Supply Chain Differences – B2b And B2c
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The development of the web and the Internet has brought significant opportunity to both businesses and consumers. Businesses can now remain “open” 24/7 in a larger market without the additional expense required of a retail location. Businesses have a greater ability to source product in a competitive environment thus reducing costs, reduce the time to order and receive product, and have the ability to expand business partnerships that can become part of their enhanced supply chain. All of this can add to customer satisfaction and increased profits for the business.
E-Business allows customers the ability to shop online at any time they have the desire or time, or even browse product without a sales person leaning over their shoulder. They can take their time, and search many different businesses and products without ever leaving the comfort of their home. This increases customer knowledge and satisfaction, and this ease of e-business creates stronger competition can lead to reduced costs for the customer.
In the e-business environment, there is both Business-to-Business (B2B) and Business-to-Customer (B2C) commerce. In order to bring product to the customer, and for the customer to purchase the product, there must be a supply chain in place. The supply chain does everything from sourcing raw materials to presenting the finished product online. Both B2B and B2C have their own supply chain and each varies significantly. In this paper, I will define both B2B and B2C and will also show how the B2B supply chain varies greatly from the B2C supply chain. An efficient and effective supply chain is necessary for the business to continue producing and selling product and is critical for customer satisfaction, leading to increased sales and profit.
Business-to-Business (B2B)
Business-to-Business (B2B) is a term most often used to describe electronic commerce transactions between businesses, as opposed to those between businesses and other groups, such as between businesses and individual consumers (B2C). The term is almost exclusively used in electronic commerce and usually takes the form of automated processes between trading partners and suppliers.
The volume of B2B transactions is much higher than the volume of B2C transactions. One reason for this is that businesses have adopted electronic commerce technologies in greater numbers than consumers have. Also, in a typical supply chain there will be many B2B transactions but only one B2C transaction, as the completed product is marketed and sold to the end customer.
An example of a B2B transaction would be the supply chain of an automobile manufacturer that includes every activity undertaken by every component supplier, including engine manufacturers, steel fabricators, glass manufacturers, wiring harness assemblers, and thousands of others. In large companies, the Procurement Department that supervises the purchasing process may include hundreds of employees who supervise the purchasing of materials, inventory for resale, supplies, and all of the other items that the company needs to buy. “Business-to-business” can also refer to all transactions made in an industry value chain before the finished product is sold to the end consumer. The supply chain is extensive and much larger than the supply chain in a B2C process where the consumer may only visit one site before making a purchase.
Business-to-Consumer (B2C)
Business-to-Consumer (B2C) describes activities of e-business serving end customers with products and/or services. It is also sometimes called Business-to-Customer. It is often associated with electronic commerce but can also encompass financial institutions and other types of businesses. B2C relationships are often established and cultivated through some form of internet marketing. An example of a B2C transaction would be the car manufacturer selling a finished car to a customer.
Online intermediaries are companies that facilitate transactions between buyers and sellers. They receive a percentage of the transactions value. These firms make up the largest group of B2C companies today. There are two types of online intermediaries: brokers and infomediaries.