This document discusses e-commerce, specifically business-to-business (B2B) e-commerce. It defines key terms like e-business, e-commerce, and discusses the differences between business-to-consumer (B2C) and B2B models. The document also summarizes that B2B spending is growing significantly and projected to reach over $1 trillion by 2003 in the US. Several industries are highlighted as being early adopters of B2B solutions like aerospace/defense, electronics, and chemicals. Factors that can help B2B e-marketplaces succeed are also discussed.

1. E-Commerce
Jason C.H. Chen, Ph.D.
School of Business Administration
Gonzaga University, Washington, U.S.A.
Senior Consultant, Taskco.com
chen@gonzaga.edu
Nov. 20, 2000

2. Topics
• E-Commerce:
From B2C to B2B and Beyond
• e-Bid Process
• Features of a B2B application.
• Business plan for an e-Marketplace (next
year)
• e-CRM and 1-1 Marketing (next year)

3. E-Commerce:
From B2C to B2B and Beyond
Jason C.H. Chen, Ph.D.
School of Business Administration
Gonzaga University, Washington, U.S.A.
Senior Consultant, Taskco.com
chen@gonzaga.edu
Nov. 22, 2000

4. Outline of Topics
• EC, B2C and B2B and their models.
• How big is B2B?
• Where is the Evidence?
• What are the revenue models in B2B?
• What is driving adoption of B2B?
• Why now?
• TASKCo.com

5. eBusiness Key Concepts
• eBusiness
– The strategy of how to automate old business models
with the aid of technology to maximize customer value
• eCommerce
– The process of buying and selling over digital media
• eCRM (eCustomer Relationship Management)
– The process of building, sustaining, and improving
eBusiness relationships with existing and potential
customers through digital media

6. What is E-Commerce ?
• Electronic commerce
(EC) is an emerging
concept that describes
the buying and selling
of products, services
and information via
computer networks,
including the Internet.

7. 9%
6%6%
22%
15%
8%
26%
24%
21%
In pilot stage Starting to
implement
In use
1997 1998 1999
Figure:
E-commerce on the
rise.
Source: 1999 SG
Cowen/Datamation
Networked
Computing Survey
364
434
775
623
E-commerce status at sitesFigure:
E-commerce apps are
a big driver for
storage. Average
installed online
storage in gigabytes.
Source: 1999 SG
Cowen/Datamation
Networked
Computing Survey
No plans Start in 99/00 Expand in 99/00 Largely done

8. Benefit
New
channel for
existing
business
Improved
customer
service
Enabled
entire new
line of
business
Reduced
operating
costs
Improved
cycle time
% of
Respondents
25% 23% 18% 7% 5%
Benefit
Keep pace
with
technology
Reduced cost
of sales
Other Not
available
None
% of
Respondents
5% 4% 6% 4% 3%
Table: E-commerce’s most promising potential benefits

9. eBusiness Processes
WHY Customer Relationship
Redesign Business
Processes (Outside-In)
Applying Technology
WHAT
HOW

10. eBusiness Processes
WHY Customer Relationship
Redesign Business
Processes (Outside-In)
Applying Technology
WHAT
HOW

11. C
B
C
B
Traditional versus E-Business
Models?
C: Individual Consumer
B: Business

12. What is B2C?
• B2C (or Extranets) is just web-enabled
relationships between existing partners;
they tend to be run by a single company
seeking to lower the cost of doing business
with its current suppliers or individual
customers.
• Examples?
– Amazon.com
– Egghead.com

13. Enterprise
User Profiles
Workflow
Business rules
Payment
Analytics
Internet
Intranet
Figure: A B2C e-business Model

14. B2C Applications
• Electronic storefront
• Electronic malls
• Advertising online
• Service online
– selling books, toys, computers
– e-banking (cyberbanking)
– online stock trading
– online job market, travel, real estate

15. Figure : B2C and B2B Internet Commerce in the
U.S. (Source: Forrester Research)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
1998 1999 2000 2001 2002 2003
B2C
B2B
Billion

16. What is B2B?
• “B2B” is business-to-
business commerce
conducted over the
Internet (called B2B
e-commerce space, or
e-marketplaces)
N

17. B2B e-Markepplaces:
A CEO’s Perspective
“The next chapter in the e-business revolution
involves the transformation of entire markets and
the redefinition of industries. We will see the rise
of a new class of entities -- e-Marketplaces -- that
will help online buyers and sellers find each other,
attack the inefficiencies of traditional markets,
and carve out for themselves important roles in
the e-business economy.”
Louis V. Gerstner Jr.
Chairman of the Board and CEO
IBM Corporation

18. E-Market is …
Web-based marketplace
• e-market is Web sites
where buyers and sellers
come together to
communicate, exchange
ideas, advertise, bid in
auctions, conduct
transactions, and
coordinate inventory
and fulfillment
BuyersBuyers
SellersSellers
MarketSiteMarketSite

