Whitepaper B2B E-Commerce by wulinqing

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									Whitepaper B2B E-Commerce
Using hidden potential
Author: Prof. Dr. Ralph Sonntag, Professor of Marketing, with specialisa-
tion in Multimedia Marketing, Dresden University of Applied Sciences

Author‘s biography
Prof. Dr. Ralph Sonntag

Ralph Sonntag (born1968) accepted the professorship in Marketing, specialising in Multimedia
Marketing, at the Dresden University of Applied Science (HTW) in 2004. At the HTW Dresden he is
also the scientific supervisor of a company formation workshop called „Gruendungsschmiede“, an
incubator for business start-ups. Before this, Mr. Sonntag was a professor at the Ansbach University
of Applied Sciences. After completing his studies in Business Administration at Würzburg, he worked
as a research scientist and project manager at the Steinbeis Transfer Center for Business Information
Management in Dresden. Immediately after that followed posts at Diebold business consultancy (now
known as Detecon) in the area of digital business and communication and advertising agencies. His
work and research centred around the study of social commerce, digital business models, methods in
media planning and advertising effectiveness research.

Management summary
The E-commerce area is now growing in importance as a result of the rise of social media and the pro-
fessionalisation of the B2B segment in a range of areas. Visibility is very important in B2C E-commerce,
but in the B2B area the focus is directed more towards efficiency in electronic business processes.
The buying decision process, the role of the manufacturer and the roles of possible intermediaries are
fundamentally different in E-business. These specific characteristics of business-to-business relation-
ships must be grasped and acted upon appropriately by any B2B E-commerce initiative. It can now be
observed from recent experience that manufacturers have, on the one hand, come to see E-commerce
as a separate profitable business area and, on the other, intermediaries are emerging with new business
models for the B2B area. In parallel, business models are emerging that borrow features and functiona-
lities from social media.
                                                Business to Business - B2B                         Business to Customer - B2C

                Business partner                                                      Company                                   Customer
                                                       Internet / Extranet             Intranet           Internet

                                                        E-Commerce                                      E-Commerce


Fig. 1: Categorisation of E-commerce and E-business (following Stähler 2001, p. 54)

1. Categorising the topic
The activities of businesses and people are increasingly being represented
and supported using electronic methods and tools. Thus, the internet is now
exerting an increasing and lasting influence on economic activities.
E-commerce and E-business are often used as synonyms in this context.

E-business is the integrated implementation of the automatable business
processes of an enterprise with the help of information and communication
technology, often using internet-based technologies (cf. Thome 2002,
p. 151; Herden et al. 2006, p. 43).

E-commerce refers to a sub-domain of E-business and understood as
market-oriented E-commerce primarily covers trading processes between
market partners (see Figure 1.).

E-commerce thus corresponds to the operations and trade that go on
between supplier and consumer. In this regard, it is irrelevant whether the
market is created only temporarily between the supplier and the consumer
at the time of trade or if a permanent marketplace is used for E-commerce.

The market-oriented and thus primarily trade-related approach to E-com-
merce includes three forms (cf. Fritz 2004, 29f.; Zerdick et al. 2001, p. 223f):
‚ Net-aided commerce
‚ This denotes trade in traditional marketplaces that facilitates certain
  sub-functions to be exercised electronically.
‚ Indirect E-commerce
‚ In this form, non-digital goods are traded and – due to their nature –
  delivered conventionally.
‚ Direct E-commerce
‚ Here trade is carried out entirely electronically, as it involves digital goods.

The majority of E-commerce platforms can be categorised as indirect forms
of E-commerce.
                                                                                                                                   Another distinction to be made is the classification of the sector by actors
                                                                                                                                   (see Figure 2), the most important economic area being B2B E-commerce.
                                                                                                                                   Just a few years ago one could observe electronic marketplaces transferring
                                                                                                                                   the business model of trading platforms from B2C E-commerce into the
                                                                                                             + 33 %
                                                                                                                                   B2B sector.
                                                                                            + 35 %
                                                                           + 37 %                                                  The first B2B platforms originate from the start of the year 2000. These
                                            1,983         + 37 %
                          1,443 + 37 %
                                                                                                                                   were created simply as marketplaces and worked in a similar way to such
                                                                                                                                   B2C platforms as eBay or Amazon. With time, these basic approaches to
                          2003               2004                  2005             2006             2007             2008
                                                                                                                                   E-commerce began to reduce in importance. Typical industrial and
                                                                                                                                   investment products contain too much complexity to be presented in a
Fig. 3: B2B E-commerce sales volume in billions of euro, 2003-2008
(cf. BMWI 2009, p. 235; Global Industry Analysts 2008)                                                                             standardised way on such classical trading platforms (Zunke 2010, p. 39).

