2.2. B2B Success Stories

Even from early dotcom days, business to business transactions were destined to be important. 'According to studies published in early 2000, the money volume of B2B exceeds that of e-tailing by 10 to 1. Over the next five years, B2B is expected to have a compound annual growth of 41%. The Gartner Group estimates B2B revenue worldwide to be $7.29 trillion dollars by 2004.' {1} The same article saw B2B ventures as company web sites, product supply and procurement exchanges, specialized or vertical industry portals, brokering sites and information sites. Today, that list has expanded, and can be grouped in two categories:

1. Business to Business

B2B companies sell to other companies, notably:

1. E-Distributors that sell goods and services direct to companies.
2. E-Procurement companies that create and sell access to digital markets.
3. Digital exchanges (electronic marketplaces) where hundreds of suppliers meet large commercial purchasers.
4. Industrial Consortia ( industry-owned vertical marketplaces) that serve specific industries.
5. Private Industrial Networks (Private Trading Exchanges or digital networks) that coordinate the flow of information between companies that do business together.

2. eCommerce Enablers

Companies that enable Internet business between companies, by supplying:

1. Computers and servers.
2. Operating systems.
3. Routers.
4. Ecommerce systems.
5. Customer relationship management software.
6. Encryption software.
7. Streaming and rich media software.
8. Payment systems.
9. Performance enhancement software.
10. Databases.
11. Site hosting.
12. Search engine optimization.
13. Marketing advice.
14. General e
commerce advice.

Current Situation

That the 10 to 1 ratio is still roughly correct. The US Census Office E-Stats report of May 26, 2011 disclosed the following:

Revenues in US$ billions

Total

Ecommerce

Year

B2B

B2C

Ratio of B2B to B2C

B2B

B2C

Ratio of B2B to B2C

2008

11,630

10,840

1.07 to 1

3,482

292

11.9 to 1

2009

9,602

10,412

0.92 to 1

3,073

298

10.3 to 1

Also worth noting:

1. US ecommerce revenues are now appreciable: the figures for 2009 were $3,073 billion for B2B and $ 298 billion for B2C.
2. Fortunes of B2C and B2B ecommerce sectors are not necessarily linked: while the first increased 2% from 2008 to 2009, the second fell by 11.7%.
2. Within the B2B sector, manufacturing made up $1,862 billion and merchant wholesale $1,211 billion in 2009 ( from $2,171 billion and $1,311 respectively in 2008).
4. Supply chain management is important: e-shipments were 42% of all manufacturing shipments in 2009, up from 40% in 2008.

Accurate figures are notoriously difficult to obtain, but B2B appears to dominate ecommerce in Europe, {4} and is growing fast in emerging Asian markets. {5}

Questions

1. Why is B2B ecommerce so important?
2. Give a detailed, two-fold grouping of B2B ecommerce constituents.
3. Analyze current the US electronic economy.

Sources and Further Reading

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