Business to Business Electronic Commerce
Part VIII
Prepared By
P. K. Nakhate
Different Types of B2B Business Models
Supplier- Oriented Model (eDistribution)
A supplier oriented model is a model wherein a number of suppliers set-up an online marketplace to establish an efficient channel to sell to a large number of businesses. The supplier has the prerogative to set his/her own price based on the needs of the buyers. Suppliers are usually searchable by the products or services they offer. The loyalty of businesses and goodwill in the market is crucial to have success in this business model.
Cisco is a fine example of the supplier-oriented B2B model. Cisco first launched its website in 1994. By 1998 there was heavy traffic on the website, one million views per month. The popularity was due to check on their orders, technical assistance or download software. In the same year, Cisco stated that launching its online applications saved them US$363 million per annum.
Buyer Oriented Model (eProcurement)
A buyer-oriented model revolves around the demands of individual buyers. This business model is most popular among big corporations with greater purchasing power and high volume purchases. The buying business sets up an online portal to accept quotations from various different sellers. The quotes start to flow in and after careful analysis, the buyer can decide which seller to transact with. That way, this model allows buyers to bring down their administrative costs and also get the best price from the suppliers.
GE’s electronic bidding site, known as GE TPN Post acts as a buyer-oriented marketplace. To use this site, the buyers need to pay a nominal fee. Post that they can share their project requirements on the website. Suppliers who can meet the requirements start making bids for the project. Once there are plenty of bids to choose from, buyers can go ahead and decide which one gives them the best bang for their buck.
In addition to bringing buyers and sellers close to each other, this model allows both parties to expand their network, build partnerships and eventually strike more profitable deals than otherwise possible. To build a highly versatile website, the business would need 3rd party integrations. Be careful about the solution you are choosing to build your b2b ecommerce website.
Intermediary-Oriented Marketplace (exchange)
An intermediary oriented model consists of marketplaces that allow buyers and sellers to communicate and transact with each other. Marketplace owners maintain a log of buyers and sellers and the chief aim is to earn profit from such associations. Also understanding the top practices for b2b ecommerce is important.
The prototypical example of an intermediary oriented marketplace is the eCommerce behemoth Alibaba. The company was founded in 1999 as a B2B portal to connect Chinese manufacturers with overseas buyers. The magic moment happened in 2012 when two of Alibaba’s portals recorded $170 billion in sales. In 2015 it created a new record by racking up sales and profits far greater than all US retailers, including Walmart, Amazon, and eBay combined.
Just-In-Time Delivery
The speed of order delivery is an increasingly examined aspect of supply chain management, particularly with constantly expanding consumer demands for same- and next-day delivery and other features. Just-In-Time (JIT) delivery is an inventory management strategy that helps facilitate speedier order fulfillment with particular applications in raw materials orders and manufacturing.
Since production for just in time delivery happens only for specific customer orders, just-in-time services are somewhat backward from normal supply chain fulfillment in the way that goods are pulled through the supply chain versus pushed through. So, the production process only begins when a customer placed an order, and inventory stock is only delivered as-needed.
Characteristics of Just-In-Time Delivery
Supply chain assembly and packaging operations don’t store the materials in on-site warehouses; the materials are received only when they are ready to be implemented into outgoing orders. Therefore, just in time logistics allows supply chain management companies to save on inventory costs and allow more usable space in their warehouses for components that are ordered more variably.
While just in time delivery enables supply chain companies to reduce their costs for inventory storage and management, it does present an alternative challenge of accurately forecasting demand.
Demand forecasting is secondary to meeting customer expectations, and today’s customers (be they the end consumer or business customers that serve the end consumer) value flexibility and responsiveness to a remarkable degree. It’s not enough to make processes more efficient when working to reduce costs. For example, many customers appreciate the just in time inventory company’s ability to send additional supplies on tight deadlines (particularly when a delivery wasn’t scheduled ahead) or accommodate rapid demand changes.
In order for it to be successful, just-in-time delivery requires a highly responsive, flexible supply chain. The level of responsiveness is defined by how quickly the supply chain can adjust to accommodate the four primary areas of flexibility in response to an external stimulus such as a customer order:
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