1. B2B Exchange and the Internet
Differences between B2B and B2C
Internet Influences on B2B Exchange Processes
Types and function of B2B Hubs

2. B2B versus B2C Exchange Some things are similar
Bi-directional exchange of resources
Goal of effecting a transaction
Other things are different
Great limits on decision time
Increased asset-specificity
Pricey
Sizable
More repeat purchasing

3. Characterizing B2B Exchange
By type of customer
For production of goods/services
For sale of goods and services
By nature of product demand
Derived demand (as fxn of consumer need)
Narrower markets with more volume
By form of exchange processes
More formalized processes (procurement)

4. Online B2B: A Big Business

5. An International Marketspace

6. Internet B2B: Purposes, Processes, and Participants
Purposes for B2B Activity
Reselling (wholesalers and retailers as middlemen: $65.6B)
Building products (valued-added by OEM’s: $40.6B)
Conducting business practices (MRO’s: $25B)
Purposes define types of markets
Vertical – specific industry, narrow focus
Horizontal – same good/service across several industries

7. B2B Exchange Processes
Stages of the process: Information, negotiation, settlement
Relationship development affects processes
New relationship  new buy behaviors (info)
Familiar relationship modified rebuy (negotiation)
Established relationship  straight rebuy (settlement, based on existing agreement)
Internet effects on stage-related behaviors
As content source for information gathering
As communications resource for negotiation
As channel resource for aspects of trade settlement

8. B2B Exchange Participants
Direct v. indirect exchanges
Direct involve buyer/seller interaction
Indirect involve intermediaries (e.g., e-hubs)
The Internet affects direct exchanges
By enabling buyers to find sellers, and vice versa
By facilitating the initiation of contact (e.g., WRF’s)
The Internet also affects indirect exchanges
Creates buyer/seller links by aggregating them

9. Types of B2B Intermediaries
Consortia-led exchanges
Companies share ownership
covisint
Form of strategic alliance
Proprietary exchanges
Privately owned Wal-mart's Retail Link
Integrates buying/selling activities of the supply chain members
Third-party exchanges
Market-makers who are not owners alibaba

10. Characteristics of E-hubs
Operate within vertical or horizontal markets
Enable near real-time communication
Check inventory availability
React to price fluctuations
Decouple channel flows (product/info)
Provides logistics benefits
Increases geographic market scope

11. The Value of a B2B Hub Value is added in two ways
Aggregation: increasing the numbers of buyers for a seller, and vice versa
Characterized by pre-set prices and variety
E.g., a catalog approach
Matching: facilitating exchanges
Builds on aggregation to achieve liquidity
Price negotiation is the basis for exchange
E.g., auctions and bid-ask exchanges

12. A Typology of E-hubs
Hubs can be organized by what and how they buy (Sawhney and Kaplan, 1999)
What? = manufacturing, operating
How? = spot v. systematic sourcing
In general, systematic sourcing  aggregation
Spot sourcing  matching
By combining what and how, we get four types of hubs
Yield managers, MROs, exchanges, and catalogs
Hubs can be neutral or biased