographical constraints hence can lead to growth of vast
range of business applications.
2. Offers potential to reach the widest possible number of
trading partners.
3. Reduction in communication cost by 50%
4. Can complement or replace current EDI applications

5. Internet tools like browsers and search engines are very


user-friendly and most users today know how to use
them.

6. Using internet to exchange EDI transactions is


consistent with the growing interest of business in
delivering an ever increasing variety of products and
services electronically, particularly through the web.

Types of Internet Enabled EDI


Internet can support EDI in many ways:
1. Internet email can be used as the EDI message
transport in place of VAN.
2. A company can create extranet that enables trading
partners to enter information in Web form whose
fields corresponds to field in an EDI message or
document.

3. Companies can utilize services of a web based EDI


hosting service in the same way the companies
rely on third parties to host their commerce sites.
Eg: Netscape Enterprise

4.7 Prospect of Internet based EDI


Some participants are turning to internet based systems
to eliminate costly VANs. Since in traditional EDI, they
need to pay for network transport, translation, routing
of EDI messages into their legacy processing systems.

Frequently companies combine traditional EDI with


internet by having internet based orders transmitted to a
VAN or service provider that translates the data into an
EDI format and sends it to their host computer.
Internet acts as an alternative to a more expensive
leased line.

5. Integration with Backend


Information Systems
Backend system is a system that supports back-office
applications. They deal with the databases so their basic
operation is to implement responses to what the front end
has initiated.

Backend information systems can be implemented


using intranet based workflow, DBMS or ERP.

Enterprise Resource Planning


System
It is an enterprise wide application software that can provide
a centralized repository of information for the massive amount of
transactional detail generated daily.
It integrates core business processes from planning to
production, distribution and sales. A popular ERP solution is
SAPs R/3.
The approaches taken for integration between EC and ERP are
inside out approach, outside in approach & open electronic cart
approach.

Inside Out Approach: Extend ERP


outward
Leading ERP vendors like SAP, PeopleSoft, Oracle offer the
way to extend their applications to users through a web interface
as depicted in figure below:
ERP Based
catalog
Web
Browser

Buyer

Web
Server

ERP System

Seller

When the ERP system requires a simple mapping of


ERP functionality to a web interface, this architecture is
helpful as it lets companies distribute ERP transaction
capabilities to a wide audience of web users without
requiring that they load specific client software in their
PCs.
Problem: Most companies use multiple back-end
systems in addition to their ERP system such as a data
warehouse. This approach is difficult to integrate with
multiple systems and hence breaks down.

Outside in Approach
Rather then extending the reach of ERP based business
processes through web server, the outside in approach uses a
robust software named application server which has the ability
to integrate multiple systems into an e-business solution.
This architecture is suited for complex e-business with
multiple back end and front end applications.
Various application servers are: Websphere(IBM), Enterprise
Server(Microsoft), Enterprise Server(Sun) etc.
These approaches are limited by the capabilities of the
application server platforms upon which they are built.

Web Based
catalog

Web Browser

Mainframe

Application Server

Sales from
Automation

Supply Chain
Planning

Data Mark
ER System

Open Electronic Cart Approach


In this approach the buyer keeps a shopping basket,
which resides at the buyers PC. Items from multiple
sources can be tentatively selected and stored in buyers
electronic cart. The order can be made and stored in the
cart as well.
The e-cart has an open file format so ERP or any legacy
system can be interfaced easily.

6. Role of software agents for


B2B EC
A software agent is a persistent, goal-oriented
computer program that reacts to its environment and
runs without continuous direct supervision to
perform some function for an end user or another
Program.
A software agent is the computer analog of an
autonomous robot.

There is a minimum set of common features that typify a


software agent:
1. A software agent is autonomous: Capable of
operating as a standalone process and performing actions
without user intervention.
2. A software agent is communicative; it communicates
with the user, other software agents, or other software
processes.

3. A software agent is perceptive; it is able to perceive


and respond to changes in its environment.

