The Next Wave...B2B E-Commerce
Traditional EDI Systems Face
Extinction or Integration

Many agree that even with the dot-com crash, business-to-business (B2B) e-marketplaces show the greatest potential to improve buying, selling and cooperation between companies. The B2B segment of Internet e-commerce has greater profit potential than that of business-to-consumer e-commerce (B2C) sites, which have to rely more heavily on marketing to turn a profit.

Business-to-business e-commerce has slowly evolved; in the early stages, companies opened web sites to allow customers to view information and in some cases, perform basic ordering tasks.

Step-by-step, B2B exchanges have begun to incorporate additional services and capabilities in order management, procurement, logistics, financial services, and collaboration.

Various market researchers estimate that the value of business-to-business e-commerce transactions will grow to between $2.7 and $5.2 trillion by 2004. Even with the economic crunch, more businesses are purchasing online, and, as the lines between EDI and B2B exchanges are eroding, the fastest growing area is e-marketplaces.

According to Forrester Research, 93 percent of businesses expect to do some business over the Internet in 2002. Twenty five percent of these businesses revealed that they expect most of their online business will be through e-marketplaces.

If you are not familiar with B2B e-commerce, in a nutshell it is businesses buying from and selling to each other online. But this is only the tip of the iceberg. Successful B2B enterprises have incorporated supply chain management to make doing business even easier. Companies have already benefitted from B2B e-commerce in a variety of ways; they have been able to manage inventory more efficiently, get products to the market faster, adjust more quickly to customer demand, and cut overhead costs.

B2B exchanges are websites where companies can buy and sell goods using a uniform technology platform. Many of these exchanges also offer related services such as shipping, payment and logistics, as well as industry news and content. The benefit of these exchanges are that all they require to get started is Internet access and a web browser, not expensive upgrades or new software that employees would have to be trained on.

Expectedly, the procurement process is the near-term focus of many businesses engaging in B2B e-commerce. But this is not the only department that can benefit from B2B e-commerce. You can put a leash on Inventory Management by utilizing online auctions to get rid of excess products. The sales and marketing departments can benefit by reducing costs, increasing revenue and customer satisfaction.

A major advantage is that companies are able to buy and sell goods and services regardless of the business’ size, location or pre-existing relationships. E-marketplaces also have the potential to connect into the supply-chain management process. For example, a manufacturer’s production facility could be notified to make more of a particular item the moment the sale is completed, and production could be halted on items that aren’t selling well. This gives companies the flexibility to get new products to the market faster and more efficiently.