B2B and eCommerce
What would be the best way to define those two terms to make it easier to differentiate between them?
That's a pretty good question!
In this fast changing environment, new terms are generated quite rapidly to describe circumstances which are under permanent transformation by themselves. This lack of clear definition leads to some confusion or mix-ups when it comes to deeper investigation.
It would be helpful if the group could work on some specific definitions about the e commerce related sectors (Rigid handling of the GG terms was crucial to the success of this thread - IMO).
Lets try to figure out the distinction between B2B and e-commerce - or more exactly B2B and so called Business to CUSTOMER (I would prefer CONSUMER because also a business is someone else Customer):
Whats the difference for a company to deal with other companies rather than with a person? It depends weather a company is part of the supply chain of the buyers business or if its sells ink cartridges to a car manufacturer.
The former relation between supplier and buyer demands a highly efficient procurement solution with a fully integrated business process. This is where the vast stream of turnover between businesses flows. Not far away from now, almost every company involved in a product or service supply chain will have to be integrated in a electronic system in order to smooth the match of supply and demand and improve product development. But this is not a task to be solved with a single application linked to an open software interface. This requires huge efforts within the structure of a company and adoptions and/or changes in the workflow. But that s what I call real B2B, a task for supply chain management and enterprise resource management vendors.
Now lets have a look about the latter. According to AMR, 30% of all a typical company's indirect spending is so called "maverick buying". This means that employees are buying non allowed items, or are buying allowed items at a premium price. To avoid this, the offerer will have to present it's items electronically and provide the purchase order process with the ability of special statistics, approval structures and other features. But by not being part of the core business process of a customers, there is not much difference to sell to an institution rather than to a person. Nevertheless, here is a market for the so called B2B companies. Using open interfaces (XML - base DTDs and XML schema languages, Open Buying on the Internet (OBI), EDI, EDI/ANSI X12, EDIFACT, HTML for hosted applications) and creating special catalogues for special customers (i.e. businesses). But this is not the holy grail of e commerce, it pales in insignificance compared to the turnover flowing within the supply chains.
Conclusions:
With it's B2B solution alone ARBA will not be able maintain is s growth rates. It has to expand it's product vertically (or tighten it's strategic alliance with siebel) to avoid that the ERPs is spoiling their day. Maintaining it's high market cap may prevent her form being acquired (not the worst thing to happen for an ARBA investor, though)
Given the above described definition for real, CMRC will not be a big player in real B2B. A business model based upon fees for single trades simply does not fit in an environment where information flow is the intrinsic value. Fees for transactions is more like a commission for bringing together demand and supply to me. Though, there is a huge market out there for open Marketplaces I doubt that there will be a dominant player. I can see no significant entry barriers nor switching costs.
I assume some highly respected members of the thread disagree with me and even Mr. Market proves me wrong (at least at the moment). Please feel free to strip down my arguments and reassemble them to a brand-new picture . Keep the discussion alive (In the meantime, I enjoy watching my small position of ARBA growing and will add some ITWO and SEBL)!
Thanks for your attention
Martin |
