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B2B E-commerce Model

Updated On:15-February-2016

Before knowing about B2B E-commerce model you should have a clear understanding on B2B and E-commerce separately. In simple terms, B2B involves commercial transaction between businesses and E-commerce involves buying & selling goods via an electronic network.

B2B E-commerce involves electronic business transactions between companies where both the suppliers and buyers are business organizations. A business entity can connect with their distributors, suppliers, wholesalers via electronic mode. In this model raw materials, manufacturing, wholesaler & retailers are market chains and Government, transportation, communication & banks are intermediaries.

Transaction in B2B E-commerce not only means money transaction but it also includes the exchange of information before buying the products, flow & transformation of goods from raw materials till it reaches the user and service after the transaction is completed. B2B E-commerce makes use of Electronic Data Interchange, internet, intranet, extranet and back end information system integration.

B2B E-commerce is beneficial both for the suppliers and buyers as it increases market competency. It reduces procurement & inventory costs, offers more choices & better pricing, makes logistics efficient and reduces cycle time for the buyers. It reduces sales, marketing & order processing costs, enables to reach more customers & generate revenue and offers better customer support for the suppliers.

The marketplace is controlled by buyer, supplier and intermediary. Hence it can be classified as:-

(i) Buyer-oriented marketplace in which suppliers make use of the platform provided by buyers & it has few buyers and many suppliers.

(ii) Supplier-oriented marketplace in which customers & buyers make use of the platform provided by the suppliers and it has many buyers and few suppliers.

(iii) Intermediary-oriented marketplace in which buyers and sellers make use of the platform provided by an intermediary company and it has more number of buyers and suppliers.

The leading items in B2B EC are electronics, shipping and warehousing, motor vehicles, petrochemicals, paper and office products, food and agriculture. According to Schneider and Schnetkamp, B2B E-Commerce is expected to grow more in the upcoming years and it will continue to be the major share of the electronic commerce.

Thus, we know B2B E-commerce has a bright future so follow the same to shine in your business.