Unit -II

E-Commerce

CHARACTERISTICS OF B2B IN E-COMMERCE:

1.Multiple decision makers.

In B2B, there are often four or more decision makers involved in the purchase process. In practice, this
may require multiple user roles in the checkout /cart process with multiple stages taking many days (or
weeks).

2.Longer decision cycle.

The B2B buying cycle is much longer than for B2C – so the lead time between initial contact and
receiving any payment are longer. But also, customer expectation is different - wanting to change exact
details of the order through the process.

3.Customer specific discounts.

In B2B, the variations in price lists, discounts, and even available products are generally more complex
than for B2C. This is historical. Whether necessary is not the appropriate question when building a B2B
eCommerce solution as this is usually a fixed requirement in all but the smallest businesses.

4.Conflict with direct sales channels. Many B2B businesses have an established sales team who will be
unhappy with online competition that can be seen to decrease their performance bonus. Careful thought
must be given to how this is introduced.

MODELS OF B2B EC:

A website following the B2B business model sells its products to an intermediate buyer who then sells
the products to the final customer. As an example, a wholesaler places an order from a company's website
and after receiving the consignment, it sells the end product to the final customer who comes to buy the
product at the wholesaler's retail outlet.

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B2B identifies both the seller as well as the buyer as business entities. B2B covers a large number of
applications, which enables business to form relationships with their distributors, re-sellers, suppliers, etc.
Following are the leading items in B2B eCommerce.

 Electronics
 Shipping and Warehousing
 Motor Vehicles
 Petrochemicals
 Paper
 Office products
 Food
 Agriculture

Key Technologies

Following are the key technologies used in B2B e-commerce −

 Electronic Data Interchange (EDI) − EDI is an inter-organizational exchange of business

documents in a structured and machine processable format.
 Internet − Internet represents the World Wide Web or the network of networks connecting
computers across the world.
 Intranet − Intranet represents a dedicated network of computers within a single organization.
 Extranet − Extranet represents a network where the outside business partners, suppliers, or
customers can have a limited access to a portion of enterprise intranet/network.

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  Back-End Information System Integration − Back-end information systems are database
management systems used to manage the business data.

Architectural Models

1.Supplier Oriented marketplace − In this type of model, a common marketplace provided by supplier
is used by both individual customers as well as business users. A supplier offers an e-stores for sales
promotion. In this type of model, there are many buyers and few suppliers. For the success of this model,
goodwill in the market and a group of loyal customers is very important.

2 .Buyer Oriented marketplace − In this model, there are few buyers and many suppliers. The buyer
has his/her own online marketplace. It then invites suppliers and manufacturers to display their products.
Buyers search in electronic stores in malls and markets for similar service providing products and
compare them.

So the buyer company makes it simple by opening a bidding site where a particular product is available
from different sellers at different prices.

3.Intermediary Oriented marketplace − In this type of model, an intermediary company runs a

marketplace where business buyers and sellers can transact with each other and there are many buyers
and many suppliers. An intermediary company runs a marketplace where business buyers and sellers
meet and do business with each other.

The best example of an intermediary-oriented marketplace is the giant player in this space, Alibaba. It
started in 1999 when the founder created Alibaba.com, a business-to-business portal to connect many
Chinese manufacturers with many overseas buyers. In 2012 alone, two of Alibaba’s portals handled $170
billion in sales. To get a feel for the size of Alibaba, since 2015 its online sales and profits surpassed that
of all US retailers, including Walmart, Amazon, and eBay combined!

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International markets. B2B eCommerce is often used as a way of reaching international markets,
maybe in small numbers. Regulations, legal and cultural issues can cause more of an impact than for B2B
eCommerce and this impact is exaggerated if products are small in number and high in value.

B2B eCommerce is the selling, buying, and trading of goods and services through an online sales portal
between businesses. Since both parties involved are business entities, the transactions are more rational
than impulsive. Furthermore, the relationship between the companies involve long-term interests.

Trading online has several benefits such as the expansion of business, the rise in the number of
customers, and increased brand-awareness. In this article, we’ll try to cover all the aspects you need to
know about B2B eCommerce.

What is Just-In-Time Delivery?

Just-In-Time delivery, or JIT delivery, is a supply chain inventory management technique that is designed
to increase efficiency while decreasing waste by receiving products or materials only when they are
needed. With drop shipping being the increasingly preferred method of order fulfillment for smaller e-
commerce retailers, JIT delivery is even more appealing.

