B2B and B2C

Business to Business (also known as “B2B: buying or trading)

E-commerce is when companies are buying from and selling to each other online. But there's more to it than just purchasing. It has evolved to encompass supply chain management as more companies outsource parts of their supply chain to their trading partners. At its most basic, a B2B exchange (also called a marketplace or hub) is a website where many companies can buy from and sell to each other using a common technology platform. Many exchanges also offer additional services, such as payment or logistics services that help members complete a transaction. Exchanges may also support community activities, like distributing industry news, sponsoring online discussions and providing research on customer demand or industry forecasts for components and raw materials. Business-to-business (B2B) online commerce is expected to be embraced by almost all businesses that conduct B2B commerce in the material (as opposed to cyberspace) world. Thus, great sums of gross merchandise will likely trade hands over the Internet. Already, companies such as Cisco Systems Dell Computer, and Intel conduct a majority of their B2B commerce over the Internet. Less tech-centric companies are following suit, with automakers, wholesalers, and diversified companies like General Electric launching major online business initiatives.
There's no doubt that the size of B2B e-commerce is going to be huge. Due to variations in the way things are counted and estimated, it's hard to nail a precise market size figure, but it will certainly be big business. The value of goods and services sold online among businesses could be anywhere from $1 trillion to $2 trillion by 2003, depending on the market research firm you quote. Even if B2B firms only capture a small percentage of this business, the potential is still great. Either way, the size of B2B e-commerce should dwarf the value of the products sold to consumers. The benefits of B2B commerce can save or make many companies money. Not that companies weren’t making profits prior to E-commerce, in many ways companies have benefited from this technology surge. So, why choose E-commerce as way for marketing and selling?
· Reduced purchasing costs One of the easiest ways that a company can cut costs is by remodeling the way it purchases raw goods. The National Association of Purchasing Managers says that the average manual purchase order costs a company $79. This is because locating goods needed and then filling out the necessary paper work is a labor-intensive process. Searching for products online requires much less time and electronically processing an order streamlines the ordering procedure.
· Increased market efficiency Using the Internet, companies can quickly and easily get price quotes from numerous suppliers. By increasing the number of sellers, buyers are more likely to get a better price, and vice versa. Just as eBay has created an efficient market for everything from Barbie dolls to old Atari games, B2B hosts make connections between buyers and sellers that may not have otherwise happened.
· Greater market intelligence Related to finding good prices, B2B hosts give producers a better insight into the demand levels in any given market. Spot price levels can quickly be determined in everything from paint pigments to plastic cups. This allows companies to make better decisions regarding what to and what not to produce.
· Decreased inventory levels Using B2B technologies, companies can better utilize their inventory and raw materials. The Internet allows even more time to be shaved off for companies that use "just in time" manufacturing techniques. In essence, it allows firms to use less working capital to do the same amount of work, freeing these funds to be invested elsewhere.
The overriding attraction that runs throughout online B2B is that it can make companies much more efficient. Increased efficiencies means reduced costs, which is a goal that interests every company, thus making the potential B2B e-commerce industry enormous
With the fast pace market of online buying, many companies have become more successful, and have upgraded to adding many more products to their services line. Or, have expanded to the level of B2C commerce. Which, can potentially bring in double the amount of profits, that a business would make with B2B sales alone.


Business to Consumer (B2C commerce)
While the term e-commerce refers to all online transactions, B2C stands for "business-to-consumer" and applies to any business or organization that sells its products or services to consumers over the Internet for their own use. When most people think of B2C e-commerce, they think of Amazon.com, the online bookseller that launched its site in 1995 and quickly took on the nation's major retailers. However, in addition to online retailers, B2C has grown to include services such as online banking, travel services, online auctions, health information and real estate sites. The difference between B2C and B2B e-commerce?For one thing, the customers are different — B2B is strictly business to business, customers are other companies; while B2C customers are individuals. Overall, B2B transactions are more complex and have higher security needs.

What’s the big fuss over B2C E-commerce? After all consumers are just people.
In the late 90s, dotcoms like Amazon.com and eBay — which were quickly gaining in size and market capitalization — posed a threat to traditional brick and mortar businesses. In many ways, these dotcoms seemed to be rewriting the rules of business — they had the customers without the expenses of maintaining physical stores, little inventory, unlimited access to capital and little concern about actual earnings. The idea was to get big fast and worry about profits later. By late 1999, Amazon had a market capitalization of close to $25 billion, eclipsing some of the largest and most established companies in America. Since then, retail giants such as Kmart and Wal-mart were hoping to cash in on the dotcom frenzy, as well as other small businesses who were in the market against the retail giants, but weren’t in a well off position. Many never made it to the initial public offering after the Nasdaq started to tumble in the spring of 2000. Almost as quickly as the dotcom phenomenon took over, the hype over B2C e-commerce dissipated along with the crumbling Nasdaq. Funding for Internet ventures started to dry up and major companies started to reel in their spinoffs, bringing e-commerce initiatives back under the corporate fold.
Due to the significant fall of B2C e-commerce, the idea itself may be diving nose first, but it isn't dead. In fact, the North American online retail market is expected to grow 45 percent to $65 billion, according to a joint study conducted by the industry group Shop.org and the Boston Consulting Group. Forrester Research predicts that B2C e-commerce in the United States alone will grow from $45.8 billion in 2002 to $184.5 billion in 2004.
What are the primary concerns of B2C consumers and the companies who are selling?
Getting customers to buy things: A company’s e-commerce site cannot live on traffic alone. Getting consumers visit the site regularly is only half the battle. Whether they buy something, is part of the determining factor. The so-called conversion rate for B2C e-commerce sites is still fairly low. (Boston-based Yankee Group said in November 2002 that the average rate was 10 percent.) Some ways to boost your conversion rate include improving navigation, simplifying checkout process (such as one-step checkout and easily replaced passwords, and security options discussed later.), and sending out e-mails with special offers.
Secondly, building customer loyalty: With so many sites out there, how can you build a strong relationship with customers, that will continue to keep them returnin, to buy your goods, and patron your services?
Focus on personalization: A wide array of software packages are available to help e-commerce sites create unique boutiques that target specific customers. For example, American Airlines has personalized its website so that business fliers view it as a business airline and leisure travelers see it as a vacation site. Amazon, which built its own personalization and customer relationship management (CRM) systems, is well known for its ability to recognize customers' individual preferences.

Create an easy-to-use customer service application. Providing just an e-mail address can be frustrating to customers with questions. Live chat or, at the very least, a phone number will help.

Focus on making your site easy to use.

Thirdly, fulfillment: E-commerce has increased the focus on customer satisfaction and delivery fulfillment. One cautionary tale is Toys "R" Us' holiday debacle in 1999, when fulfillment problems caused some Christmas orders to de delivered late. Since then, companies have spent billions to improve their logistical systems in order to guarantee on-time delivery.
Providing instant gratification for customers still isn't easy, but successful B2C e-commerce operations are finding that fulfillment headaches can be eased with increased focus and investment in supply chain and logistical technologies.