19. Figure : A B2B Model
(Source: Goldman Sachs Investment Research Report)
Banks,
Financial Institutions
eCredit.com
Suppliers
•Production materials
•Operating goods, services
Enterprise Customers
Logistics
Celarix, NTE

20. E-Channel
Management
Procurement
Network
Trading
Network
E-Customer Relationship
E-Commerce
E-Portal Management
E-Services
SCM/ERP/Legacy Appls
Businesses
Businesses&
Consumers
1:NM:1 M:N
Knowledge Management/Business Intelligence
Focus on e-Business Applications

21. B2B Applications
• Advertising
• Auctioning
• Procurement
• Channel management
• E-commerce

22. $39 $114
$294
$522
$782
$1,500
$1,113
0
300
600
900
1200
1500
1800
1998 1999 2000 2001 2002 2003 2004
($Billions)
B2B
Figure: The Goldman Sachs B2B Sizing in USA
How Big is B2B?

23. Where is the Evidence
• Three highlights from the Goldman Sachs
B2B survey 1.0:
– E-Commerce spending on proprietary Web site,
e-market, and procurement (75% say, in 2000)
– Business are increasingly likely to develop B2B
e-markets and to favor online auctions (74%
say, in 2000)
– Outsourcing e-commerce spending is
commonplace among businesses (25% say, up
to 75% of e-C spending)

24. B2B Revenue Model
• B2B companies exhibit varying business
models, depending on the key products and
services they offer. The models include:
– transaction fees,
– auction-driving commissions,
– advertising,
– content subscriptions,
– software licensing

25. B2C vs. B2B
B2C B2B
Switching Costs Low with multiple suppliers High when integrated with e-frastructure;
few qualified suppliers
Relationship
Type
Transactional Long term, mission critical
Transaction Type Smaller average selling price Larger average selling price
Revenue Model Traffic volume is critical;
Large customer base is key
Don’t need every customer, only need the
right customers
Source: Goldman Sachs Investmenet Research

26. The Magnificent Seven B2B Drivers
• Increasing competition and globalization
• Growing interactivity
• Financial opportunity
• Efficiencies and cost savings
• Enhanced market and customer reach
• Real-time needs
• Regulatory and taxation issues
N

27. Small Business Likely to Fuel
B2B
• Small businesses will fuel the B2B market
– the use of and dependence on the Internet by
small businesses as a medium for marketing,
distribution, and commerce will likely fuel the
B2B market.
– as more small business access the Internet and
set up corporate Web pages, the more they will
employ the Internet to execute their business
strategy.

28. Benefits of B2B
• B2B solutions create competitive dynamics
through:
– cost savings
• the composition of cost (product versus process
costs)
• the number of intermediaries in the supply chain.
– new financial (revenue) opportunities
• the rate of industry-wide B2B adoption
• business model
N

29. Why Now?
• B2B catalysts are now arising to stimulate
adoption (mentioned earlier).
• Interactive networks have recently become
ubiquitous and inexpensive, accelerating the
use of B2B applications.
• A viral effect will spur copycat behavior
throughout the market as more companies
continue to implement B2B applications.

30. Which Industries are Likely to
Embrace B2B Solutions
• Industries that are B2B inclined exhibit
certain key characteristics:
– the supply chain is highly diffuse,
– techno-innovators dominate the culture,
– process represents more than 20% of total
costs,
– products exhibit complex configurations,
– expense pressure is intense.

31. • Research show that leading industries
migrating online and adopting B2B
solutions include the following:
– Aerospace/Defense: 35%
– Electronics: 25%
– Chemicals: 20%
– Motor vehicles and parts: 18%
– Medical equipment and transport: 17%

32. What Makes a B2B e-market
Company Succeed?
• Five Critical Success Factors for e-markets:
– Business model,
– market size,
– industry expertise,
– branding and distribution,
– management execution hustle (not just the
formulation of strategy)
N

33. Solutions for e-Enterprise
Organizations
• Streamlines buying and
selling between trading
partners
• Maximizes trade efficiency
across the entire supply chain
• Strategic e-commerce
capabilities in Internet time
• Delivers compelling ROI
BuyersBuyers
SellersSellers
MarketSiteMarketSite

34. Solutions for Internet Market
Makers
• Turn your supply chain
into a revenue generation
opportunity
• Leverage your industry
domain expertise into
strategic e-commerce
solutions
• Brings e-commerce to
businesses of any size,
across all industries
YourYour
PortalPortal

35. Global Solution for Businesses:
The Global Trading Web
Global
Trading
Web
Connect once to trade with anyone,anytime,
anywhere in the world.

36. European e-markets
• B2C e-commerce in Europe is likely to
remain approximately two to three years
behind the U.S. .
• B2B in Europe currently lags the U.S. by
two years.
• How about in Asia?

37. TASKCo Mission
Expand
Markets
Improve
Efficiencies
Retain
Customers
Fundamental
Business
Drivers Have
Not Changed
Leveraging Internet to Help Customers to: