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Chapter 14
B2B Marketing through Electronic
Commence
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Chapter Questions
• Electronic Commerce
• Classification of e-Commerce
• B2B e-Commerce
• Key components of B2B e-Commerce
• E-Procurement
• Electronic Data Interchange (EDI)
• Electronic Fund Transfer (EFT)
• Electronic Exchange
• On-line Auctions
• Electronic Catalogues
Cont…3
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• Just-In-Time (JIT) delivery

• E-Commerce support service

• Intranet

• Extranet

• Domain name
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Electronic Commerce
• Electronic Commerce is defined as buying, selling and
exchange of products, services and information via
computer network, particularly on the internet.
• Where as e-Business has a broader definition than E-
Commerce, not just buying and selling, but also
providing services to the customers and partners or
collaborators and performing electronic transaction
within or outside the organization.
• Business to Business (B2B) marketing as marketing of
products and services to business organizations.
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• E-Commerce is generally classified into

the following types;
– Business–to-Business (B2B)
– Business–to-Consumers (B2C)
– Consumers-to-Consumers (C2C)
– Collaborative Commerce (c-Commerce)
– Intra-organizational commerce
– Mobile –Commerce (M-Commerce)
– Location based–Commerce (L-Commerce)
– E-Government
• Government-to-Citizens (G2C)
• Government-to-Government (G2G)
• Government-to-Business (G2B)
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The important features of e-Commerce:

– Firms want to increase the efficiency of business
communication;
• Expand market share
• Maintaining long term viability
• Digital relationship with their distributors,
suppliers and other partners.
• Streamline delivery system
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• Marketing mix model (four P’s) can be used by

marketers as a tool to assist in implementing the
marketing strategies.

Fig.1 The market space model

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B2B e-commerce
• B2B , the Business alliance with different entities will
offer enterprises to access the following
information's.
• Product details
• Customers
• Suppliers
• Shipping mechanisms
• Inventory
• Services
• Sales and marketing
• Supply chain process and performance
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Key components of B2B e-commerce

• Buyers company
• Seller company
• Electronic intermediary
• Deliverer
• Network platform
• Protocols and communication
• Back end information system
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Models of B2B e-commerce

• Supplier oriented market place
• Buyers oriented market place
• Intermediary oriented market place
• Virtual corporation
• Networking between headquarters and subsidiaries
• Online services to business
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E-Procurement
– E-Procurement is a technology solution that
facilitates corporate buying using the Internet.
– E-Procurement software make the on-going
purchase and may qualify the customer for volume
discount or special offers.
– E-Procurement software make it possible to
automate some buying and selling
– E-procurement is expected to be integrated wit the
trend towards computerized Supply Chain
Management in the organizations
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Fig. 2 E-Procurement Architecture

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• E-Procurement’s efficiency benefits includes lower

procurement cost, faster cycle time, reduce
maverick, or unauthorized buying will organized
reporting information and tighter integration of the
procurement functions with key back office systems.
– Shorter purchase cycle
– Improvement data accuracy
– Access to real tie information’s
– Reduced paper work
– Reduction in off-contract buying
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• Risk of e-Procurement
– Internal business risk
– External business risk
– Technology risk
– E-Procurement process risk
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Electronic Data Interchange (EDI)

• The communication between the applications
running in two or more number of computers.
• It communicates specially formatted standard
business information like purchase order, bills
invoices, approval of credit, shipping notice and
conformation between the computer systems of
companies, bank, government agencies and logistic
companies.
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Layered EDI architecture

Fig.3 Layered EDI architecture

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Fig. 4 Message communication between the users in EDI on a Value Added Network
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Electronic Fund Transfer (EFT)

• is an application that electronically routes the funds,
debits and credits and charges and payments
between the banks and customers using
telecommunication networks.
• The most common and acceptable methods of
payments in E-Commerce are electronic cheque,
electronic fund transfer (EFT), e-wallet, electronic
credit cards, electronic cash, smart cards, person-to-
person payments and purchasing cards.
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• payment mechanisms are broadly classified into two

types:
• Token based payment systems (or electronic token),
which are of three types:
– Electronic cash (e-cash)
– Electronic Cheques
– Smart cards
• Credit card based payment systems are of the
following types:
– Plain credit cards
– Encrypted credit cards
– Electronic wallet
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Fig. 5 Electronic Fund Transfer using Electronic Wallet.

