7 Models of B2B E-Commerce You Should Know About
B2B e-commerce is the process of selling goods or services online between businesses. It is different from B2C e-commerce, which involves selling to consumers. B2B e-commerce can offer many benefits for both buyers and sellers, such as lower costs, faster transactions, and wider market reach.
However, not all B2B e-commerce models are the same. Depending on the type of products or services, the size and nature of the businesses, and the level of interaction and customization required, there are different ways to conduct B2B e-commerce. In this article, we will explore seven models of B2B e-commerce and their advantages and disadvantages.
1. Supplier-Oriented Model
In this model, a supplier (also known as a manufacturer or a producer) creates an online platform where it showcases its products or services and invites buyers to place orders. The supplier controls the pricing, delivery, and payment terms. This model is suitable for suppliers who have a large and diverse product portfolio, a strong brand reputation, and a loyal customer base. Examples of this model include Dell, Cisco, and Grainger.
The main advantage of this model is that it allows the supplier to reach a global market and increase its sales volume and revenue. It also reduces the intermediation costs and enhances the customer loyalty and satisfaction. The main disadvantage is that it requires a high investment in developing and maintaining the online platform, as well as in marketing and customer service. It also exposes the supplier to more competition from other suppliers who may offer lower prices or better quality.
2. Buyer-Oriented Model
In this model, a buyer (also known as a purchaser or a procurer) creates an online platform where it posts its requirements and invites suppliers to bid for them. The buyer controls the selection, negotiation, and contract terms. This model is suitable for buyers who have a large and complex purchasing process, a high demand for customization, and a need for cost reduction and efficiency. Examples of this model include GE, Boeing, and Walmart.
The main advantage of this model is that it allows the buyer to source from a wide range of suppliers and compare their offers based on price, quality, delivery time, and other criteria. It also reduces the transaction costs and risks and improves the transparency and accountability of the procurement process. The main disadvantage is that it requires a high level of trust and cooperation between the buyer and the suppliers, as well as a clear specification of the requirements and standards. It also may limit the innovation and differentiation opportunities for the suppliers.
3. Intermediary-Oriented Model
In this model, an intermediary (also known as a broker or an agent) creates an online platform where it connects buyers and sellers and facilitates their transactions. The intermediary charges a fee or a commission for its services. This model is suitable for buyers and sellers who have a low volume or frequency of transactions, a lack of information or expertise, or a preference for convenience and simplicity. Examples of this model include Alibaba, Amazon Business, and TradeKey.
The main advantage of this model is that it reduces the search costs and risks for both buyers and sellers and provides them with access to a large and diverse market. It also offers value-added services such as verification, rating, payment, delivery, and dispute resolution. The main disadvantage is that it reduces the direct contact and relationship between buyers and sellers and may create dependency on the intermediary. It also may increase the transaction costs due to the intermediary’s fees or commissions.
4. Community-Oriented Model
In this model, a community (also known as a network or a consortium) creates an online platform where it enables its members to exchange information, knowledge, best practices, referrals, or leads related to their business activities. The community may charge a membership fee or generate revenue from advertising or sponsorship. This model is suitable for businesses that share common interests, goals, values, or challenges and seek to collaborate or learn from each other. Examples of this model include IndustryNet, ThomasNet, and ProZ.
The main advantage of this model is that it fosters trust, loyalty, cooperation, and innovation among its members and provides them with access to valuable resources and opportunities. It also enhances the reputation and visibility of its members in their respective markets. The main disadvantage is that it requires a high level of participation and contribution from its members and may face competition from other communities or platforms that offer similar or better benefits.
5. Content-Oriented Model
In this model, a content provider (also known as an information provider or an educator) creates an online platform where it offers relevant and useful content such as articles, reports, e-books, webinars, or courses to its target audience. The content provider may charge a subscription fee or generate revenue from advertising or sponsorship. This model is suitable for businesses that have a high level of expertise or authority in their field and seek to educate or influence their potential or existing customers. Examples of this model include
Forbes, Harvard Business Review, and Udemy.
The main advantage of this model is that it builds trust, credibility, and loyalty among its audience and provides them with valuable information or skills that can help them solve their problems or achieve their goals. It also creates a competitive edge and differentiation for the content provider in its market. The main disadvantage is that it requires a high investment in creating and updating the content, as well as in marketing and customer service. It also may face competition from other content providers who may offer similar or better content.
6. Auction-Oriented Model
In this model, an auctioneer (also known as a market maker or a price setter) creates an online platform where it allows buyers and sellers to bid for products or services based on dynamic pricing mechanisms such as reverse auction, forward auction, or Dutch auction. The auctioneer may charge a listing fee, a transaction fee, or a percentage of the final price. This model is suitable for products or services that have a high demand variability, a low differentiation, or a short life cycle. Examples of this model include eBay, Priceline, and Ritchie Bros.