                                                                                                                                   A B2B E-commerce marketplace is an intermediary whose role must visibly
                                                                                                                                   provide added value, as otherwise participants in this marketplace will go
                                                                                                                                   elsewhere so they themselves can benefit from the added monetary value of
                                                                                                                                   a B2B E-commerce site.

                                                                                                                                   Depending on the study one looks at, the annual growth rate for B2B
                                                                                                                                   E-commerce is upward of 30 percent (cf. BMWI 2008, p. 290; see Figure 3).

                                                                                                                                   German B2B E-commerce is expected to experience a declining rate of
                                                                                                                                   growth, but to continue to enjoy increasing sales volumes. A growth rate of
                                                                                                                                   636 billion euro is expected in 2010 for the E-commerce sector (cf. BMWI
                                                                                                                                   2008, p. 292).


                                                             Consumers                                                  Business                                     Administration
                                                             Consumer-to-Consumer                                       Consumer-to-Business                         Consumer/Citizen-to-Administration

                                                             C2C                                                        C2B                                          C2A
                                                             e.g. small ads on a private                                e.g. job exchanges with ads for              e.g. tax returns for private
                                                             homepage                                                   job-seekers                                  persons
      Service providers

                                                             Business-to-Consumer                                       Business-to-Business                         Business-to-Administration

                                                             B2C                                                        B2B                                          B2A
                                                             e.g. products and services in                              e.g. orders from suppliers (supply           e.g. tax returns for enterprises
                                                             an e-shop                                                  chain)

                                                           Administration-to-Consumer/Citizen                         Administration-to-Business                    Administration-to-Administration
                                                           A2C                                                        A2B                                           A2A
                                                           e.g. a facility for electronic voting                      e.g. invitations to tender for                e.g. transactions between public
                                                                                                                      a proposed project                            institutions

Fig. 2: Classification by transaction relationship (cf. Buchheit 2009, p. 45; Meier et al. 2009, p. 3)
2. The status quo – B2B E-commerce
An international stock check
In 2008 E-commerce turned over 6.7 trillion euro worldwide. Of that volume,
90 percent was due to the B2B sector. A comparison of global regions
shows that the USA has held the largest market share since statistics were
first collected. However, this tendency is on the way down. It still accounted
for 59 percent of the market in 2003, but was down to only 38 percent by
2008 (see Figure 4). Despite this reduction, in the same period sales
volumes in the USA rose from 848 billion in 2003 to 2.517 trillion euro in
2008 (cf. BMWI 2009, p. 236; Global Industry Analysts 2008; see Figure 5).

In the last few years strong growth can be observed most clearly in the Asia/
Pacific region. Though in 2003 it only had a market share of 15 percent, in
                                                                                 Fig. 4: B2B E-commerce sales volume by region in percent, 2003-2008
2008 Western Europe had jumped to second place in the ranking. With a            (cf. BMWI 2009, p. 236; Global Industry Analysts 2008)
30 percent share of the world market and a sales volume of 2.026 trillion
euro, the Asia/Pacific region is well ahead of Western Europe, which has a
27 percent and a 1.828 billion euro share. As compared to the previous year
(2007), this converts to a growth in sales volume for the Asia/Pacific region
of 47%, which is far above the worldwide average of 33 percent (cf. BMWI
2009, p. 236f.; Global Industry Analysts 2008).

B2B E-commerce in the Western Europe region is dominated by Germany.
For the year 2008 analysts predict an annual sales volume in the B2B sector
of 562 billion euro for Germany. Thus Germany accounts for a market share
of 31 percent, positioning it far ahead of Great Britain (with 18%), France
(15%), Italy (11%) and Spain (6%) (see Figure 6). Thus 10.4 percent of all
sales volume generated worldwide in B2B E-commerce is ascribable to              Fig. 5: B2B E-commerce sales volume by region in billions of euro, 2003-2008
Germany. According to studies, B2B relationships accounted for 89 percent        (cf. BMWI 2009, p. 237; Global Industry Analysts 2008)

of all E-commerce sales volumes generated within the country in 2006. This
leaves the rate in Germany only slightly under the worldwide average of 90
percent. However, it is expected that this share will reduce to 81 percent by
2010 in favour of the B2C sector (cf. BMWI 2009, p. 237f.; Global Industry
Analysts 2008).

