Page 128 - Introduction to Electronic Commerce and Social Commerce

108 4 Business-to-Business E-Commerce

– Expedia (expedia.com), Travelocity (traveloc- • Creates new sales opportunities (S)
ity.com), Orbitz (orbitz.com), and other online • Eliminates paper and reduces administrative costs (J)
travel services provide similar services for both • Expedites processing and reduces trading cycle
B2C and B2B. time (J)
• Real estate. Commercial real estate transactions • Lowers search costs and time for buyers to find
can be large and complex. Therefore, the Web might products and vendors (B)
not be able to replace existing human agents com- • Increases productivity of employees dealing with
pletely. Instead, the Web can help businesses find buying and/or selling (J)
the right properties, compare properties, and assist • Reduces errors and improves quality of service (J)
in negotiations. Some government-run foreclosed • Makes product configuration easier (B)
real estate auctions are open to dealers only and are • Reduces marketing and sales costs (S)
conducted online. • Reduces inventory levels and costs (J)
• Financial services. Internet banking can be an effi- • Reduces purchasing costs by cutting down on use
cient way of making business payments, transferring of intermediaries (B)
funds, or performing other financial transactions. For • Enables customized e-catalogs with different prices
example, electronic funds transfer (EFT), which pro- for different customers (J)
vides for electronic payments, is popular with busi- • Increases production flexibility, permitting on
nesses, as are electronic letters of credit. Transaction demand delivery (S)
fees over the Internet are less costly than any other • Reduces procurement costs (B)
alternative method. To see how payments work in • Facilitates customization via self-configuration (J)
B2B, see Chapter 11. Businesses can also purchase • Provides for efficient customer service (B)
insurance online, from both pure online insurance • Increases opportunities for collaboration (J)
companies and click- and- mortar ones. • Web-based EC is more affordable than traditional
• Banking and online financing. Business loans can be EDI (J)
solicited online from lenders. Because of the eco- • Allows more business partners to be reached than
nomic downturn, it is difficult for some business own- with EDI (J)
ers (even those with excellent credit scores) to obtain • Reaches a more geographically dispersed customer
loans; therefore, they may turn to companies like base (S)
Biz2Credit (biz2credit.com), a company that helps • Provides a better means of communication with
small businesses grow. Biz2Credit is an online credit other media (J)
marketplace that matches loan applicants with over • Provides 24/7 coverage of the shop front (J)
1200 lenders (see biz2credit.com/about and cnbc. • Helps equalize small enterprises (B)
com/id/101009116). Several sites, such as Garage
Technology Ventures and LLC (garage.com), provide
information about venture capital. Institutional inves- B2B EC development has limitations as well, especially
tors use the Internet for certain trading activities. regarding channel conflict and the operation of public
• Other online services. Consulting services, law firms, exchanges. Furthermore, personal face-to-face interactions
medical services, and others sell enterprise knowledge may be needed but are unavailable.
and special services online. Many other online ser- Implementing e-B2B might eliminate the distributor or
vices, such as the purchase of electronic stamps (simi- the retailer, which could be a benefit to the seller and the
lar to metered postage, but generated on a computer), buyer (though not a benefit to the distributor or retailer). In
are available online (see stamps.com). Recruiting and previous chapters, such a phenomenon is referred to as disin-
staffing services can also be done online. termediation (Chapter 3). The benefits and limitations of
B2B depend on such variables as who buys what items, and
in what quantities; who are the suppliers; how often a com-
The Benefits and Limitations of B2B pany buys, and so forth.

The benefits of B2B are for buyers, sellers, or for both, and
they depend on which model is used. In general, though, the SECTION 4.1 REVIEW QUESTIONS
major benefits of B2B (the beneficiaries are marked after
each benefit: S = seller, B = buyer, J = joint) are that it: 1. Define B2B.