4. Software agents, like people, can possess different


levels of competence at performing a particular task.
For example: One email software agent might be quite
dumb and capable of only forwarding email to a few
specified locations.
A second, smarter email agent might have the ability to
automatically detect and delete spam.

Role of Software Agent in Seller Oriented Market Place


1. Aids comparison-shopping process.
2. The software agent collects data from multiple commercial
sites(seller oriented marketplace) so that they can be used
for both consumers and business buyers.

Role of Software Agent in Buyer Oriented Market


Place
When last number of customers want to collect RFQ from
multiple suppliers in buyer oriented marketplace, answering
such numerous queries manually will become physically
impossible and uneconomical. Software agents need to assist
both buyers and sellers.

Agent should have the ability of meta- problem


solving(ability to understand how to react to the received
message and what to say in the context) and
communication controller(interpret the other agents
message and synthesize messages understandable to other
agents,
Agents need to use commonly agreed-upon agent
communication languages like KQML(Knowledge, query
manipulation language.
Agents need to understand the protocol of contract types
that involved agents will follow for each bid. Contract type
definition needs to be standardized worldwide to support
compatible communication among agents.

Electronic Marketing in B2B


eMarketing or electronic marketing refers to the application of
marketing principles and techniques via electronic media and
more specifically the Internet. The terms eMarketing, Internet
marketing and online marketing, are frequently interchanged,
and can often be considered synonymous.
It is the process of marketing a brand using the Internet.

It encompasses all the activities a business conducts via the


worldwide web with the aim of attracting new business,
retaining current business and developing its brand identity.

Issues related to E-Marketing


1.

Direct Marketing:
In business organizations, buying decisions are made by group of individuals.
Also there are some key people in the organization who play the role of
influencers. Hence, it is for the selling company to identify such people and
reach them appropriately.

2.

Relationship Marketing:
- Business buyers are not always ready to buy products when your are ready to
sell them.
- Due to many factors like companys budgeting process, need for additional
approvals, long purchasing procedures, it may not be possible to match the
timings of the buying organizations decision to buy and the selling
organizations desire or ability to sell.
- There exists an uncertainty always for the B2B marketer as to when buyer
may buy. To make up for this, B2B marketer uses continuity program.

Continuity Program
The B2B marketer maintains a regular, ongoing communication with the buyer. This may
be achieved through email or by placing the information on the website and may include
information on new products, product up gradations, discounts and schemes, newly
establishes relationships of seller with other partners and so on. This helps in building a long
term impact of selling organization on the buying organization.
3. Electronic/Interactive Media:
Business organizations depend mainly on three basic media for B2B marketing: email,
web, CD-Roms. Email and web are internet based media. Cd-Roms are used to execute fullfledged multi-media promotions with text, sound, animation and full motion video.

Solutions of B2B EC
Most B2B EC platforms are supplier oriented market place
which is similar to B2C platform. How is it different?
1. Management of buyer information at buyer sites to integrate
with corporate information system.
Platform for supplier oriented market place store the customers
data in suppliers servers. Business buyers cannot manage the
procurement information at their servers resulting in poor
integration with buyers information systems. So, the B2B
platform needs to store buyers ordered information in buyers
server

Current B-to-C Platform

Prospective B-to-B Platform

Buyers information stored in


the sellers server

Buyers information needs to be stored in


the buyers server to integrate with backend systems such as Intranet, Workflow &
ERP

Limited bookkeeping-supported

Complete bookkeeping necessary

Web technology using a thin client is


adopted.

Web technology with thick client is


needed. Java and External helper Program
at client PC are necessary.

2. Comparison Shopping with Buyers Own Electronic


Bag
Supplier oriented marketplace stores the shopping cart in
suppliers server. However for comparing items, from multiple estores, it is convenient to pick the items for buyers e-cart
tentatively so that organizational decision making can be
supported by information in the cart.

