- 1. Business to Business eCommerce Dr. Mary Wolfinbarger
Internet Marketing
2. Definition
- B2B e-commerce refers to the _________of _________
_____processing and Internet communications for ______ services in
the production of economic transactions
- Many B2B businesses are____________
3. B2B Transactions
- Purchases by businesses of _______, resources, technology,
manufactured parts and components and capital equipment
- Services included __________ transactions including insurance,
credit, bonds, securities
4. Size of Market
- Overall B2B transactions in US = $11.5T ( 2000 )
- $336B are electronic( Jupiter Communications )
-
- (comparison to B2C -- $45B at most)
- 2005:Predict $6.3T out of $15.1T
- Or 4.5T worldwide? ( Goldman Sachs )
5. Why the growth?
- Anticipated productivity gains:
- _____ ________from automating transactions
- Economic advantages of ___ market intermediaries
- Consolidation of demand and supply through
organized________
- Changes in extent of _______integration
6. Cost Efficiencies
- Can reduce cost of __________before, during and after
transaction
-
- At every stage e-commerce avoids the need to translate computer
files into paper documents, a process that generally involves
errors, delay and costly clerical personnel.(Lucking-Reiley and
Spulber 2000)
-
- Both websites and ____(electronic data interchange) are
used
7. 8. Cost Efficiencies
- Before:May lower cost of _________for suppliers or buyers and
making _____and _______comparisons
-
- Sales personnel are freed from _______product availability and
pricing; they can concentrate on account management and
_________strategy
9. Cost Efficiencies
- During:Can ______communication regarding transaction
details
- After:Lower cost of____________, monitor contractual
performance, confirm_________, automatically ______ production and
accounting records
10. Cost Efficiencies
- The potential cost savings in this area
aresubstantial.Processing a purchase order manually, including
paperwork, data entry, phone calls, faxes and approval requests,
can be quite expensive, so online transactions might easily reduce
costs by a factor of five or ten or more.Lucking-Reiley and Spulber
2000
11. Cost Efficiencies
- British Telecom has reduced external procurement costs from
$113 to $8 per transaction
- Mastercard costs of processingpurchase orders has fallen from
$125 to 40, number of days from 4 to 1.25 days
- Lehman Brothers:financial transactions are $1.27 for teller,
$.27 for ATM, $.01 online
12. Efficiency Gains from Intermediation
- Intermediairies can reduce __________ _____by
- Certifying product_______
- Mitigating ______________ costs
- Providing ___________for buyer and seller commitments
13. Efficiency Gains from Intermediation
- Intermediairies can be _______-_____ who create efficiencies
by
- Creating institutions of________
- Adjust and communicate_______
- Provide liquidity and immediacy
14. Efficiency Gains from Intermediation
- Intermediairies can be market-makers who create efficiencies by
(continued)
- Providing market __________
- Offering an _________of goods and services (e.g. credit, supply
chain management, appraisal, transportation, and storage, industry
news on website)
- Bilateral negotiation is replaced w/ ______ bidding
mechanisms
15. Efficiency Gains from Intermediation
- Online markets have been established for aircraft parts,
agriculture, apparel automotive parts, chemicals, computers and
electronics, energy, financial instruments, food and beverages,
health care, intellectual property, freelance services, laboratory
supplies, industrial machinery, advertising, metals, office
supplies, plastics, paper, printing services, telecommunications,
shipping, and travel services.Lucking-Reiley and Spulber, 2000
16. Terms for Intermediation
- _______ markets:a marketplace targeting a single industry
- _________ markets:target manyindustries e.g. maintenance,
repair and operations (MRO) sells materials like belts, pumps and
light fixtures
17. Types of Intermediaries
- E-commerce intermediaries can be classified into four main
categories:
- Can skip the intermediaries and go direct through proprietary
exchanges/networks or buy directly from the company (e.g.
Intel.com)
18. Types of Intermediaries
- Match buyers and sellers for a____
-
- Some resemble yellow pages directories, but with more
comprehensive _________
-
- Brokers generally make money from ______ ___ paid by
sellers
-
- Sellers can place product listings that resemble ______
ads
-
- Order fulfillment is typically up to the______
19. Types of Intermediaries
- In addition to matchmaking, set up a mechanism to
determine______
-
- Internet tech. _______ ______of running an auction relative to
using posted prices
-
- Auctions useful when there is _________ about market-clearing
prices
-
- Some hold auctions of ______ inventory (e.g. One Media Place
sells advertising space)
-
- Some hold _______ auctions where sellers compete for a buyers
contract
-
- Example:www.FreeMarkets.com(largest reverse auctionneer)
20. Types of Intermediaries
- Take _______ of goods provided by suppliers and ______them to
buyers
-
- Post ____ prices for buyers and ___ prices for sellers
-
- Early development has seen ____dealers as compared to brokers,
auctions or exchanges
-
- Dealers are largely extensions of ___ economy
distributorsExamples:Grainger.com, EnronOnline ( www.enron.com )
(the worlds largest e-commerce site for global commodities)
21. Types of Intermediaries
- Exchanges (also called marketplaces):
- ______sided markets (like commodity markets)
-
- Buyers and sellers observe the _____ of transactions as
they____ and expect to receive best available price
-
- Buyers settle their ___ position at end of day rather than
settling each transaction individually
-
- Examples: Altra Energy (oil and gas), CheMatch (
www.chematch.com )(chemicals), e-Steel (steel)
22. Types of Intermediaries
-
- Many exchanges are ______-sponsored
-
- Examples:1) Sears, Carrefour and several other major retailers
started GlobalNetExchange to organize purchases from over 50,000
vendors
-
- 2)Boeing, Lockheed Martin, BAE Systems and Raytheon formed an
exchange for aerospace parts and services with potential for $70B