                                                                                 Fig. 6: B2B E-commerce sales volume in selected Western European countries in billions of euro, 2006-
                                                                                 2008 (cf. BMWI 2009, p. 237; Global Industry Analysts 2008)
3. The value chain concept
The value chain is a concept used to illustrate the activities of an enterprise.
                                                                                                          Enterprise infrastructure
Michael E. Porter designed this approach in 1985 (cf. Porter 1985; Porter
1996).                                                                                                    Human resource management

                                                                                                          Technological development

The basic model consists of primary activities directly contributing to added      Support activities     Procurement
value, and support activities required to fulfil the primary ones. The original
model (see Figure 7) needs to be adjusted and particularised depending                                  Inbound      Operations         Outbound        Marketing         Services
on the industries and business outlines in question. The purpose of a value                             logistics                        logistics         &

chain analysis is to identify competitive advantages (cf. Porter 1996, p. 66).                                                                           Sales

The results of an analysis using the value chain primarily affect strategic
planning and the identification of core competencies for the relevant                                                        Primary activities
                                                                                   Fig. 7: The value chain according to Porter (cf. Porter 1996, p. 62)

The E-business framework by Meier & Stormer provides a means of re-
searching and visualising the E-business and E-commerce sector (cf. Meier                                            eBusiness E-business Framework
et al. 2008, p. 19; see Figure 8).                                                                                          Strategic planning
                                                                                                                    Organisation and human resources
                                                                                       Value chain

                                                                                                                          Security management
                                                                                                                          Culture management

                                                                                           E-products           E-pro-                                                               E-customer
                                                                                           & E-services        curement   E-marketing    E-contracting E-distribution   E-payment   relationship

                                                                                                                           Supporting processes
                                                                                                         Technology and innovation management (E-business)
                                                                                                                   Industries and sector solutions

                                                                                   Fig. 8: The E-business value-added chain (cf. Meier et al. 2008, p. 19)
As E-commerce is a business activity in a market, its support activities count                       E-products
as part of the organisational tasks of the business, and thus within the broad                       At the E-products value-added level, sales markets and target groups need to
definition of E-business.                                                                            be determined for the B2B E-commerce platform. In this context, the possi-
                                                                                                     ble business models (see the chapter „Platforms and business models“) will
Within the domain of E-commerce, no matter whether we are dealing with                               also need to be chosen. Besides these business models, price differentiation
B2C or B2B, only value-added activities are included:                                                opportunities are also important in this area. As with traditional markets,
                                                                                                     prices can be differentiated by time, customers, quantities and service
 ‚ E-products                                                                                        components. Dynamic pricing in response to changes in the market is easier
 ‚ E-procurement                                                                                     to represent here than for traditional markets (cf. Meier 2008, p. 56; Wang, et
 ‚ E-marketing                                                                                       al. 2007, p. 119).
 ‚ E-contracting
 ‚ E-distribution                                                                                    E-procurement
 ‚ E-payment                                                                                         Procuring goods takes place in a market involving suppliers and consumers
 ‚ E-CRM                                                                                             and is structured into a number of steps, including the specification and
                                                                                                     selection of products, agreeing contracts and operative procurement
As an example, three value-added levels that are of special relevance to B2B                         actually placing the order. E-procurement can be divided into three different
platforms are described in more detail below.                                                        market models (cf. Meier 2008, p. 62ff.):

                                                                                                     ‚ Sell-side
                                                                                                     ‚ In this case the supplier provides the B2B platform with the relevant
                                                                                                     ‚ Buy-side
                                                                                                     ‚ The purchaser possesses the purchase information and compares them
                                                                                                       internally. Given its character, this market model is unsuitable for an
                                                                                                       E-commerce platform of the B2B type.
                                                                                                     ‚ Marketplace
                                                                                                     ‚ A third party or intermediary operates a marketplace used simultaneously
                                                                                                       by purchasing businesses and suppliers. In this category, a distinction
                                                                                                       can be made between vertical markets with a particular specialisation
                                                                                                       (e.g. chemconnect.com in the chemical industry) and horizontal ones
                                                                                                       without any particular sectoral focus.

                                                                                                     E-contracting describes the electronic process of business negotiation,
                                      Negotiation            Signature
                                       service                service
                                                                                                     which can be subdivided into an information gathering phase, a declaration
      Electronic                                                                        Electronic
    representation                                                                       logistics   of intent phase, an agreement phase and an execution phase.
    of the supplier
                                    Validation                Enforcement
                                                                                         services    For B2B E-commerce it is important that the negotiation process is sup-
                                     service                    service                              ported adequately by the platform. To achieve this, the appropriate generic
                   Electronic                                                  Electronic            services are generally offered by the platform (see Figure 9). The negotiation
                representation                                                 payment
                of the customer
                                       Archiving            Conciliation
                                                                                                     service may, for example, support the market actors in negotiating on the
                                        service               service
                                                                                                     objects of the agreement. It can also include a review functionality from the
                                                                                                     agreement documentation (cf. Meier 2008, p. 112ff.).
   Information gathering
                                         Agreement phase                    Execution phase
          phase                                                                                      A signature service will include the provision and management of digital
                                                                                                     signatures to verify the identity of the actors and to permit a legally valid
Fig. 9: Generic services for E-contracting (cf. Meier 2008, p. 112)                                  contractual agreement to be concluded.
                                                                                                           4. Platforms and business models
                                                                                                           One of the most prevalent platforms in the B2B sector is the electronic
                          Schematic structure of a B2B marketplace                                         marketplace. The IDC estimates that 85 percent of the entire E-commerce
                                                                                                           sales volume in 2009 was generated via E-marketplaces (cf. Manenti 2010,
                                                                                                           p. 1). Via this sort of trading system, opportunities for tapping productivity
                                                 Marketplace                                               advantages are made available to the actors (supplier or consumer). Cost
                                                                                                           and time savings as well as improvements in quality are possible thanks to
     Consumer with                                Transaction                              Supplier with
       integrated                                   support                                 integrated
                                                                                                           the standardised, automated and even integrated processes that are provi-
      connection           XML                                                  XML         connection     ded (see Figure 10).