Current B-to-C Platform

Customers need to visit many malls

Prospective B-to-B Platform

Meta-Mall architecture is need for the


customers to reduce the effort of
visiting many sites

Current B-to-C Platform

Prospective B-to-B Platform

Every mall requires a proprietary


shopping bag and digital wallet

Standard shopping bag and digital


wallet that can work independently
of malls are necessary

Software agents merely help the


search process

Comparison-shopping needs to be
treated as multiple criteria decision
support

Customer membership registration is


requested for each mall

Shared customer membership is


necessary to allow the comparison of
multiple malls with a single registration

3. Just-in-Time Delivery
Business who operates the assembly line in JIT manner needs
JIT delivery.
Current B-to-C Platform

Prospective B-to-B Platform

Inventory availability is not


displayed

Dynamic inventory availability should


be displayed to customers

Precise delivery date is less


critical

Precise delivery date should be


dynamically confirmed at
ordering time

Ordering system is fragmented


from inventory system

Integration of orders with


inventory, production scheduling,
and delivery scheduling systems
essential

4. Buyer Oriented Directory


Supplier oriented directory is not easy to use from business
buyers point of view. Buyer needs to reconstruct a buyer
oriented directory that will be maintained by software agents.

Current B-to-C Platform

Prospective B-to-B Platform

Seller Oriented Directory


popular

To big buyers, Buyer Oriented


Directory should be offered

Major motivation of EC is sales


promotion

Additional motivation is the reengineering acquisition process

Either buyer or seller oriented


directory is developed

Intermediary directory is
necessary to coordinate
between seller and buyer
oriented directories

5. Formal Contract with Bidding Process


Business contract needs more formal documentation and protocol.
The buyer may need to attach the electronic invoice for their
organizational decision and audit

Current B-to-C Platform

Prospective B-to-B Platform

Ordering without formal


contract is enough for order
fulfillment

Formal contract with electronic documents


that include specific terms and conditions is
necessary

Free contract protocol

Legitimate contract protocol


needs to be conformed

Electronic version of
traditional bidding and
auction are implemented

More creative contract protocol


can be innovated

6. Organizational Purchasing Decision


Current B-to-C Platform

Prospective B-to-B Platform

Purchasing is an individual
buyers decision

Purchasing is an organizational
buyers decision

Buying decision process does


not need coordination

Buying decision is made as a


combination of synchronous
group decision (using web
conference and Internet phone)
and asynchronous group decision
(using workflow tools)

7. Agent Based Commerce


Current B-to-C Platform

Prospective B-to-B Platform

Human interactively involved in


the buying decision

Buyers and sellers software


agents assist communication to
minimize humans involvement

Software agent in one site cannot


understand the norm of the
counterpart agents

Mutually agreed contract type


conformation is necessary to
effectuate the communication
between agents

Buyers have to search around the


sellers products catalog
configuring manually

Seller agents assist the


configuration process based on
the buyers requirement
specification

Sellers data mining is popular

Buyers data mining is


additionally necessary

8. Secure Large Amount Payment


Current B-to-C Platform

Prospective B-to-B Platform

Credit card is popular, and


relatively high fee is charged to
sellers

Electronic check and electronic


fund transfer will become popular,
whose fees are traditionally paid
by payer.
Security, certification and nonrepudiation will become more
critical. So registered delivery,
which keeps the important
transaction record at the third party
will become popular.

Managerial Issues
1. Focus of EC management: Select from the three business
models-supplier oriented, buyer oriented or intermediary
oriented.
2. Sales Promotion: To promote sales, adopt supplier oriented
marketing approach and consider joining the other popular
intermediary oriented marketplaces as well.
3. Purchase Process Reengineering: To reengineer the purchasing
process, establish a customer oriented marketplace if the sales
volume is big enough to attract attention of major vendors.
4.

JIT delivery: Outsource to a reliable delivery service provider.


Make sure the advanced assurance of JIT delivery can be
committed.

5. New electronic intermediary business


6. Provision of solutions
7. Business Ethics: Since B2B accounts for sharing of mutual
information, business ethics are must. Accessing
unauthorized parts should not be attempted and privacy
partners should be protected both technically and legally.