B2b E- Comerce

Business-to-business e-commerce (B2B) is a form of transaction that takes place in between businesses, for instance those involving a manufacturer and a wholesaler, or a wholesaler and a retailer. Business-to business refers to transactions that is conducted between companies electronically over the Internet, extranets, intranets, or private networks (Turban, 2012, p.147). B2B is the fastest growing division of e- commerce. Business-to-business transactions accounts for 77 to 95 percent of all electronic transactions. (Turban, 2012, p.189)

Three major business-to-business models are determined by who controls the marketplace: seller, buyer, or intermediary (third party). As a result, three marketplace were formed: Seller controlled marketplace (one seller to many buyers), buyer controlled marketplace (one buyer from many sellers), and third party exchange marketplace (many sellers to many buyers). Each model has a specific characteristics and is appropriate for a specific business (Bidgoli, 2002, p.63)

Seller controlled marketplace model has a one-to-many interaction form and is initiated by a single supplier supporting many buyers. The model is also known as supply side or sell-centric model. In this model there is a single supplier, who initiates the market, and multiple buyers. In seller controlled marketplace seller determines the price of goods based on supply level. It is a seller biased marketplace and they have most of the control of the marketplace (Turban, 2012, p.147). There are three major marketing methods: one of them is selling from electronic catalogs, second is selling via forward auction, and third is one-to-one selling (Turban, 2012, p.155).

Buyer controlled marketplace is used by large companies with substantial buying power or a group of several large companies. In this model a buyer or a group of buyers invite sellers to browse and offer to fulfill orders. It is a buyer oriented marketplace, and they have more control over the marketplace. Major procurement methods used in buyer controlled market are reserve auctions (bidding system), buying from storefront and catalog; negotiations, buying from an intermediary, internal marketplace and group of purchasing (Turban, 2012, p.189).

Third-party exchanges marketplace are electronic intermediaries. They not only present catalogs but offers suppliers a direct channel of communication to buyers through online storefronts. Third-party exchange marketplace are characterized by two contradicting properties. On one hand they maintains a neutral relationship with both buyers and seller. In contrast, because they do not have a built-in constituency of seller or buyer, they sometimes have a problem attracting enough buyers and for sellers to attain financial viability (Turban, 2012, p.174).

Some of the key differences between seller controlled marketplace, buyer controlled marketplace, and third-party exchange marketplace model. Seller controlled marketplace model is a seller oriented marketplace, buyer controlled marketplace is buyer oriented marketplace, whereas third-party exchange marketplace favors neither seller or buyer controlled marketplace it is neutral marketplace.

Business-to-business transactions are of two basic types: first type of transaction is spot buying which refers to the purchasing of goods and services as they are needed, usually at prevailing market price. Strategic sourcing is the second type of B2B transaction it involves purchases based on long-term contracts that usually are based on private negotiation between sellers and buyers (Turban, 2012, p.149).