A beginners guide to B2B e-commerce
Business-to-business (B2B) e-commerce takes place when businesses are able to conduct their transactions, ordering and referencing electronically. B2B exchanges or marketplaces can take two forms: the vertical supply chain in which the market is confined to a specific range of products or services relating to the businesses involved; and the horizontal supply chain, in which the supply chain covers a range of diverse services or products.
Both forms can offer your business significant advantages and benefits, such as the synthesis, streamlining and simplification of your business process. This relates not only to the time-savings that come with electronic communication, but also to the cost benefits involved. If your business has its inventory, ordering and purchasing processes online, you allow for an electronic interface between your suppliers and buyers. This can drastically reduce transaction time, cut down paperwork and significantly slash the cost of conducting transactions. In theory, placing your inventory online gives your buyers a far greater level of accuracy and reduces the opportunity for human error or confusion in the ordering process. B2B allows your business to feature stock quantities, inventory details, and processes in a readily accessible manner. An inventory will have each item stored in the database, allowing you to give buyers absolute access to and knowledge of the product they wish to buy. “It is essentially a means of simplifying the business process, a process of electronic communication between businesses, locating the most obvious means of communicating,” says John Krivitsky of Pixeltech Design, a company that consults with and supplies B2B solutions to businesses. Krivitsky goes on to add, “This is not to say that B2B is for everyone. Businesses really need to think about whether it is in their best interests to adopt B2B.” “Much of the day-to-day communication between businesses is actually best not conducted in this way. The information needs to be dynamic. If it helps to get the information out there more quickly then it is an advantage, but if the information is static then it is best conveyed in a traditional medium,” he says. This mirrors the sentiments of Gustav Louch, of Qasar Computer Consulting, who points out that the significant hype surrounding B2B needs to be gauged in terms of a realistic outlook on what the current technologies are actually able to deliver. Having experienced B2B processes first hand through his business, Louch argues that many businesses are ill-equipped to integrate into B2B in real terms and that testing the waters may actually hurt the business. “Businesses seem to think that putting a computer in place will free up three staff, but in truth that system needs to be tended to and maintained. In my experience, the businesses you deal with simply haven’t got the infrastructure – “this isn’t available,” “that price is wrong,” “we’ll just send someone down to check if it’s in stock,” – the loop is not a closed one and so the process falls to pieces,” says Louch. Louch goes on to add, “Many businesses want to get online, but they just can’t and I have seen lots of examples of this. There is often just not enough computerisation. Businesses need to really concentrate on their infrastructure.” Louch’s remarks underscore the extent to which you need to take care when embarking upon B2B. The first step you need to take in implementing B2B is research. It is crucial that you obtain an understanding of what you wish to get out of the process and what you want to give your partners or clients. Looking at how other businesses have approached B2B e-commerce can be highly instructive. It is equally important to understand the costs involved in setting up the process. As Krivitsky points out, “There are a variety of different processes but some are more useful whilst others are too high grade.” There is always the choice between off-the-shelf as opposed to custom-made products. Off-the-shelf may well be cheaper, but that depends upon the industry in which your business is positioned. Sometimes an off-the-shelf product has been produced to cater to a specific niche market, making it more expensive than a tailor-made package. “The benefits and how will it affect what you are trying to do are what’s important, as opposed to the bells and whistles features. Bear in mind that the purpose is to automate or simplify a process of your business. If it does not do this then it is a waste of money,” says Krivitsky. “It must always be looked at from a commercial point of view.” In the implementation stage, the developer has to appreciate your business’ viewpoint. The focus should always be on the desired business process, rather than the available technology. Implementing technology for its own sake is a common error, and a costly one. As Krivitsky puts it, “We always tell our clients to look at the usefulness involved in changing the operating procedure.” Make sure you look at all the options from a commercial viewpoint – there is no use in implementing a system if it costs more than it will earn your business over the long-term.
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