What is Business to Business (B2B) e-commerce

" Business to Business (B2B) E-Commerce
is the new way to do business
that is taking the business world by digital storm. "

B2B is the relationship between two businesses using a digital network to interact.

Company A gives Company B the modem, software, hardware and a customized web site that enables Company B to interact with Company A without having to talk to a human being. Company B can see what is available in its inventory with Company A, can trace processing and distribution of its order, can look at its invoices, can get technological problems sorted out and can buy over its direct, personalized connection. This link between Company A and Company B is private.

As of yet, B2B has not yet shared the level of attention as that of the Business-to-Consumer Internet market. The Internet is an undeniable media sensation. ‘dot.coms’ (jargon for Internet businesses using their address ‘.com’ to sell their products) are most visible due to the increase in use when selling to consumers. Cocktail and smart dinner parties are not complete without their Web discussions. The chattering classes are hot to give their views on ordering a book from Amazon or Chapters, their favourite section of the web site and what it cost to get their choice of book delivered to their homes. Going to the store is no longer the cool way to do your shopping.

The new growth opportunity is for Business-to-Business, B2B, as Fortune or IBM call it. Mercer Management Consulting say it is expected to grow to ten times larger than the current ‘dot.com’ consumer market. The Internet opportunity for business is huge. The strategic focus is again on the need to design the ‘how’ you do business. Although computers are 10% of the GDP it is projected to account for 50% within the next five years and this growth will be driven by B2B. The E-Commerce technology will change industries’ value chains and is already a reality.

The usual value chain for a business has the customer contacting your sales department and sending in an order by phone or fax, or through a sales representative taking the order. Now, your business customer can use their customized ‘dashboard’ or web site to find the information they require. Information is available immediately or in ‘Internet time". In reality, customers are doing the clerical work but they are asking for that level of access and control.

Why do managers care? Their priorities used to just be between choosing cost or differentiated product. Now they are moving into a whole new world and depth of relationship that has never before been possible. The problem is how will this impact on the business?

Cost/Service New Relationship
Lowest cost Differentiated and giving value clients willing to pay	How do I establish new e-commerce without damaging my present business relationship?

Dell saw the further benefit of the business being set up to go direct to the customer. Dell realized the power in the supplier chain. They were able to use far less capital but still reach the market. They could better manage orders and suppliers, and build the next generation digital business design. Dell was rewarded in the market place for their risky approach and became the darlings of Wall Street.

The down side is that going virtual can damage your present bricks and mortar business if it is done poorly. B2B is not an off-the-shelf, packaged solution. It requires customization which can be expensive and which has cost the job of a few CEOs.

You can understand why leaders of established businesses are not ready to risk their professional career on the web.