                                                 Web front-end
                                                                                                           Electronic marketplaces generally support all stages of transactions – from
                                                                                                           the information gathering phase, through the agreement phase with contract

                                                                                                           preparation, negotiation and conclusion, up to the execution phase with
                                                                 via we
                                        b brow

                                                                                                           the exchange of the contractually agreed performances. In this sense the
                                                                   b brow
                                      via we

                                                                                                           electronic marketplace integrates the different functionalities of individual

      ERP system                                                                           ERP system
                                                                                                           E-products, of E-procurement and of E-contracting.
                                   Small or                        Small or
                                 medium-sized                    medium-sized
                                  consumer                         supplier                                The added value of electronic marketplaces in the B2B sector results mainly
                                                                                                           from the core functions it fulfils:

                                                                                                           ‚ Integration function (connector role
Fig. 10: Schematic structure of a B2B marketplace (cf. Hepp et al. 2000)
                                                                                                           ‚ Value-added services
                                                                                                           ‚ Supply and demand bundling

                                                                                                           The connector role is provided via the portal structure, which facilitates the
                                                                                                           real-time exchange of information between the actors. All additional func-
                                                                                                           tions that ease or substantially improve the handling of market transactions
                                                                                                           should be put under the heading of ‚value-added services‘. The supply and
                                                                                                           demand bundling function is achieved by the presence of a large number of
                                                                                                           providers and customers. Thus economies of scale can be exploited. One
                                                                                                           precondition for as complete as possible an exploitation of this potential,
                                                                                                           however, is the availability of standardised product catalogues or categories,
                                                                                                           or of conversion mechanisms for the different types of catalogue information
                                                                                                           provided by each participant (cf. Hepp et al. 2000).

                                                                                                           According to Balocco et al. (2010; see Figure 11) B2B E-commerce
                                                                                                           platforms can be structured and classified according to their strategic
Fig. 11: Platforms in the B2B sector – strategic clusters (Balocco et al. 2010, p. 1125)                   orientation into three basic types (cf. Balocco et al. 2010, pp. 1124-1131):

