Describe different types of B2B business model.

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 B2B – Business to business.

  • In a B2B business model, a business sells its product or service to another business. Sometimes the buyer is the end-user, but often the buyer resells to the consumer.
  • B2B transactions generally have a longer sales cycle, but higher-order value and more recurring purchases.
  • Recent B2B innovators have made a place for themselves by replacing catalogs and order sheets with e-commerce storefronts and improved targeting in niche markets. 
  • In 2020, close to half of B2B buyers are millennials — nearly double the amount from 2012. As younger generations enter the age of making business transactions, B2B selling in the online space is becoming more important.


                                                                 OR,


  • The B2B e-commerce business model is the buying, selling, and exchanging of products between companies via online sales channels. It centers on supplying goods and services from one enterprise to another. Since the parties are both business entities, B2B e-commerce transactions are more logical, need-based, and thoroughly considered than impulsive. They typically entail longer-term interests.
  • With the B2B business model, product prices are more flexible, order volumes are larger, and delivery is more complex. Often included in this niche is a software as a service (SaaS) companies, document-hosting businesses, office supply, and furniture enterprises, etc.
  • Examples of B2B companies are General Electric (GE), Salesforce, Chevron Corporation, Assurant, Dupont, and Boeing.

 Advantages of the B2B model

  •  It can efficiently maintain the movement of the supply chain and the manufacturing and procuring processes.
  •  It can automate corporate processes to deliver the right products and services quickly and cost-effectively. 
  • The B2B model is predicted to become the largest value sector of the industry within a few years.
  • This is said to be the fastest-growing sector of e-commerce.





E-distributor 
  • A company that supplies products and services directly to individual businesses 
  • Owned by one company seeking to serve many customers
  • Examples: • Grainger.com • GE Electric Aircraft Engines (geae.com)

E-procurement Companies 
  • Create and sell access to digital electronic markets
  • B2B service provider is one type – offer purchasing firms sophisticated set of sourcing and supply chain management tools 
  • Application service providers are a subset of B2B service providers
  • Examples: • Ariba • CommerceOne

Exchanges (B2B Hubs) 
  • An electronic digital marketplace where suppliers and commercial purchasers can conduct transactions 
  • Usually owned by independent firms whose business is making a market 
  • Generate revenue by charging transaction fees
  •  Usually serve a single vertical industry
  •  The number of exchanges has fallen to around 700 in 2003

Industry Consortia 
  • Industry-owned vertical marketplaces that serve specific industries
  •  Horizontal marketplaces, in contrast, sell specific products and services to a wide range of industries 
  • Leading example: Covisint

Private Industrial Networks 
  • Digital networks (usually, but not always Internet-based) are designed to coordinate the flow of communications among firms engaged in business together 
  • Single firm network: the most common form (example – Walmart) 
  • Industry-wide networks: often evolve out of industry associations (example – WWRE)

                                        OR,


MAJOR BUSINESS-TO-BUSINESS (B2B) BUSINESS MODELS



 E-Distributor
  •  Companies that supply products and services directly to individual businesses. E-distributors are owned by one company seeking to serve many customers. 
  • The more products and services a company makes available on its site, the more attractive that site is to potential customers. 
  • W.W. Grainger, for example, is the largest distributor of maintenance, repair, and operations (MRO) supplies. 
  • Business model: sale of goods Grainger.com, Partstore.com

 E-Procurement 
  • Just as e-distributors provide products to other companies, e-procurement firms create and sell access to digital electronic markets. 
  • Procurement is the act of buying goods, services, or works from an external source.  
  • E-procurement is the business-to-business purchase and sale of services through the Internet as well as other information and networking systems, such as electronic data interchange. 
  • Firms such as Ariba (ariba.com) have created software (eg: Procurement Software Solutions) that helps large firms organize their procumbent process by creating mini- digital markets for a single firm. It creates custom-integrated online catalogs (where suppliers firms can list their offerings) for purchasing firms. 
  • Revenue is for market-making services, supply chain management 


 Exchanges 
  • An independent digital electronic marketplace where hundreds of suppliers meet a smaller number of very large commercial purchasers. 
  • They serve single vertical industries such as steel, polymers, etc. 
  • For buyers, B2B exchanges make it possible to gather information, check out suppliers, collect prices, and keep up to date on the latest happenings all in one place. 
  • Sellers benefit from expanded access to buyers.
  • Revenue model: Transaction fees
  •  Business model: fees and commissions on transactions. 

Industry Consortia 
  • Industry-owned vertical marketplaces that serve specific industries such as automobile, aerospace, chemical, etc. 
  • Supply a smaller number of companies with products and services relevant to the industry
  • Sponsored by powerful industry players
  • Business model: Fees and commissions on transactions Elemica.com, Exostar.com 


 Private Industrial Network
  • It is also referred to as a Private Trading Exchange is a digital network designed to coordinate the flow of communications among firms engaged in business together. 
  • The network is owned by a single large purchasing firm. Participation is by invitation only to trusted long-term suppliers of direct inputs. 
  • Eg: Walmart operates one of the largest industrial networks in the world for its suppliers, who daily use Walmart’s network to monitor the sales of their goods, the status of shipments, and the actual inventory level of their goods. 
  • Business Model: cost is absorbed by the network owner and recovered through production and distribution efficiencies.


Business to business (business model) e-commerce
 Business-to-business (B 2 B) e-commerce, in which businesses sell to other businesses, is more than ten times the size of B 2 C e-commerce, even though most of the public attention has focused on B 2 C.

E-DISTRIBUTOR
  •  Companies that supply products and services directly to individual businesses are e-distributors. 
  •  E-distributors are owned by one company seeking to serve many customers 
  •  With e-distributors, the more products and services a company makes available on its site, the more attractive that site is to potential customers. 


E-PROCUREMENT
  •  Just as e-distributors provide products to other companies, e-procurement firms create and sell access to digital electronic markets.
  •  B2B service providers make money through transaction fees, fees based on the number of workstations using the service, or annual licensing fees. 
  • They offer purchasing firms a sophisticated set of sourcing and supply chain management tools that permit firms to reduce supply chain costs. 


EXCHANGES
  •  an independent digital electronic marketplace where suppliers and commercial purchasers can conduct transactions 
  • Exchanges are owned by independent, usually entrepreneurial startup firms whose business is making a market, and they generate revenue by charging a commission or fee based on the size of the transactions conducted among trading parties. 

INDUSTRY CONSORTIA 
  • Industry consortia are industry-owned vertical marketplaces that serve specific industries, such as the automobile, aerospace, chemical, floral, or logging industries. 
  • In contrast, horizontal marketplaces sell specific products and services to a wide range of companies. 
  • Vertical marketplaces supply a smaller number of companies with products and services of specific interest to their industry. 

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