The other important tool of the B2B marketing is the just in time delivery. JIT is the way to manage the
stock in the storage. It involves getting products from the suppliers and handling other issues related to it.
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Direct marketing needs a just-in-time manufacturing system. It is an advanced confirmation of the
supplier’s inventory. It is a compulsory element for b2b, for increasing the profit of the business, it is
very important to increase the sales. The sales are increased on the wide platform. The B2B marketing
provides solid support to the businessmen. Here, they can introduce their products at the wide level.

Two Different B2B Models in e Commerce‍ (other B2B model)

B2B e Commerce, by nature, is tailored to the specific selling strategies of various suppliers,
demanding multiple selling models. The two most common selling strategies of B2B
platforms are Marketplace and Direct.

The Marketplace B2B model in e Commerce involves multiple suppliers selling in one
centralized online marketplace, such as Alibaba , whereas the Direct model offers a
personalized B2B e Commerce portal meant for your specific brand (or brands that you
represent).‍

The Marketplace model is:

 A more discoverable, but competitive environment. While having your products

located in a central marketplace, in theory, makes your products easier to find, it also
creates fierce competition between suppliers, who often get caught up in the pricing
game.

Helpful for small start-up brands. B2B companies that are just getting started and lack name
recognition often find the Marketplace model helpful in getting their name and products out in
front of prospective customers.

 Not easily customizable.

 Some Marketplaces offer lightweight customizations, but it is difficult to implement
personalized pricing and product assortments in an environment completely controlled by the
Marketplace.
‍

The Direct model offers:

Distraction free buying. The Direct model is your personal B2B e Commerce portal, only
displaying your products, not your competitors’.

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  Complete control. Since you are in charge of the buyer experience, your brand, design
and other portal features are exactly as you want them to be—which helps you build
brand trust and maintain relationships with your buyers.

A personalized experience. As previously discussed, buyers in the Direct model only see
the prices, products and promotions they are eligible for.

While some suppliers choose only one of these B2B e Commerce models to implement, others
blend the two strategies. Manufacturers and distributors with complex selling rules, promotional
structures, and pricing tiers, however, tend to focus more on the Direct model to handle the
complexities of their businesses.

TRADITIONAL EDI: EDI is a communication standard that enables the electronic transfer of routine
documents, such as purchasing orders, between business partners. It formats these documents according
to an agreed-upon structure. An EDI implementation is a process in which two or more organizations
determine how to work together more effectively through the use of EDI. EDI is basically a computer-to-
computer messaging system with a minimum of human intervention.

Business transaction messages. EDI primarily is used to electronically transfer repetitive business
transactions. These include purchase orders, invoices, credit approvals, shipping notices, confirmations,
and so on.

INTERNET-BASED EDI: Internet-based (or Web-based) EDI is becoming very popular. Let’s see why
this is the case and review the various types of Web-based EDI. WHY INTERNET-BASED EDI? When
considered as a channel for EDI, the Internet appears to be the most feasible alternative for putting online
B2B trading within reach of virtually any organization, large or small. Firms should use Internet based
EDI for several reasons:

◗ The Internet is a publicly accessible network with few geographical constraints. Its largest attribute,
large-scale connectivity (without the need for any special company networking architecture), is a seedbed
for growth of a vast range of business applications.

◗ The Internet’s global network connections offer the potential to reach the widest possible number of
trading partners of any viable alternative currently available.
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◗ Using the Internet instead of a VAN can cut communication costs by over 50 percent.

◗ Using the Internet to exchange EDI transactions is consistent with the growing interest in delivering an
ever-increasing variety of products and services electronically, particularly via the Web.

◗ Internet-based EDI can complement or replace many current EDI applications.

◗ Internet tools such as browsers and search engines are very user-friendly, and most employees today
know how to use them.

◗ Internet-based EDI has several functionalities not provided by traditional EDI, such as collaboration,
workflow, and search engine capabilities.