                                                                                                           ‚ Orthodox model
                                                                                                           ‚ Application Service Provider (ASP)
                                                                                                           ‚ Process outsourcer
Orthodox or conventional B2B platforms provide the actors with publicly        ‚ Consortium-based service providers: These should be understood as
accessible websites, which give access to the basic services for trade           electronic marketplaces insofar as they provide businesses of a particular
interactions between enterprises. A further distinction can be made within       sector, united in a consortium, with the sort of offerings and services ge-
this cluster between public exchanges and E-markets with an emphasis             nerally covered by the E-sourcing and E-supply chain services segments.
on second-hand and warehouse sales, on locating suppliers and on the             The platforms they use offer the actors a system closed to the outside
transport industry.                                                              world, thus ensuring secure data exchange. These days, suppliers focus
                                                                                 their offering mainly on E-supply chain execution (e.g. data exchange
‚ Public exchange: Commodities such as chemicals, metals, informa-               and data alignment). The technical platforms deployed in this way are
  tion and communication technology products, etc., are traded via an            very much tailored and tuned to the individual needs of the actors. An
  exchange-type platform. Such platforms offer actors a variety of basic         example of such a site is Supplyon (associated with Bosch, the Schaeffler
  services (e.g. financial, logistical and/or risk management). The pricing      Group and Continental).
  corresponds to that of stock exchanges. Potential buyers make their
  bid to the platform and not directly to any (as yet unknown) seller. The     ‚ Independent Sourcing-based Service Providers: The marketplaces
  platform operator passes the best bids back to the seller. The latter can      belonging to this group (e.g. Adquira and IBX) make technical platforms
  then decide which bids to accept or reject. ChemConnect and Converge           available for large enterprises from a variety of sectors. The strength of
  are examples of such sites. ChemConnect is a platform for dealing in           these providers lies mainly in the scalability of their technical platforms.
  chemicals, whereas Converge provides a marketplace specialised in
  semiconductors, electronic components and networking equipment.              ‚ Independent sourcing-based service providers: Suppliers in this
‚ Concentration on second-hand items and overstocks: The second cluster          cluster provide actors with E-supply chain execution services to exchange
  focuses on platforms specialised in selling second-hand goods and ware-        documents and to facilitate integrated supplier networks. The services
  housed stocks. Here, pricing is fixed via a variety of auction mechanisms.     offered are often supplemented and extended to include E-catalogue
  LiquiBiz and Ironplanet are examples of such sites. LiquiBiz is the result     functionalities. One of the largest suppliers in this cluster is CCHubwoo.
  of a merger between GovLiquidation, LiquidBiz and GovWholeSale. The
  E-marketplace is an auction platform for second-hand goods of all sorts,     ‚ Independent E-catalogue service providers: This group offers busi-
  and for warehoused and surplus stock. Ironplanet is now owned by               nesses of a particular sector tools and services relating to E-catalogues.
  Caterpillar, Volvo Construction Equipment and Komatsu. This market-            There is currently a tendency for services of this type to fade out of the
  place facilitates dealing with second-hand construction machinery,             market. A lack of acceptance could be cited as an explanation for this
  especially amongst hire and financing companies. A condition of entry is       tendency.
  strict proof of the maintenance status of the machines offered.
‚ Supplier scouting: Such platforms use RFx systems for suppliers of highly    The third broad cluster can be identified simply by its one relevant business
  complex products or services. Their business model is mostly based on        model. The E-sourcing process outsourcers group comprises suppliers
  membership fees. Buyers and interested parties are generally large busi-     who manage E-sourcing processes on behalf of their customers and offer
  nesses wanting to develop new supplier relationships (whether globally       consultancy services. They focus their efforts on large and medium-sized
  or locally). FirstIndex should be mentioned here as an example of a local    businesses that exercise both a supplier and consumer role on the market.
  provider with a global base.                                                 One of the most important of such suppliers is Ariba.
‚ Transport industry: Electronic marketplaces with this specialisation offer
  actors an exchange platform for transport capacity. This type of platform
  may be considered a ‚discontinued model‘. The reason for this is that
  an increasing number of providers are evolving towards ASP. Examples
  include Teleroute and Logisticator (see chapter 5, „Usage“).

Application service providers can in turn be subdivided into four further
To summarise, a very heterogeneous picture can be seen on the                                  The demands placed on any electronic marketplace depend above all on the
E-marketplace landscape. However, all these business models and strategic                      needs of individual businesses. For this reason, it will not always make sense
orientations share the common goal of providing users of and actors on the                     to use an already established platform. Suppliers of stand-alone software
different platforms with a measurable added value – adding value either by                     solutions respond to these individual requirements of businesses.
facilitating a variety of B2B processes (E-sourcing, E-procurement, E-supply
chain execution, collaboration) or by providing a range of services (the
orthodox model, ASP, process outsourcing). Apart from that, a very strong
tendency to variability can be detected over time. Platform operators are
forced to respond constantly to the changing requirements of their users.

Kuron has developed a model to represent the five levels of development of
E-business (Kuron 2002, p. 20):
‚ Information (e.g. a web site)
‚ Interaction (e.g. a newsletter)
‚ Transaction (e.g. a shopping system)
‚ Integration (e.g. ERP integration, B2B systems)
‚ Market maker (e.g. communities)

In this context, a factor that stands out is the increasing integration of E-com-
merce solutions into existing E-business tools and processes. E-commerce
applications may also be classified according to their maturity level. The
model below is guided by the multi-stage model (see Figure 12).

           B2B maturity levels – 5 C's

                                                                          Industry                                                             Best in class 20%
                                                                        average 50%
                    Stragglers 30%

                                                                                                                      Collaboration                       Involvement of the

                                                                                                                                                           community and customers
                                                                              Commerce                               Collaboration with external         Web 2.0
                                                                                                                      partners                            Co-browsing
                                                                                                                     B2B integration                     Social commerce (widgets,
                                         Commerce                             Online transactions
                                                                              24/7 ordering                         SOA                                  forums, Facebook)
                                                                              Internal process                      Ordering interfaces for             Ratings & reviews
            Communication                Online catalogues
                                                                               automation                             partners                            Mobile commerce
                                         Presentation of
                                                                               and integration                       RFQ                                 Target group-specific
            Phone/Fax/e-mail             Information (CMS)
                                                                                                                     Paperless ordering                   recommendations/
            EDI


          low                                                                     Maturity                                                                                        high
                                                     Fig. 12: Maturity levels of E-commerce (T-Systems Multimedia Solutions 2010 following Kuron 2002)
Stand-alone E-commerce software
Gartner‘s study (2010) gives a good overview of the relevant suppliers. The
Magic Quadrant for E-commerce locates different solutions according to two
continua – completeness of vision and ability to execute (see Figure 13).