with 37,000 suppliers
-
- 3)Covisint (auto industry exchange GM, Ford,
Daimler-Chrysler)
- Industry consortia have put many of the independents out of
business (also called ISMs _______ _________ __________)
23. Types of Intermediaries
-
- By mid-2000, it was estimated that 60 buyer-dominated
consortia, representing over 278 companies and $3 trillion in
annual purchasing planned to establish their own electronic markets
rather than relying on independent exchanges.(-Roberti 2000 )
-
-
- Competitors can more easily exchange _____ info and thus
______
-
-
- B2B sites could ________ participation by competitors
-
-
- In industry-sponsored exchanges so far, ownership tends to be
on the side of the market having greatest concentration of market
power
24. Types of Intermediaries
-
- Competitors arent used to working together __________
-
- Suppliers are _______to sign on (they dont want to be
squeezed)
-
- Transparency:posting ______ and contracts where competitors can
see them
-
- Companies like buying from tried and true_______
-
- Some companies dont have the ________to participate (e.g. hotel
supply exchange failed)
-
- Sensitizing managers to the notion of ________ ______
25. Private Networks
- _________exchanges between businesses
- More consistent with the way many businesses are already
run
26. Private Networks
- many old-line manufacturersview B2B sites as cost-effective
tools to improve and cement [existing] business relationships
rather than as a way to attract an entirely new set of buyersthey
have balked at aggressively participating in independent trading
sites that also feature the wares of rival suppliersInstead, [they]
are focusing on building up their own, company-specific sales
platforms and techniques, and then helping longstanding customers
adapt smoothly to them.--- Wall Street Journal, May 21, 2001
27. Types of Intermediaries
- Some firms fall into more than one of these categories
-
-
- PlasticNet runs auctions for some transactions and acts as a
broker by allowing its users to place classified ads for
products
-
-
- MetalSite runs single-sided auctions for some clients, but
operates a double-sided exchange as well.
- Industry consortia tend to run exchanges with multiple
functions and tools
28. Future of Intermediaries
- Many Observers predict substantial _______ and market _______as
markets become established
- Comprehensive up-to-date lists of B2B exchanges appear
atwww.line56.com
29. What do buyers want?
- B2B buyers want many of the same qualities that B2C buyers
desire
-
- Only 41% of B2B companies respond to email inquiries within 6
hours, only 65% in 24 hours (as in B2C, email responsiveness can be
used to judge trustworthiness of a site)
-
- FAQ pages and search capabilities at many sites are poor
-
- 45% of B2B buyers say they dont go online because they dont
trust suppliers
- ________ sites set expectations difficult to reach since B2B
transactions are often more_______
30. What do buyers want?
- Over 4/5 companies said they would be more interested in buying
online if comprehensive services were offered (e.g. collaborative
product design or supply/inventory applications)
- --Jupiter Media Metrix, May 2001
31. Value of Collaboration
- Replenishment, Demand _________
-
-
- Higher Quality/Fewer Mistakes
-
-
- Lower Inventories, less working capital
32. What do buyers want?
- The early focus was transactions, but win-win business
relationships are built from collaboration not just
transactions.--Tim Clark, Jupiter Media Metrix
- As e-markets develop, supplier _____ and ______ will complement
the present focus on price
33. What do buyers want?
- GEPolymerland.com lured enough customers online to make their
venture worthwhile:How?
- Customers were involved in planning the site
- Site is easy to navigate, fast, customer service is high
quality, website customization, access to technical
information
- Not forcing customers online
34. Direct Marketing and B2B
- Internet direct marketing can be used in combination with mail
and telephone
- Similar to direct mail, on web can combine ____ and_______
- ___________ direct marketing
35. Direct Marketing and B2B
- Generate ____on the Internet
- Use Internet to provide_______/______
- Execute instant _______ fulfillment
- Enhance customer___________
36. Direct Marketing and B2B
- Typical direct mail response is ___%
- Order generation below __%
- _______ ______seem to be declining
37. Direct Marketing and B2B
- The Internet can help in generating leads:
-
- Generate leads in first place
-
- Support use of __________ direct marketing media
-
- Support ______organization
38. Direct Marketing and B2B
- The Internet can help in generating leads:
-
- _______ (develop own list, rent for $250/300 per 1000
names)
-
- Emails give _______ ______/inside track on products
-
- Email can be used to ______ ___on inquiries or orders
(follow-up generates more sales)
-
- Email can also be used to follow up on _______ meetings
39. Direct Marketing and B2B
- The Internet can help in generating leads:
-
- Email ________(opt-in) contain info. useful to recipient, but
also marketing
-
- Email _________/web _________ groups
40. Direct Marketing and B2B
- 2.Using the Internet to Promote Products/Services
-
- Online _______(cheaper than offline)
-
- Can be ________ for partner/re-seller release
-
- Can use in conjunction with ______ ____
-
- Can be live, pre-recorded or interactive
41. Direct Marketing and B2B
- 3.Executing Instant Information Fulfillment on the Net
- Fullfillment responding to an information______
-
- Dramatically closes need for ______ __________
-
- Leads dont ____ while waiting for information
-
- Customers can try online______
-
- Fullfillment can be________/__________
42. Direct Marketing and B2B
- Internet forms help _______leads so sales effort is better
allocated
- Straight __________can be handled without using personnel
43. Direct Marketing and B2B
- 5.Enhancing Customer Relationships:
- Email ___________(as mentioned earlier)
- _____and _______on website are appreciated
- ________websites can be developed for specific businesses
- Occasionally, customer ___________ develop (e.g. Cisco)