The commerce that takes place on the Internet (or any computer network) is called electronic commerce, e-commerce or e-business. Electronic commerce takes the form of business-to-business, customer-to-customer, or business-to-customer commerce.
Business-to-Customer (B2C) Commerce takes the form of online retailing (like Amazon) or stockbroking (like E-Commerce). Customer-to-Business (C2B) transactions move in the opposite direction of the normal flow of commerce, with customers telling the business what they want and businesses accepting or rejecting customer requests. Priceline pioneered this type of business by giving customers the opportunity to quote about airline seat prices. Customer-to-Customer transactions include consumer auctions (like e-Bay) or consumer clearinghouses (like Napster).
The Internet is an important tool through which things work. Basically, it depends on how businesses and customers interact. The traditional value chain consists of wholesalers selling the product to retailers and manufacturers selling products to distributors. Manufacturers contact the customer directly, eliminating middlemen and “brokers” who increase the price of the product without adding value. Companies like Dell Computers have for some time sold directly to customers. The Internet has made this process much easier and has allowed other manufacturers to do the same. However, many companies are unable to handle many one-on-one sales transactions, and most consumers do not want to search hundreds of web pages to purchase everyday goods.
Some businesses use the internet to do business directly with their customers (B2C); others use it to do business with suppliers or distributors (B2B). E-Business is said to have an integrated value chain across all companies integrating both types into their transaction structure and corporate strategy. The Internet creates the make-to-order environment where customer demand initiates product production. In this respect, we now know that there are two streams in the value chain: the input stream (customer order) and the output stream (customer satisfaction).
While Business-to-Customer E-Commerce is still seeking its place in the business world, Business-to-Business E-commerce has become a true success of the internet. The total dollar value of business commerce in electronic commerce corresponds to 90%, and this number is estimated to exceed $7 trillion by 2004.
Businesses; communicate designs, contracts and agreements; scheduling work and deliveries; buy or sell goods from suppliers; transfer funds; They use the internet to share information and do business. B2B E-Commerce takes place in the following ways:
E-business models depend on who controls the market, the number of users and the type of transaction. Electronic display and online auctions are supplier-oriented, as the buyer goes to the supplier in search of a product or service. Similarly, electronic pricing and online clearing are buyer-oriented as markets create buyer transactions.
E-Catalogues or electronic showcases are similar to B2C E-Commerce, where vendors (also known as suppliers or resellers) often offer catalogs of electronic products and invite businesses to purchase these products online. Most of the time; these systems are designed to automate the indirect purchase of materials or standard goods such as supplies. In addition to saving time; It also automates things like company rules that limit spending, determining who gets what, and authorizing certain types of purchases. Company accounts are invoiced electronically and in most cases payment is made before the goods are shipped, sometimes even before the goods are produced. Companies such as Dell, Cisco, Intel, and IBM sell their products using their websites as an electronic showcase. This works very well for companies with a prominent reputation and established customers, but smaller or less well-known companies may have trouble attracting customers to their websites. The showcase is also not a good model for large-volume recurring purchases with significant discounts and special needs. Another model is to combine the purchase information stored on the supplier’s server with the buyer’s information system, especially when buyers may need to visit competitor sites before making a decision.
Searching different sites to compare suppliers and their products is expensive and time consuming. Industry exchanges, or e-marketplaces, offer buyers a single point of contact in segmented markets so that the supplier can select the products in hand. E.g; a buyer has access to any amount of private industry exchanges and markets. These exchanges can be viewed and matched between buyers and sellers through e-catalogues and electronic display cases. In some cases, companies may combine purchasing power with other units or companies to obtain wholesale discounts.
The VerticalNet market itself is also a portal to the e-Market. The e-Market is often used to describe an exchange that carries out more complex transactions between buyers and sellers, such as an auction or a quote. These virtual markets also confirm supplier engagements, search for new suppliers, create a forum for information sharing, collect statistics and other data, and connect with relevant markets.
In fact, vendor Auctions emerged in the mid-1990s as a way to eliminate excess computer inventories. Today, online auctions are used in industries of both large and small companies. Either a company or a third party main website sends the goods for sale like a broker and allows buyers to submit offers to them. Some sites are open to the public, while others are only open to members or approved customers. Tenders are made over the internet, so that a large number of bidders from different regions are brought together and the tender is carried out automatically. The website enables the auction to reach millions of potential customers, gives sellers a reliable channel to save them from excess merchandise, and enables buyers to spot offers they might not otherwise be aware of. OneMedia.com, which appears in banner ads as the remaining advertising space from the tender, is an example.
When the site went to print, it started holding large monthly auctions that lasted for hours. To assist the bidding process, an electronic agent called ProxyMan automatically took bids from buyers until they reached the preset limit. Today, the site still operates as an exchange selling ad space on a first-come, first-served basis across all types of media.
In buyer tenders, also known as auctions, large companies or organizations call suppliers for bids to meet their product and service needs. As suppliers increase bids against each other, costs decrease and buyers save money. An electronic offer may be submitted on the buyer’s offer page or through a third party. Initially, the main advantage of these bidding sites was cost savings, but nowadays these sites have evolved into more specialized platforms where critical topics such as product design are discussed between trading partners. Because the information is sensitive, many companies prefer to use their own B2B sites for the bidding process. The whole process is carried out electronically. Usually, a company develops a quotation (RFQ) and the capacity to supply the part needed along with the technical drawing and other documents is sent to the company. The quotation (RFQ) is also posted on a secure website accessible only to authorized suppliers. At a certain time and date, suppliers log into the site and submit their offers. The parties collaborate in real time, clarifying the work that needs to be done and negotiating proposals. Sometimes supplier selection can also be automated, depending on predetermined criteria – price is just one of these criteria. Once the supplier is selected, the quota is automatically converted to an actual order.
Barter and e-marketplaces provide customized information for specific industries and provide a platform for buyers and sellers to do business. These intermediaries have the potential to reorganize entire industries while adding value.
With the increase in competition, there is a rapid decrease in the number of barter and e-markets, as well as the shrinkage of the customer internet companies. Exchanges that provide open source products like FreeMarkets.com can make big bucks. Consortium e-marketplaces (such as Cordiem in the Space Industry, Covisint in the automobile industry) exist to increase efficiency and integrate cutting-edge technologies through supply chains and other processes. The success of many of these initiatives depends on the willingness of suppliers to participate. Many suppliers complain of large barter and e-markets that only encourage price-based competition. To maintain a supplier base and improve relationships with suppliers, more and more companies are choosing to organize their own private exchanges among their trading partners, similar to the internal communication networks large companies started years ago.