Posts Tagged ‘consumer’

E-Commerce Supply Chain Analysis

August 16, 2009

E-Commerce has altered business worldwide. Corporations offer products to businesses and consumers, and monopolize the global spread of the internet as a communications and search tool. Both Business-to-Business (B2B) and Business-to-Consumer websites specifically target their chosen demographic in order to generate sales, albeit with different, unique features common to each.

In the following analysis, this author will examine the supply chain relative to both B2B and B2C websites, offering a glimpse at the path a product may take as it is purchased and fulfilled through internet commerce.

First, it is important to note the unique commonality of both B2B and B2C transactions. In many cases, consumer purchases, either on behalf of companies or the individual, now eliminate middlemen, particularly the traditional brick-and-mortar retailer. Whereas a purchase of a Dell computer may once have taken place at a Best Buy outlet (by the consumer) or through contacting Dell’s corporate sales unit (by corporations for large-scale computing purchases), this step in the supply chain no longer exists. There are exceptions among B2B and B2C websites (drop-ship e-commerce websites, for example), but for the most part e-commerce has streamlined the supply chain with this middleman elimination.

However, other unique properties exist in the e-commerce supply chain, and this author will first discuss the B2B transaction. Specifically, B2B commerce deals with the business transactions that occur between businesses. While some businesses may directly purchase products online from a manufacturer for that business’ use, in many cases B2B transactions still have another end-user outside of the B2B transaction.

For example, a manufacturer of redwood playsets has established a website for its retail outlets to select and purchase merchandise for sale in brick-and-mortar stores. While Walmart, Target, and Toys R Us are the “consumer” in this B2B transaction, the ultimate recipient of this purchased product through the play set manufacturer’s website is an individual consumer visiting these retailers.

B2B commerce offers several advantages to both the supplier and the purchaser. First, business procurement specialists can select and compare products at their leisure. In some cases, B2B websites offer a dearth of information regarding the particulars of various products and allow the corporate procurement specialist to compare the advantages of one purchase versus another. Second, B2B commerce eliminates many of the responsibilities bourne by the corporate salesperson. In the past, corporate sales representatives visited potential clients and spent ample time educating these corporations about the offered products. In the case of B2B commerce, businesses can now eliminate many of these time-consuming tasks and streamline their sales departments. If a corporation has questions regarding a large-scale transaction, in most cases it is possible for a lower-level sales associate to handle these queries. Only in highly sophisticated product purchases are executive level salespersons required in a B2B transaction.

B2C commerce has taken consumer retail by storm. Individuals have the luxury to compare prices through price comparison websites and analyze products from the privacy of their home. From a supply chain standpoint, B2C commerce can be more complex, as many e-commerce sites are acting as the online representation of a brick-and-mortar retailer. However, the middleman relationship is not eliminated; many e-commerce companies do not warehouse products. In this “drop-ship” business model, the e-commerce retailer takes an order from a consumer. The order is sent to the manufacturer by the e-commerce retailer. The manufacturer then ships the product to the consumer. It is important to note that in the drop-ship model, it is standard that the e-commerce company will handle all aspects of customer service, including consumer problems experienced after receipt of the product.

Both B2B and B2C commerce have clearly affected business on a global scale. With readily accessible communication provided by the internet, companies and consumers can purchase products instantly. Increasingly sophisticated websites make product information easily available to consumers, allowing individuals and corporations to make better-informed purchasing decisions. While the supply chain part of B2B and B2C businesses are different, in many ways the supply chain has become better organized through the use of automation.

Resources

A-K Strategic Business Solutions (2001). “What Is The Difference Between B2B and B2C?”. Retrieved online November 17, 2007 from http://www.akstrategic.com/b2b-or-b2c.html

Singh, M.P. (Nov.-Dec. 1999). “The End Of The Supply Chain?”. Internet Computing. Retrieved online November 17, 2007 from the EBSCO database, part of the University of Phoenix student library.