Basically, B2B stands for business to business transactions. So, B2B are exchanges done between two marketplaces over the internet where suppliers and buyers come together to conduct transactions. B2B marketplaces can be defined as a World Wide Web site where goods and services can be bought from a wide range of suppliers.
According to the size and number of companies using the online transactions and the commodity in context, the online exchanges may vary. There are successful exchanges in markets as diverse as energy, textiles, and logistics. Online exchanges allow participants to trade straightforwardly with a wide variety of buyers and sellers. Two of the biggest factors driving the growth of exchanges are that large businesses can use them to reduce stock holdings while small businesses can bid collectively to earn volume discounts or to jointly deliver a large contract.
Types Of Marketplaces
Based around a specific industry sector; marketplaces based on products and services; marketplaces focused on the functions, there are three types of marketplaces.
Vertical Marketplaces - These are largely based around a specific industry. Buyers can sources goods and services by these marketplaces. An example can be the petroleum industry.
Horizontal Marketplace - The supply market which cuts across several industries is known as a horizontal marketplace. Examples include the marketplaces for maintenance, repair and operating (MRO) goods such as safety and office supplies. The value of the horizontal marketplaces is that they efficiently match the needs of the one with the offerings of the other.
The Third One - The marketplaces focusing on functions gain value from concentrating on functional capabilities and quality services. For example, they help HR departments manage employee benefits; help companies dispose of excess inventory and so on.
Generate lower prices for buyers
Cut the costs of buyers’ operations
Expand everyone’s market reach
Higher potential profits for manufacturers with lower procurement costs
Increase extent and liquidity in the market
Lower inventory requirements
Greater transparency and more orderly markets
Elimination of geographical and time zone barriers
Removal of distribution channel blockages such as agents and brokers
Trust is an important issue for B2B e-marketplaces. The most important trust issues for participation in B2B e-marketplaces are the following:
Transparency, in particular of the terms and conditions of the contract and the transaction procedure.
Catalog aggregators – must be neutral, independent sites that are operated by a third party if they are to bring many competing sellers together to earn buyers trust in the information on the site.
Post an browse (one–on–one negotiation) – just like a private members room, a post and browse function creates a virtual community, a group of people interested in buying or selling a particular product that make a connection through a web-based bulletin board.
Auction markets – the ability of multiple buyers and sellers to collectively set price for a wide range of people and services represents a radical departure from the older, fixed price model in an industrial age. Buyers and sellers driven auctions will become popular because of the scale, reach, interactive and real-time attributes afforded by the internet.
Continuous auto execution systems – work only for the same standardized products with high liquidity.
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