Page 130 - Introduction to Electronic Commerce and Social Commerce

110 4 Business-to-Business E-Commerce

The company sells its products via all types of retailers Selling via Distributors and Other
and distributors (25% of which are small), located in over Intermediaries
170 countries. Until 2000, the small retailers had entered
their orders from Whirlpool manually. This process was Manufacturers can sell directly to other businesses, and they
slow, costly, and error prone. do so if the customers are large buyers. However, manufac-
Therefore, Whirlpool developed a B2B trading partner turers frequently use intermediaries to distribute their prod-
portal (for the small retailers), which enabled self-ordering, ucts to a large number of smaller buyers. The intermediaries
therefore reducing the transaction cost considerably. buy products from many other manufacturers and aggregate
The system was tested with low-volume items and then those products into one catalog from which they sell to cus-
extended to larger volume items. In addition, more features tomers or to retailers. Many of these distributors also are
were added. Adding the portal has increased Whirlpool’s selling online via webstores.
competitive advantage. Some well-known online distributors for businesses are
For additional information, see IBM (2000) and whirlpool Sam’s Club (samsclub.com), Avnet (avnet.com), and
corp.com. W.W. Grainger (grainger.com). Many e-distributors sell in
horizontal markets, meaning that they sell to businesses in a
Benefits and Limitations of Online Sales variety of industries. However, some distributors sell to busi-
from Catalogs nesses that specialize in one industry (vertical market), such
as Boeing PART Page (see boeing.com/assets/pdf/
Successful examples of the B2B online direct sales model commercial/aviationservices/brochures/Materials
include manufacturers, such as Dell, Intel, IBM, and Cisco, Optimization.pdf). Most intermediaries sell at fixed prices;
and distributors, such as Ingram Micro (ingrammicro.com) however, some offer quantity discounts, negotiated prices, or
that sells to value-added retailers; the retailer adds some ser- conduct auctions.
vice along with the product. Sellers that use this model can
be successful as long as they have a solid reputation in the Amazon Business
market and a large enough group of loyal customers.
While the benefits of direct online sales are similar to that This site provides services to different types of sellers as well
of B2C, there are limitations also. One of the major issues as a marketplace. For details, see amazon.com/business.
facing direct sellers is finding buyers. Many companies know
how to advertise using traditional channels, but are still
learning how to contact would-be business buyers online. SECTION 4.2 REVIEW QUESTIONS
(Note: This is where Alibaba.com and similar companies
provide help.) In addition, B2B sellers may experience chan- 1. What are buy-side and sell-side transactions? How do
nel conflicts with their existing distribution systems. Another they differ?
limitation is that if traditional electronic data interchange 2. List the types of sell-side B2B transaction models.
(EDI)—the computer-to-computer direct transfer of business 3. Describe customer service in B2B systems.
documents—is used, the cost might be passed on to the cus- 4. Describe the direct online B2B sales process from
tomers, and they could become reluctant to go online. The catalogs.
solution to this problem is transferring documents over 5. Discuss the benefits and limitations of direct online B2B
extranets and using an Internet-based EDI (see Online sales from catalogs.
Tutorial T2). Finally, the number of business partners online 6. What are the advantages of using intermediaries in B2B
must be large enough to justify the system infrastructure and sales?
operation and maintenance expenses. 7. Compare an e-distributor in B2B to Amazon.com. What
are the similarities? What are the differences?
8. State two benefits to Whirlpool and their customers from
Comprehensive Sell-Side Systems the portal.

Sell-side systems must provide several essential functional-
ities that enable B2B vendors to execute sales efficiently,
provide outstanding customer service, allow integration with 4.3 SELLING VIA E-AUCTIONS
existing IT systems, and provide integration with non-
Internet sales systems. For an example of such a system pro- Auctions are gaining popularity both as B2B buying and as
vided by Sterling Commerce (an IBM Company), see ibm. sales channels. Some major B2B auction issues are discussed
com/software/info/sterling-commerce. in this section.