These days, number of eCommerce agencies and platforms are concentrating on the popular B2C market, and we inclined to forget the potentiality of B2B market. In this blog, we will give detail analysis of the characteristics of the B2B market and how Magento along with eBay enterprise solutions as a platform can offer a solution to this market.
Potentiality & Power of B2B Solution
One of the leading and largest car manufacturers of Europe ‘Volkswagen’ is well-known for producing 6 million vehicles, manages a lot of brands like Bugatti, Audi, Seat in Spain, Bentley, Skoda in Czech Republic and Lamborghini.
The company has more than 322000 employees and operates its plants in Africa, Europe, Americas, Asia/pacific rim. There are lots of companies in Volkswagen Group that annually purchase components, indirect materials and automotive parts worth 62 billion Euros. Apparently, the procurance process and relationship with supplier is curious for Volkswagen’s success.
Today, the company is managing almost all its procurement requirements through its private B2B platform. When it comes to talking about its B2B platform, it delivers more than 30 different online applications like contract negotiations, quotations, catalog purchases, engineering change management, purchases order management, vehicle program management and payments among others.
The company’s online catalog has 2.2+ million items from 550 worldwide suppliers. When it comes to talking about 2007, there were about 13500 internal users of online catalog, who had conducted 1.1+ million transaction with a value of 300 million euros. 3,310 contract negotiations involving 4100 companies that were conducted online with a value of 17.1 billion euros during 2006.
By this case study, you can comprehend the power and potentiality of B2B eCommerce and its capabilities to revolutionize the industry.
B2Bi (Business-to-Business Integrators) are such companies that helping out all those businesses, who have a brick-and-mortar store, to develop an online presence with B2B eCommerce capabilities and to integrate their conventional EDI systems with the web.
Magento is one of the most powerful eCommerce platforms with its technology/domain expertise and customer reference base. As a perfect player in this segment, B2B businesses are making use of Magento/eBay Enterprise and integrating the same with ERP systems such as Oracle and SAP.
You can find a lot of B2B extensions in the Magento Extensions marketplace; however, it is important to have a basic understanding of B2B to work with these companies to integrate 3rd party tools or even to install and use the Magento B2B extensions.
Acquaintance with B2B concepts and jargon will allow us to map its landscape. Below, you can find some of the underlying concepts of B2B:
As we all know that B2B is represented as a type of relationship with the company on the side of supplier and another business company on the customer side. However, this company can be also described by institution, sole trader and company.
With a lot of transactions, B2B market is quite difficult and the complexity of it leans on a lot of people responsible for the transaction and steps in these transactions.
From legacy EDI systems, various B2B models are moving away due to being expensive and inapt to handle affordable online platforms where buyers and sellers can meet from any part of the world.
Models of B2B eCommerce
It is expected that B2B market will be $6.7 trillion in gross merchandise value by 2020 that is two times larger than B2C. It is also important to understand the shades of the market in order to know what workflows, functionalities, features, approval cycles, payment methods, third-party integrations and logistic/shipping methods are expected in an application such as Magento/ebay enterprise to win the market.
Merely, there are three important B2B models that are depended on who controls the marketplace – the purchase, the supplier or the intermediary.
- In a supplier-oriented marketplace, there are many buyers are facing very few numbers of suppliers.
- In a Buyer-Orientated marketplace, very fewer numbers of buyers are facing many suppliers.
- While in an Intermediary-Oriented market, various buyers are facing many suppliers.
Business Purchasing & Sourcing
What of B2B Purchase
Manufacturing Inputs – (Direct Goods)
- When it comes to talking about the manufacturing inputs, the purchased raw material goes directly to the product or the process.
- Here, companies will require particular logistics/shipping – chemical companies will require goods that fall under risky materials, and these will require specialized logistics.
Operating Inputs – (Indirect Goods)
- The purchased raw material is not considered as the part of the finished product in operating inputs. However, the purchased materials are generic in nature such as office stationery.
- Here, companies do not want specialized shipping/logistics.
B2B Purchase’s How
- Systematic Sourcing involves (Strategic Sourcing)
- Qualified Suppliers
- Long term
- Negotiated Contracts
- Ambient relationships with buyers and sellers
- Low Cost
- Immediate Need
- Purchasers and Sellers may not see each other
B2B purchase’s What and How can be fitted into a Johari that you can find below:
- MRO Hubs are horizontal markets, which allow systematic sourcing of operating inputs.
- Exchanges are vertical markets, which allow spot sourcing of manufacturing inputs.
- Catalog Hubs are vertical markets, which make systematic sourcing of manufacturing inputs.
So, this is the whole concept of B2B industry that provided a complete view of the industry. However, if you still want to get support related to Magento enterprise or any other query, you can get in touch with our professional Magento developer.
Online B2B Market: Applying lessons from B2C to B2B – Frost & Sullivan Analyst Briefing series.
Forrester Research / Internet Retailer Q2 2014 Global B2B Sell-Side Survey
E-Commerce – Business.Technology.Society – 4th Edition – Kenneth C Laudon and Carol Guercio Traver – Pearson Publications
Electronic Commerce 2010 – A Managerial Perspective – 6th Edition – Efraim Turban, David King, Jae Lee, Ting-Peng Liang, Deborrah Turban – Pearson Publication