In this, both the parties involved are business firms and therefore, it has been named as B2B i.e., business to business. Historically, the term e-commerce originally meant for facilitation of B2B transactions using Electronic Data Interchange (EDI) technology to send and receive commercial documents like purchase orders and invoices. Salient aspects of B2B Commerce:
1. Need: Creation of utility requires a business to contact with a number of other businesses which
- May be suppliers
- May act as channel of distribution.
- Different middlemen in different locations;
- Changing production as per specifications of the customer.
2. Benefits:
- It strengthens and improves the distribution system of a firm. For example, each consignment of goods from a warehouse and the stock in hand can be monitored and replenishments and reinforcements can be set in motion as and when needed.
- A customer’* specifications can be routed through the dealers to the factory so that there may be customized production.
- B2B E-commerce expedites the movement of information and documents.
- It also expedites money transfers.
3. Example: The manufacture of an automobile requires assembly of a large number of components which in turn are being manufactured elsewhere. To reduce dependence on a single vendor, the automobile factory cultivates more than one vendor for each of the components. A network of computers is used for placement of orders, controlling production and delivery of components and making payments.