It is obvious that only two suppliers are listed in the ‚Leaders‘ field. Both IBM
and ATG offer users the greatest possible degree of support for B2B but
also B2C E-commerce. Their classification as market leaders is grounded
on their high level of customer satisfaction and on their professional support
(see Gartner 2010). By way of example, the market leader, IBM WebSphere
Commerce, is presented in detail below.

IBM WebSphere Commerce is now available in Version 7. The package
provides a wide range of E-commerce core competencies out of the box.
A schematic overview of the capabilities of the software as an interaction
platform can be seen in Figure 14.

Set out in detail, the software package provides the following functionalities
(cf. IBM 2010):

‚ Support of B2B and B2C implementation
‚ A secure and scalable E-commerce platform                                         Fig. 13: Magic Quadrant for E-commerce (Gartner 2010)
‚ Functions for catalogue content management for designing,
  administering and publishing professional online catalogues
‚ User-friendly GUIs to create dynamic advertising campaigns, target
  market segments and individual product adverts
‚ Customer service and online collaboration in real time with the help of
  Lotus Sametime and Lotus QuickPlace
‚ Multicultural functionality for selling in global markets
‚ Integrated payment functions supporting offline payment, SET, Cyber-
  Cash, VisaNET and BankServACH
‚ A highly adjustable and flexible development environment based on
  open architecture and industry standards
‚ Data mining and business intelligence for analysing customer behaviour
  and purchasing patterns as well as for creating reports
‚ Fast, easy and extensive integration of internal and external systems and
  business processes

                                                                                    Fig. 14: IBM WebSphere Commerce (vgl. IBM, 2010)
No matter what platforms or business models are used for implementing            An increase in profitability these days is often no longer achieved by impro-
the variety of E-commerce solutions, four core challenges/values remain for      ving existing products, but by offering value-added services for established
businesses:                                                                      products. An illustrative example is provided by the very successful sales
                                                                                 model employed for printer cartridges. A higher margin is achieved with
1. Reduction of costs and increase in productivity                               such sales than with the sale of the printer itself. An optimal implementation
2. Customer loyalty                                                              of an E-commerce strategy in an E-business environment will allow you to
3. Profitability through value-added services                                    analyse in great detail the wants and needs of customers, and thus to offer
4. Opening up of new markets                                                     efficient value-added services on the basis of this information (e.g. warranty
                                                                                 management, maintenance services, etc.).
Through the efficient deployment of E-commerce solutions, improvements
in efficiency and productivity must be achieved in all business processes        It is especially true for small and medium-sized businesses that opening up
to reduce the operating costs. This applies particularly to E-marketplaces       new markets in the classic manner is expensive and therefore very often not
involving highly differentiated distribution chains. Sales and purchasing        considered worthwhile. By building a well fitting E-commerce solution you
processes have an important share in the operating costs. B2B E-commerce         may manage to open up precisely those markets that were previously seen
investments do not usually offer a short-term return on investment (ROI).        as not worth the effort. Launching a sales channel on the internet will allow
From a long-term point of view, they generate profitability mainly through       you to open up new geographical sales areas very easily and economically
increased revenues, faster product launches and improved customer                or will facilitate your penetration into new industry sectors.
satisfaction. In this regard the cost advantages can be measured both on
the buyer‘s side as well as on the seller´s side. Creating customer loyalty is
always the most significant factor in the online B2B sector. The internet is
currently generating enormous pressure due to the large number of potenti-
ally competing business it can bring together.

