BU480 eBusiness Strategy – Business-To- Business (B2B) Exchanges

E -business or ecommerce is selling services and through an online store, or the transmitting of funds or information over an electronic network. Many small businesses have considerably benefited from e-commerce (Karat, 2004). Every online store is fit and equipped with efficient and competent shopping cart software, which allows possible display, and the exhibit of products in manage inventory, shipping, and catalog fashion. E-commerce websites have one principal objective; to generate business while advancing the brand. E-business describes the short and the long terms goals, which engage cautious and skilled planning. E-commerce strategies are indispensable and important to all of the organization that conducts business over the internet; It is part of the business plan and corporate strategy, and also interrelates with other plans; IT strategic plans, organizational plans, and marketing. These are several types of e-commerce strategies; planning, website content, website technology, market planning, and budgeting.

The three business-to-business (B2B) exchanges

Business-to- business exchanges defined as electronic marketplaces on the internet where sellers and buyers and sellers interact and network to carry out dealings, and transactions. It is known as the World Wide Website where services and goods bought from multiple of suppliers and dealers. Business-to-business exchanges vary and differ, according to the size, number of companies, and the type of product, and service traded (Karat, 2004). Online exchanges allow, and permits sellers, and buyers to conduct transactions directly, and candidly. The two main factors influencing the growth of these exchanges are; small businesses tender collectively to earn quantity discounts, and jointly deliver the large tenders, large businesses use the B2B exchanges to reduce stock assets.

Types of B2B exchanges

There are three types of e-marketplaces: markets founded around services, and products, marketplaces based around specific industries, and markets founded around particular industry sectors.

Vertical marketplaces

The vertical market exchanges are founded around specific industries. They are a group of companies that serve each other particular need and do not serve a wider market (Sculley, & Woods, 2001). It is focused, and aimed at meeting the needs, and requirements of one specific industry, examples of vertical markets are, finance, automobile, healthcare, legal, and education. These verticals frequently break down into advanced subcategories. Value-added resellers and other service providers choose to specialize in one vertical market, these permits and allow them to target prospective new clients, and enlarge account infiltration, and penetration with a diverse set of products and services. These lead to increased revenues, and thriving business opportunities.

Read also BU480 eBusiness Strategy – Internet’s Effects On Planning

The internet has been a great resource in the vertical market, since value- added resellers can recognize and understand vertical market segments. These allow them to target a particular customer, based on the know-how and practice. Functioning in a vertical market through internet allow, and permit customers to know, and understand specific industry; its terminology, trend, competitive tendencies, and compliance challenges (Sculley, & Woods, 2001). Also, vertical market ensures consumers to know and understand the industry, and its products, thus allowing consumers to become a vital part of the transactions. Through the internet, industries operating in the vertical markets generate, and accumulate revenues by consultation services, for instance, doctors can create specific, and unique applications to set appointments, and administer their patient records. One unique feature of the vertical market is specialization; where products and services are tailored, and customized to meet the distinctive needs of a specific market. Also, industries that are involved in the vertical market display their products, and services, and inform their clients about their products and services.

Horizontal marketplaces

These are a marketplace that formed a wider and broader market supply that involves several industries and creates an opportunity for industries to purchase their goods and services. Industries engage in systematic sourcing; it involves negotiated contracts with qualified suppliers, since it is a long- term contract, sellers, and buyers establish close relationships. Also, horizontal markets provide within spot sourcing; buyers buys goods and services on the spot, and at the lowest cost (Lucking-Reiley, & Spulber, 2001).  Horizontal markets characterized by low-value goods and services that have comparatively high operation costs. Thus, industries participating in horizontal markets provide resourceful and competent procurement process. Also, these horizontal markets provide buyers with contacts of merged catalogs from a wide range of suppliers.

Horizontal markets consist of yield managers, who create in spot markets for widespread operating resources like labor, advertising, and manufacturing capacity (Lucking-Reiley, & Spulber, 2001). These add value to commodities with the high price and demand volatility like electricity, and utility markets. Also, the value is added to fixed-cost assets that cannot be acquired and obtained quickly such as, manufacturing capacity, and manpower. Horizontal markets allow yield managers to balance demand and supply by rapidly, and quickly exchanging merchandise needed for productions. This exchange maintains close relationships between sellers, and buyers are hence permitting them to do the transactions without negotiating contracts. Also, horizontal markets provide buyers with catalogs of different industries and companies. These join suppliers and give them a platform to sell their commodities via the internet. It also reduces and minimizes transaction costs.

Reverse Aggregators markets or free markets

This forms groups of buyers within vertical and horizontal markets. They reduce two major ineffectiveness and incompetence y bringing together the buying power of many buyers, particularly small, and midsize buyers. The buyers negotiate for better prices, and also reduction of procurement costs. These markets use systematic, and in spot sourcing, although interactions and exchanges were done on in spot transactions (Mudambi, 2002).  The reverse aggregator market brings buyers for in spot buying and also negotiates long- term tenders, hence cultivating close relationships. This market also brings a balance between large business, and small businesses, in those large businesses will enjoy vital discounts, and the small businesses will obtain the purchasing power to negotiate with large buyers. Also, catalogs of different industries and companies are also provided to sellers and buyers in this market.

In conclusion, e-commerce that is the selling of products and services has benefited both large and small businesses, since the online stores are well fitted and equipped with sort wares, and shopping carts to ensure successful transactions of products and services. E-commerce has also led to the emergence of business-business exchanges, where buyers and sellers interact and network to carry out dealings, and transactions (Mudambi, 2002). It is also known as the World Wide Website where services and goods bought from multiple of suppliers and dealers. There are three types of e-marketplaces: markets founded around service and products; free markets, marketplaces based around specific industries; horizontal markets, and markets founded around particular industry sectors; vertical markets. E-commerce is a vital concept in business, since it has created wider markets, costs have been lowered, geographical limitations have overcome, and elimination of travel and time cost.


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