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Advantages of Electronic Fund Transfer

systems
– EFT (or electronic payment) system is faster and
real time.
– It reduces the problem in sending the paper based
documents and processing time.
– Applicable for large volume of financial transaction
generated daily in the banking industry.
– Electronic Fund Transfer based Point of Sale (POS)
and ATMs are available in most of the shopping
centers and business areas.
– Transaction is available 24/7.
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Disadvantages
– Frauds and mistakes
– Shops should select an appropriate set of
electronic payment systems. Until electronic
payment methods become popular among
customer it is necessary to offer traditional
payment methods as well.
– Technical limitations like availability of telephone
connections and desired internet Band width.
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Risks in electronic payment system

– There are three major risks involved in the

electronic payment systems:
– Fraud and mistakes
– Privacy issues
– Credit card risk
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Electronic Exchanges
• It is a market place where many sellers and buyers
gather to do the business. It is also referred as e-
market place, e-hub or portal.
• There are four types of electronic exchanges;
– Vertical distributors
– Vertical exchange
– Horizontal distributors
– Functional Exchanges
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On-line Auctions
• B2B auction is a mechanism which enables multiple
buyers or sellers to make competitive bid on a
contract. On-line auctioning becomes more popular
due to the following two reasons;
• Low barrier to entry in the auction market
• The opportunities to earn good commission on the
sales without maintaining any inventory.
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Fig. 6 on-line Auction process

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Electronic Catalogues
• Using an electronic catalog customer can search the
information about their required product and
services, which they want to buy.

Fig. 7 Electronic cataloguing

process
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Just-In-Time (JIT) delivery

• Here the delivery of components and materials on
time is a must.
• Benefits of JIT delivery: The benefits of Just-In-time
delivery system to the customers are;
– It reduces inventory carrying expenses.
– Electronic commerce based JIT delivery system
reduces the administrative expenses.
– Lowers the storage space required.
– Reduces the material handling expense.
– Reduces the insurance cost for the materials.
– Reduces the inventory Tax ramification
– It reduces the valuable capital.
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– Also JIT is quite different for workers, in the sense

that due to the shorter cycle time, lots of pressure
and stress is added on the workers. 
– Also the JIT system throws workers off in the sense
that if a problem occurs, they cannot use their
own method of fixing the problem, but use
methods that have been previously defined.
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Limitations of JIT delivery

– Regardless of the benefits of JIT delivery there are
few limitations in the following cases;
– The organizations cultures vary from firm to firm. 
There are some cultures that tie to JIT’s success,
but it is difficult for an organization to change its
cultures within a short time. 
– Also manufacturers that use the traditional
approach which relies on storing up large amounts
of inventory for backing up during bad times may
have problems with getting use to the JIT system.
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E-Commerce support services

• It comprises of on-line services, internet, Intranet,
extranet, web sites, web portals, Domain names,
web spheres and integration with back end
information systems.
• The major on-line services to be considered for travel
and tourism, employment placement and job
market, real estate, trading stock, cyber banking,
insurance, electronic bill payment (Electronic
Clearing system) and auctions.
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• On-line advertising
• Permission marketing
• Viral marketing
• Customized advertisement
• Interactive marketing
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Intranet
• Internet is a private network that uses Internet
software and TCP/IP protocol in essence with an
organization network (corporate LAN). Intranet
interconnects various servers, clients, database
programs like ERP and other devices in the entire
organization.
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Fig. 8 Architecture of Corporate Internet

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Extranets
• It is a secure network that links the business partners
and Intranets over the Internet by providing access
to areas of each others corporate Intranets. It is
otherwise also called as Extended Intranet.
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Fig.9 Interconnection of Intranets in an Extranet

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Domain Name
• A domain name identifies a web site on the internet
including the server that handles web browser
requests the specific organization associated with the
domain name, and the general category in which the
organization operates.
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Type of the organization TLD Name

Commercial .com

Educational .edu

Government .gov

International Treaty organization .int

Network Provider .net

Non-profit .org

Military .mil

Fig. 10 some of the Top-Level Domains (TLD’s)