Business-to-business
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Business-to-business (B2B) is a term commonly used to describe electronic commerce transactions between businesses, as opposed to those between businesses and other groups, such as business and individual consumers (B2C) or business and government (B2G).
B2B is also commonly used as an adjective to describe any activity, be it B2B marketing, sales, or e-commerce, that occurs between businesses and other businesses rather than between businesses and consumers. Similar to B2B, B2G is often meant to refer to B2G Marketing.
There exists several types of online transactions:
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[edit] Automated Ecommerce Transactions
It is a term also used in electronic commerce and to describe automated processes between trading partners.
The volume of B2B transactions is much higher than the volume of B2C transactions. One reason for this is that businesses have adopted electronic commerce technologies in greater numbers than consumers. Also, in a typical supply chain there will be many B2B transactions but only one B2C transaction, as the completed product is retailed to the end customer.
An example of a B2B transaction is a chicken feed company selling its product to a chicken farm, which is another company. An example of a B2C transaction is a grocery store selling grain-fed chickens to a consumer. B2B can also describe marketing activities between businesses, not just the final transactions that result from marketing, though the term can be used to identify sales transactions between businesses (also referred to as "institutional sales"). For example, a company selling photocopiers would more likely be a B2B sales organization than a B2C sales organization.
"Business-to-business" can also refer to all transactions made in an industry value chain before the finished product is sold to the end consumer.
[edit] B2B standards
UN/EDIFACT is one of the most well-known and established B2B standards. ANSI ASC X12 is a popular standard in North America. RosettaNet is an XML-based, emerging B2B standard in the high tech industry. An approach like UN/CEFACT's Modeling Methodology (UMM) might be used to capture the collaborative space of B2B business processes.
[edit] E-Marketplace
"E-" or "electronic" marketplace in a business-to-business context is primarily a large online platform (B2B portal) or website that facilitates interaction and/or transactions between buyers and suppliers at organizational or institutional rather than individual levels. Since the builders of such marketplaces primarily aim at facilitating buyer-seller interaction (in most cases without being a buyer or seller themselves), these are also referred to as "third-party" B2B marketplaces.
These marketplaces can do one or more of the following:
- Help buyers find new suppliers and vice versa
- Help reduce the time and cost of interaction for B2B transactions
- Help increase trade between distant geographies
- Help manage payments and track orders for B2B transactions
- Help the environment by using appropriate technology that is environmentally friendly
[edit] Vertical e-Marketplace
A vertical e-marketplace or Vortal spans up and down every segment of one specific industry. Each level of the industry has access to every other level, which greatly increases collaboration. Buyers and sellers in the industry are connected to increase operating efficiency and decrease supply chain costs, inventories and cycle times. This is possible because buying/selling items in a single industry standardizes needs, thereby reducing the need for outsourcing many products.
[edit] Horizontal e-Marketplace
A horizontal e-marketplace connects buyers and sellers across many industries. The most common type of materials traded horizontally are MRO (maintenance, repair and operations) materials. Mainly business and consumer articles, these items are in demand because they are crucial to the daily running of a business, regardless of industry and level within that industry. Many corporations have MRO materials bought directly on-line by the maintenance team in order to relieve the purchasing department.
[edit] No-frills e-Marketplace
Developed in response to customers wanting to purchase products without service (or with very limited service), the no-frills e-marketplace parallels the B2C offering of no-frills budget airlines. The subject of several Harvard and IMD articles/case-studies, no-frills B2B e-marketplaces enable the effective de-bundling of service from product via clear "business rules." This provides the basis of differentiation from conventional B2B sales/purchasing channels.
[edit] Etymology
The term "business-to-business" was originally coined to describe the electronic communication relations between businesses or enterprises in order to distinguish it from the communications between businesses and consumers (B2C). It eventually came to be used in marketing as well, initially describing only industrial or capital goods marketing. However, today it is widely used to describe all products and services used by enterprises.