Role of Software Agents In E-Commerce:

Software Agents enabling the formation of virtual organization: Virtual systems are the decentralized
business networks which work in flexible. To have efficient operation and productivity virtual
organizations must be able to communicate, Co-operate and Co-ordinate (the 3Cs of business) with each
other. Software agents are effective tool to virtual organizations since they provide mechanisms to
automate several activities like, gathering data, refining information, negotiate business deals and also
intelligent agents work like human beings in supplying and buying goods having the artificial machine

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knowledge. Software have variety of applications which includes, B2B E-Commerce, Internet based info
systems, robotics, smart systems, DSS, data mining and Knowledge discovery. Agent technology helps in
finding intranet or internet, Customer relation management, supply chain management and market
pricing.

The reason behind the use of Software Agents: The software agents are used due to the effect of
following reasons:

[1] Software Agents and Mobility: Mobile agents are a kind of software agent that represent a revolution
in how programs are distributed, run and server resources shared and how computer users interact with
online services. They can act on behalf of their principals autonomously while performing their actions in
some level of pro-activity and reactivity.

[2] A software agent is a software entity that acts with autonomy to accomplish tasks on behalf of its
users. They function continuously and autonomously in a particular environment, often inhabited by
other agents of processes. The idea here is the use of software agents for collaboration.

[3] Coping with Emergencies: There are situations where people, organizations or computer systems will
undergo stress. During this stage they fail to take quick actions which are common or daily tasks. For an
individual, if there are some natural problems like death in the family, illness, or job problem etc. they
fail to take care of simple thing like paying phone bill or electricity bill etc. For these kinds of problems,
it is not the solution to have an automated systems. Dynamic Distributed systems: Software agents
provide a better figure for utilizing parallelism and dynamics of Computer networks which increases the
usage of the available networks. Software agents give an ideal figure out for distributed computing.

[4] Life agents: Life agents are software agents that are initiated and run in the background and act
directly or indirectly on the client’s side automatically, monitoring the progress over the period of time.

E-MARKETING: -
 E-Marketing also known as Internet Marketing, Online Marketing, Web Marketing.
 It is the marketing of products or services over the internet.
 It is consider to be broad in scope because not refers to marketing on the internet but also done in
Email and wireless media.

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 E-Marketing ties together the creative and technical aspects of the internet, including design
development, advertising and sales.
 Internet marketing is associated with several business models i.e., B2C, B2B, C2C.
 Internet marketing is inexpensive when examine the ratio of cost to the reach of the target.

MANAGERIAL ISSUES AND SOLUTIONS OF B2B EC:

In order to better understand the most common challenges B2B vendors face and to look at how to solve
them, we first need to answer one key question - why do e-commerce to begin with? What’s its main
goal?

The goals of B2B e-commerce are quite different from those of B2C and thus, the ways of achieving
them will also be different. B2C e-commerce targets a huge pool of customers and lower sales quantities
per customer, so acquisition will be its main focus. B2B on the other hand sells high quantities of product

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or service to the same buyer, who is often not the end consumer, but a purchasing agent specially trained
to make buying decisions. So, the main priority is to build and maintain long-term partner relations. The
focus in e-commerce here is on the tools being easy and convenient to use rather than having a flashy and
catchy website.

E-commerce is meant to help B2B vendors achieve their main goals by getting routine orders out of the
way, so that field sales managers can focus on building and maintaining partner relationships rather than
simply be the order-takers. And here is where some common challenges come up. We’ve put together the
top 5 ones on the list paired with convenient solutions that quality e-commerce platforms provide.

1. Product assortment and filtering

Unlike B2C sector, where everyone pretty much gets the same assortment, B2B needs to be able to adapt
to different customer requirements. You may have proprietary kits or bundles, tiers of product for
different retailers based on relationship you have with them or other specific sales scenarios. And your e-
commerce solution needs to be able to accommodate that.

The perfect B2B e-commerce platform will let you enable filtering in your product catalog based on
vendors, so each buyer’s experience will be locked down to them specifically.

If you already have a large catalog set up however, migration can be a scary and painful process.
Sometimes it’s just simply not worth the risks of losing important items or creating additional mess in
your database, even if a new platform offers the most fantastic features. It’s totally understandable. The
good news is there are solutions out there, which let you avoid the nightmare of data migration by simply
merging the new system with your already existing third party PIM ( product information mgt) or
(Content Management system) CMS solution.
2. Contract based pricing
B2B sales sector deals with significantly larger volumes and more complicated transactions than B2C,
including multi-level approval processes, negotiations, etc. In terms of money spent for online purchasing
B2B e-commerce is already a lot bigger than B2C - and Forrester predicts it will be twice the size by
2020.