Winning new customers is very labour-intensive and difficult. For this
reason an existing customer is a substantial asset to any business. New
ways and means must therefore be found to offer attractive added value to
users and customers, to help them to commit them to the business. For the
E-commerce sector, this primarily means that any substantial improvement
in buyer experience can contribute to creating that commitment. This
involves smooth guidance in the information stage (offering a wide range
of information, including unstructured material), support in developing
specifications (acting as a contact) and providing a barrier-free purchasing
process (usability).
Legal aspects
The legal framework surrounding B2B E-commerce mainly concerns                       Intellectual property rights (brands, designs and patents) are important
administrative law, product liability, industrial property rights and the legal      value-creating assets of a business. They can be used commercially via
framework for electronic business transactions.                                      licensing, will affect the price of a company if it is sold and are also taken into
                                                                                     account in cases of insolvency. Inventions may require utility model or patent
Contract law and distribution rights require the relationship of the supplier        protection, while design patents are relevant for commercially used forms
with the final customer to be split up into individual informal arrangements         and designs. Property rights protection for brands and trademarks will result
made on the one hand and the pre-formulated agreements and terms of                  from registering them in the Trademark Register or via acquired recognition,
business on the other. For this reason, the administrative law contained             and can be retained indefinitely. For this reason, branding rights also have
in paragraphs 305 ff of the German Civil Law is of particular relevance. In          importance to a business from a commercial point of view. In cases of con-
addition to this tension (between individual arrangements and terms of               flict between two marks, priority in applying for intellectual property rights,
business), questions of principle may arise relating to the precise manner           amongst other things, will influence recognition of such rights. As well as
in which sales are implemented. Such questions of principle will need to             commercial property rights, there is another form of property right protection
be answered by the entrepreneur him or herself. Detailed arrangements,               for commercial markings provided by competition law and by legislation
however, should be discussed with an experienced lawyer. It will be his or           governing the usage of names (cf. Steckler 2009a, p. 497).
her task to determine where the different interests lie and to work out a legal
framework reflecting those interests, which must be as precise as possible,          In electronic commerce, in addition to the provisions of general contract
but remain as flexible as practicable as well. In addition, sales contracts and      law, the specific features of telemedia law need to be considered. The
their financial consequences should be set out by the entrepreneur him or            principle of country of origin applies to commercial activities within the
herself (cf. Niebling 2009, p. 435).                                                 internal market. In addition to that, the principles of international contract law
                                                                                     are also relevant. In any case it is always to be recommended to include a
Product liability is based on the civil law on breach of duty in accordance          jurisdictional clause in your contract due to the international relevance it may
with paragraphs 823 ff of the German Civil Code and according to product             have. Telemedia offerings must comply with the information requirements
liability law. According to the latter, the manufacturer is liable for hazards       stipulated in the German Telemedia law and the German Civil Code, as well
that may be occasioned by use of the product for its intended purpose. To            as the requirements made of entrepreneurs working in electronic commerce
minimise product liability, quality assurance agreements may be made with            according to paragraphs 312d BGB, 1 BGB-InfoVO of the Civil Code (cf.
suppliers, which can also simplify the share of joint and several liability in the   Steckler 2009b, p. 530).
event of a claim. A product safety organisation at the manufacturer will also
take measures to monitor products on the market (cf. Steckler 2009, p. 472).
5. Usage
Three examples of B2B platforms are presented below:

‚ Zentrada – trading platform for resellers in the consumer goods sector
‚ SindoPower– manufacturer-inspired platform for power electronics
‚ Logisticator – a global network of medium-sized hauliers

Zentrada (see Figure 15) is a trading platform for resellers and market
leaders in Germany and Europe for consumer-goods wholesaling. Zentrada
takes on the role of an intermediary. Its target groups and users are retailers,
resellers, importers and wholesalers. Manufacturers also use the platform to
a limited extent. The added value offered by Zentrada is the broad support
it gives for professional procurement of goods. The portal allows on-the-fly
searching for suppliers, price comparisons and trend reading, and secures
the processing of transactions. As well as electronic product and supplier
catalogues and a virtual trade fair, Zentrada provides individual shops for
wholesale order processing (see Figure 16). In the future, Zentrada plans to
offer members a trust function for order and payment processing (cf. Schloo
                                                                                   Fig. 15: The Zentrada homepage

With over 100,000 members, 300,000 offerings, 3,500 suppliers and 6
million website visitors per year, it can be expected to have sales volumes of
transacted business in the hundreds of millions. On top of its market leader
status in Europe, market transparency, security for providers, the product
offering and transaction processing are now seen as important factors in its
future success (cf. Schloo 2010).

                                                                                   Fig. 16: Shop overview on Zentrada
                                               SindoPower was founded in 2009 and is an associated company of the
                                               Semikron group, which has a volume of 500 million euro and, with a world
                                               market share of 37%, is the market leader in diode and thyristor semicon-
                                               ductor modules. In its first year of trading, SindoPower‘s sales volume was in
                                               the millions; in its second year, they were in the tens of millions, generating
                                               sales in more than 70 countries on all five continents. Its target groups are
                                               purchasers of replacement parts and production procurement and engi-
                                               neers during the technical planning phase of projects. The objective of the
                                               platform was above all to improve the efficiency of the ordering process.

                                               SindoPower endorses a policy of total transparency. The target groups are
                                               provided with a wide range of information on products, delivery methods
                                               and inventories in order to avoid traditional enquiries that can now be answe-
                                               red directly online. At the same time, technical support has been intensified
                                               and work has begun on a knowledge database. A positive sign is that both
                                               large and small businesses make use of the portal. Even large customers of
                                               the Semikron group have switched to the portal in order to benefit from its
                                               advantages (see Figure 17). For customers, speed of response is a decisive
                                               factor. SindoPower extends into the E-commerce area the traditional ‚one
Fig. 17: Screenshot of the SindoPower shop
                                               face to the customer‘ care with a 5-day/24-hour support service in 10
                                               languages via TechChat, telephone and e-mail in real time in order to reduce
                                               response times (see Figure 18). The customer advice service, as well as
                                               providing the economic benefits enjoyed specifically by manufacturers, is a
                                               clear USP for SindoPower. The quality of advice received from the Sindo-
                                               Power customer service will remain an important differentiating factor as
                                               compared to other large distributors in the future (cf. Demmelhuber 2010;
                                               Hsieh 2010; no author 2009, p. 28).