The main advantage of this model is that it maximizes the efficiency and transparency of the market and enables buyers and sellers to discover the true value of the products or services. It also reduces the inventory and holding costs and increases the liquidity and turnover. The main disadvantage is that it requires a high level of trust and security between buyers and sellers and may create uncertainty and volatility in the pricing and availability. It also may reduce the customer satisfaction and loyalty due to the lack of personalization and service.
7. Service-Oriented Model
In this model, a service provider (also known as a solution provider or a consultant) creates an online platform where it offers customized or standardized services such as design, development, testing, maintenance, or support to its clients. The service provider may charge a fixed fee, an hourly rate, or a performance-based fee. This model is suitable for services that have a high complexity, specificity, or variability and require a high level of interaction and collaboration between the service provider and the client. Examples of this model include Accenture, IBM, and Upwork.
The main advantage of this model is that it allows the service provider to leverage its expertise and experience and provide tailored solutions that meet the client’s needs and expectations. It also creates a long-term relationship and mutual benefit between the service provider and the client. The main disadvantage is that it requires a high investment in acquiring and retaining the clients, as well as in delivering and managing the services. It also exposes the service provider to more risks and liabilities due to the uncertainty and variability of the client’s requirements and feedback.
B2B e-commerce is a growing and evolving phenomenon that offers many opportunities and challenges for businesses. Depending on their characteristics and objectives, businesses can adopt different models of B2B e-commerce to achieve their desired outcomes. However, no single model is perfect or universal. Businesses need to carefully evaluate the pros and cons of each model and choose the one that best suits their situation and goals.
The Rise of B2B Ecommerce
Business-to-business (B2B) ecommerce is the process of selling products or services between two businesses through an online platform. B2B ecommerce is one of the fastest-growing sales models in the world, with some estimates valuing the global market at over $12 trillion . B2B ecommerce offers many advantages for both sellers and buyers, such as reduced costs, increased efficiency, expanded reach, and improved customer experience.
How B2B Ecommerce Models Work
There are different types of B2B ecommerce models, depending on the relationship between the seller and the buyer. Some of the basic models are :
-Supplier Oriented Marketplace**: In this model, there are many buyers and few suppliers. The supplier provides a common marketplace where buyers can browse and purchase products or services. An example of this model is Alibaba, which connects manufacturers and wholesalers from China with buyers from around the world.
-Buyer Oriented Marketplace**: In this model, there are few buyers and many suppliers. The buyer has his/her own online marketplace where suppliers can bid or offer their products or services. An example of this model is Amazon Business, which allows businesses to buy from a variety of suppliers with features such as bulk discounts, tax exemptions, and invoicing.
-Intermediary Oriented Marketplace**: In this model, there are many buyers and many suppliers. An intermediary provides a platform where buyers and sellers can exchange information, negotiate prices, and complete transactions. An example of this model is Shopify, which allows businesses to create their own online stores and sell to other businesses or consumers.
The Future of B2B Ecommerce
B2B ecommerce is expected to grow rapidly in the coming years, as more businesses adopt digital commerce solutions and leverage new technologies. Some of the trends that will shape the future of B2B ecommerce are :
-Omnichannel Selling**: B2B buyers expect a seamless and consistent experience across multiple channels, such as web, mobile, social media, email, and chat. B2B sellers need to integrate their online and offline channels and provide personalized and relevant content for each buyer.
-Artificial Intelligence**: AI can help B2B sellers optimize their operations, enhance their customer service, and generate more insights. AI can also help B2B buyers find the best products or services for their needs, get recommendations, and receive support.
-Subscription Models**: Subscription models can help B2B sellers create recurring revenue streams, increase customer loyalty, and reduce churn. Subscription models can also help B2B buyers save time and money, access more value-added services, and enjoy more flexibility.
References:
https://www.infosys.com/about/knowledge-institute/insights/Documents/future-customer-engagement.pdf
https://multichannelmerchant.com/blog/edi-b2b-ecommerce-question/
https://archive.org/details/ecommerceformula00plan/page/26https://www.shopify.com/enterprise/b2b-ecommerce
https://www.elasticpath.com/blog/6-ecommerce-business-models-b2b-b2c
https://www.bigcommerce.com/blog/b2b-ecommerce/#what-is-b2b-ecommerce
https://www.ecommerce-nation.com/7-types-of-b2b-e-commerce-models/
https://www.investopedia.com/terms/b/btob.asp
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