All of these your B2B e-commerce solution needs to account for. One more key difference with B2C is
that in B2B you can negotiate. And your platform needs to be able to support that option. If your

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customer is ordering higher volumes or if it’s a custom order or a long-term customer you’re working
with, the outcome of your negotiations needs to be reflected in your customer’s personalized settings.

B2C e-commerce software only needs to make sure you can set a price for your product - that same price
will be displayed to every customer, who views the product page. For B2B sector this is often not enough
– a B2B focused platform needs to be able to work with contract-based price adjustments and apply any
specific terms you work out with each specific customer.

On top of that, for complex transactions or bigger orders your B2B customer would often want to talk to
a sales person, so the system needs to support more complicated interactions, where there is a sales
person involved. It also needs to accommodate additional payment options, like credit checks or credit
account status.

3. Multiple Vendors catalogs

We have pretty much determined that B2B is its own type of sales with processes, logistics and shipping
vastly different from those in B2C. Thus, it requires a different system and approach. As your business
grows, it acquires more and more customers and partners until eventually there comes a point when
adding a new vendor to your distributed catalog and get the updated version to every customer in your
database becomes a real challenge.

4. Order Approval process / Integrating with external ERPs

Unlike B2C, which works directly with end-buyers, B2B often deals with a whole chain of negotiations
and approval processes. So, your e-commerce platform needs to be able to support approval process with
up to 10 different roles and the order trail needs to be accessible by some or all of those roles. A B2B-
focused e-commerce solution will make it easy to track orders and manage access and approval rights.

5. Negotiated pricing - quotation system

Working with customers ordering high volumes of product, naturally your business negotiates different
pricing with different buyers based on a number of factors, like purchase volumes, customer loyalty
programs and so on.

B2B-specific software needs to be able to reflect customer relationships and/or specific order conditions
in pricing, as well as special offers, special conditions on shipping and delivery, etc.
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For instance, you may want to offer special conditions on bundle-purchases, include a free gift with a
certain order volume, adjust the price based on the order size, provide expedited shipping for this one
special customer – the options are endless, and this is most definitely not the field where you can settle
for limitations. Thus, you need to make sure your platform of choice can easily accommodate any of such
requirements.

Conclusions

To sum it up, B2B e-commerce sector has its specifics and its unique requirements, which might not be
as essential in B2C and thus, might not be included in a regular B2C-focused solution.

EDI: T
HE NUTS AND BOLTS
EDI Standards:
• At the heart of any EDI application is the EDI standard. The essence of EDI is the coding &
structuring of the data into a common & generally accepted format.
• Documents sent via EDI can serve as input for a receiving a company's business application because
they are formatted according to standards that stipulate where certain information should be located,
such as where net total amount should appear on an invoice.
• These standards also define how individual pieces of information should be represented. For
example, in the standards for an electronics industry purchase order, there are specific codes defined
to identify the type of product or service being requested, e.g. PN (company part number), BY
(buyers part number), VP (vendors part number), PW (part drawing), etc.

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EDI stands for Electronic Data Interchange. EDI is an electronic way of transferring business documents
in an organization internally, between its various departments or externally with suppliers, customers, or
any subsidiaries. In EDI, paper documents are replaced with electronic documents such as word
documents, spreadsheets, etc.

EDI Documents

Following are the few important documents used in EDI −

 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters

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  Financial information letters

Steps in an EDI System

Following are the steps in an EDI System.

 A program generates a file that contains the processed document.
 The document is converted into an agreed standard format.
 The file containing the document is sent electronically on the network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the originating organization.

Advantages of an EDI System

Following are the advantages of having an EDI system.

 Reduction in data entry errors. − Chances of errors are much less while using a computer for
data entry.
 Shorter processing life cycle − Orders can be processed as soon as they are entered into the
system. It reduces the processing time of the transfer documents.
 Electronic form of data − It is quite easy to transfer or share the data, as it is present in
electronic format.
 Reduction in paperwork − As a lot of paper documents are replaced with electronic documents,
there is a huge reduction in paperwork.
 Cost Effective − As time is saved and orders are processed very effectively, EDI proves to be
highly cost effective.
 Standard Means of communication − EDI enforces standards on the content of data and its
format which leads to clearer communication.

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