                                               Though it is set up on a centralised basis, the motto ‚think global, act local‘
                                               plays an important role there. Customers in particular countries (currently
                                               USA, Europe and China) have access to:

                                               ‚ Native language support
                                               ‚ Payment in local currency to a bank account from that country
                                               ‚ Receipt of packages with INCOTERM DDP (as a domestic parcel without
                                                 going through import formalities)

Fig. 16: Screenshot of SindoPower‘s TechChat   In summary, it may be noted that it is not the E-commerce shop as such that
                                               shows the way to success for a B2B E-shop, but rather the central services
                                               bound to it that provide added value to B2B customers so that they do not
                                               get the impression that E-commerce was introduced merely to save the
                                               manufacturer money (cf. Demmelhuber 2010).
This is a platform and network for logistics providers (see Figure 19).
The medium-sized logistics sector, especially hauliers active internationally,
are hardly networked together at all. They certainly do not represent the
global operational network of partner logistics specialists also known as
agencies in the logistics sector. Hauliers and agents are not equipped with
compatible IT systems.

Logisticator is a global internet network for logistics firms and their custo-
mers. Logisticator facilitates the networking of logistics providers and (poten-
tial) agents, despite their different, incompatible IT infrastructure. Thus the
network functions as an ‚intranet‘ between the actors (cf. von Elsner, 2010).

In addition, it offers online tools for electronic rate enquiries (by customers
to agents or by dispatching to receiving logistics providers, etc.), online
shipping schedules for sea and air freight, electronic booking of sea and air
freight, sales tools, as well as delivery tracking for agents and customers (see
Figures 19 and 20).                                                                Fig. 19: The Logisticator dashboard

In addition, Logisticator enables every logistics provider to invite its custo-
mers to a separate network, the Extranet. The advantage for the haulier,
besides improved customer commitment, is that it receives rate enquiries
and bookings directly from its customers using online forms. Customers can
thus maintain an overview of their deliveries and have a direct connection
with their haulier (cf. von Elsner, 2010).

                                                                                   Fig. 20: E-booking for air and sea freight
6. Development trends and conclusions
This white paper has given a picture of the current state of evolution. The      In a similar way, there is a palpable trend towards a more direct and
whole field of E-commerce with its specialised orientations B2B and B2C is       personalised style of relationship management. In current discussions on
on the move. A reference should be made here to current developments that        the field of B2B E-commerce there is an increasing demand to build up
may be subsumed under the key word ‚social commerce‘. Some business              direct relationships to the relevant stakeholders and clients (cf. e.g. Walker,
models (e.g. conventional E-markets or Agora models) will respond with a         2009). Behind this phenomenon is the wish to not just deliver products and
different degree of sensitivity to technological innovations than others. The    services securely, fast and reliably, but to relive the traditional, personal rela-
integration of the functionalities provided by the social web will be substan-   tionship between seller and customer. Personal contact and the consequent
tially easier for classical models than for those with highly specialised and    advice given to the customer is gaining in importance and now represents a
differentiated models, such as application service providers. Thus the social    substantial success factor in the B2B sector (cf. Hsieh 2010). Through this
web can be seen as a new instigator in the E-commerce area, and especially       trend, previously ignored potentials in the online sector can now be fully
in the B2B sector.                                                               used and integrated.

However, it can be expected that there will be an increasing approximation,
not to say convergence, between the B2B and B2C E-commerce models.
Value-added configurations will thus be extended to fine tune on-platform
content propagated by the actors in the form of evaluations and comments,
thus gaining further information in relation to reputations. The interfaces
made available between suppliers and consumers will therefore change
radically. The focus of B2B actors is thus evolving with increasing speed.
While today consumers are still mostly perceived as customers, a trend
seems to be slowly emerging to see such customers also as consumers. The
individual person that interacts in daily life with shopping systems such as
Amazon, NetFix or eBay, increasingly expects to see the same functionalities
in the B2B sector.
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Published by:
T-Systems Multimedia Solutions GmbH
Riesaer Straße 5
D-01129 Dresden
Tel.: +49 351 2820 – 0
Fax: +49 351 2820 – 5115

Jacqueline Walbert
Tel.: +49 351 2820 – 2849
E-Mail: Jacqueline.Walbert@t-systems.com
                                           As at: 01/2011

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