Business-to-Business (B2B)

Introduction
Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacture and a wholesaler, or between a wholesaler and a retailer. The terms B2B are short forms for Business-to-Business (B2B) it describes the nature and selling process of goods and services. B2B products and services are sold from one company to another and not to the end user. In a typical supply chain, there will be many B2B transactions involving sub components or raw materials. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. B2B is also used in the context of communication and collaboration. Many businesses are now using social media to connect with their consumers however they are now using similar tools within the business so employees can connect with one another. When communication is taking place amongst employees, this can be referred to as "B2B" communication. Most B2B products are purchased by companies to be used in their own manufacturing, producing goods and services to be sold on. The value added product can then be either sold to yet another company; or to the consumer.

Any consumer product would have gone through numerous value-add processes before it is being purchased by the final user. Numerous suppliers from various industries would have contributed to the finished product. For instance, a can of soft drink will require different companies to provide the can, water, sugar, other ingredients, label-printing, packaging, transportation and paint for the printing. The can itself is made from aluminium that needs to be processed and extracted.

RISKS IN B2B
Buying one can of soft drink involves little money, and thus little risk. If the decision for a particular brand was not right, there are very little implications. The worst that could happen is that the consumer does not like the taste and discards the drink immediately. Buying B2B products is much riskier. Usually, the investment sums are much higher. Purchasing the wrong product or service, the wrong quality or agreeing to unfavourable payment terms may put an entire business at risk. Additionally, the purchasing office / manager may have to justify a purchasing decision. If the decision proves to be harmful to the organization, disciplinary measures may be taken or the person may even face termination of employment. In international trade, delivery risks, exchange rate risks and political risks exist and may affect the business relationship between buyer and seller.

BUYING BEHAVIOUR IN A B2B ENVIRONMENT Some characteristics of organizational buying / selling behaviour in detail: For consumer brands the buyer is an individual. In B2B there are usually committees of people in an organization and each of the members may have different attitudes towards any brand. In addition, each party involved may have different reasons for buying or not buying a particular brand.

Since there are more people involved in the decision making process and technical details may have to be discussed in length, the decision-making process for B2B products is usually much longer than in B2C. Companies seek long term relationships as any experiment with a different brand will have impacts on the entire business. Brand loyalty is therefore much higher than in consumer goods markets. While consumer goods usually cost little in comparison to B2B goods, the selling process involves high costs. Not only is it required to meet the buyer numerous times, but the buyer may ask for prototypes, samples and mock ups. Such detailed assessment serves the purpose of eliminating the risk of buying the wrong product or service.

BUSINESS TO BUSINESS E-COMMERCE

Online business to business eCommerce is eCommerce that targets other businesses. B2B eCommerce is different than business to consumer eCommerce because with B2B the transactions are made generally between large suppliers and other companies.

The companies who purchase from the large suppliers would then sell these products to their customers. B2B eCommerce is much more complicated and can involve negotiating contracts, setting customer specific price levels and other company specific criteria. For example, a bookstore may procure books from several distributors and office supplies from one or more other suppliers. In the ecommerce business model, a procurement staff shops online for supplies and other items necessary to the business. Just as it does for the consumer in the business-to-consumer business model, the Internet allows businesses to comparison shop online in order to find the most appropriate product at the best price. This reduces many of the front-end costs for finding goods and products that are incurred in the traditional model.

KEY Entities OF B2B eCommerce

Selling company: Marketing management Buying company: Procurement management Electronic intermediary: An optional Third party service provider Network Platform: Internet, Intranet

BIBLIOGRAPHY

www.ebscohost.com http://en.wikipedia.org/wiki/Main_Page