Business to Business (B2B) Exchanges - Virtual Market on Internet

Ever since we stepped into internet world, we find a sea of change in the way people buy, communicate and socialize with one another. Internet has succeeded in erasing the boundaries and bringing markets together. Today it is possible for one to sit in the comfort of his home or office and search for information on any product, business or service, buy online, make payment online as well as carry on with personal banking and payment of utility bills, insurance etc.

On the other hand, look at it from the point of view of businesses. No business in today’s world can afford not to participate in the online business. Though the traditional sales channel may command a much larger market share or revenue stream as compared to online sales revenues, nevertheless it has become imperative to offer online selling and organizations have very little or no choice in the matter. If competition is present on the net, then you have got to be there as well. More importantly, if your customer’s buying behavior has changed and are making online purchases, you have got to be there.

Thus online selling is growing at a phenomenal scale. Be it buying the prescription drugs, ordering latest books, booking movie tickets to downloading latest movies, we seem to be gravitating towards online buying like never before.

The more the number of people accessing various networks and sites on the internet, the more opportunities for targeting them as prospective customers. If you scan the online selling that is happening on the internet you will find largely two types of businesses namely B2C and B2B. Apart from B2C and B2B, there are also C2C and C2B businesses too that are available online.

It is quite likely that you would have come across only Business to Consumer businesses online. But then, internet is also home to larger business consisting of Business to Business markets as well. On one hand you have stock exchanges and commodity exchanges etc. Then there are proprietary systems like that of GE which are meant to provide for online buying from its suppliers. The system is automated to take care of the complete buying , shipping as well as payment process of GE. However, when we refer to B2B exchanges, we are not referring to such automated procurement system of one customer, but there exist exchanges where the multiple sellers are available for multiple customers to choose from.

Internet has changed the way business is managed. Internet has changed the procurement and marketing process followed by the organizations. It has changed the way the business processes are managed and goods are distributed. With negligible procurement costs, availability of better choice, greater number of suppliers, shorter lead times and instant access to markets, the B2B Exchange business is growing year on year. As compared to B2C business volumes, the B2B transaction volumes in increasing over the years. US is undoubtedly the pioneer in B2B online exchanges and Europe has also caught on fast enough. Online B2B business volume is said to be over 1.5 trillion dollars per annum. Therefore understanding the B2B environment on the internet is very important for all management students.


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