University:
California State University, Los Angeles
Course:
CIS 1200 | Information and Technology Literacy
Academic year:

2024
Views:

191

Pages:

2
Author:

Jithin J. I.

BUSINESS TO BUSINESS (B2B) E-COMMERCE MODEL Business to business, known as B2B model, is the largest e-commerce model that is based on revenue which involves trillions of dollars. In this both the buyers and sellers are business entities. B2B describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer. The volume of B2B transactions is much higher than the volume of B2C transactions and any other transaction.The primary reason for this is that in a typical supply chain there will be many B2B transactions involving sub components or raw materials, and only one B2C transaction, specifically sale of the finished product to the end customer. B2B Example A cyber security firm is offering its online security software that mitigates credit card fraud to an e commerce company. Advantages • Market Predictability Compared to the other business strategies, the B2B E-Commerce business model has more market stability. B2B sectors grow gradually and can adapt to various complex market conditions. This helps to strengthen the online presence and business opportunities and get more potential clients and resellers. • Better Sales An improved supply chain management process along with a collaborative approach increase customer loyalty in the B2B E-Commerce business model. This, in turn, leads to improved sales. It helps businesses to showcase product recommendations and unlock effective upselling and cross-selling opportunities. • Lower Costs Due to an effective supply chain management process, this online business model leads to lower costs for the businesses. In most cases, the work is done through automation that eradicates chances of errors and undue expenditure. • Data Centric Process One of the main advantages of the model is that it relies on effective and factual data to streamline the whole process. In this way, errors can be avoided and proper forecasts can be made. With an integrated data-driven approach, you can calculate detailed sales statistics. Disadvantages • Limited Market Compared to the B2C model, this type of business has a limited market base as it deals with transactions between businesses. This makes it a bit of a risky venture for small and medium E- Commerce businesses. • Lengthy Decision Here, the majority of the purchase decisions involve a lengthy process as there are two businesses involved. The process may involve dependence on multiple stakeholders and decision makers. • Inverted Structure Compared to the other models, consumers have more decision-making power than sellers in the B2B business model. They may demand customizations, impose specifications and try to lower price rates. • There is a smaller pool of customers when compared to other models. • Where firms ask for huge discounts because of their bulk purchase, it could eat into the profit of the seller.