E-commerceE-commercecourse 2course 2

B2B

Source: The Economist , 26 juin 1999

Supply side• Fewer suppliers• No activity that does not bring added value• All information is electronic• PDM (Product Data Management)

– Spec are provided to resellers (clothing industry)• Co-opetition

We tell our suppliers exactly what our daily production requirements are.

Buyers are often so busy trying to protect themselves that the seller can ’t really add a

lot of value

(Michael Dell)

Velocity, a key concept« we use inventory information to work both on

thefront and the back end at the same time»• Key advantages

– Accounts payables and receivable– Quality management– Selection of suppliers– «Scalable» business

• All of the above have an impat on cost and profit margins

B2B: The two basic strategies

– Intranet as a way to reduce acquisition cost. This model is very much like the old EDI

– Market places• Chemdex.com• Verticalnet.com• Mediagrif.com

Market places do have a future if….

• They operate in commodities

• If we are not looking for JIT applications

• If there are price fluctuations

“How much of your purchasing are you doing through eMarketplaces in 2000? In 2002?”

eMarketplace purchases in 2002

0-25% 26%-50% 51%-75% 76%-100%

15 126 8

Number of

companies

7%

46%

Commodities

2000

2002Based on 41 companies responding

eMarketplace purchases in 2002

0-25% 26%-50% 51%-75% 76%-100%

18 142 6

Number of

companies

4%

39%

Direct materials2000

2002Based on 40 companies responding

7%

64%

Indirect materials

2000

2002Based on 50 companies responding 0-25% 26%-50% 51%-75% 76%-100%

7 12 13 18Number of

companies

eMarketplace purchases in 2002

eMarketplace neutrality

“How important are the following in your choice of a commodities eMarketplace?”

Based on 35 companies buying commodities

1 2 3 4 5

Usability

eMarketplace fees

Participation of existing vendors

Supply chain collaboration

Integrated logistics

Equity participation

Community and content features

Integrated financing

Not important Critical

4.3

4.3

4.0

3.9

3.7

3.7

2.7

2.5

2.5

VerticalNet.com

1999 1997

REVENUS 20 757 921 $ 791 822 $

sales and marketing 26 268 370 $ 2 300 365 $TOTAL EXPENSES 75 582 035 $ 5 455 505 $

OPERATING LOSS -54 824 114 $ -4 663 683 $

LOSS PER $ OF SALES -2,64 $ -5,89 $% GROWTHrevenus 25marketing 10

2000 1999

REVENUS 77 232 000,00 $ 11 561 000,00 $

sales and marketing 44 739 000,00 $ 15 316 000,00 $%expenses 45,14% 45,16%TOTAL EXPENSES 99 110 000,00 $ 33 912 000,00 $

OPERATING PROFITS/LOSS -94 581 000,00 $ -33 345 000,00 $

PROFITS/LOSS PER $ OF SALES -1,22 $ -2,88 $% GROWTHrevenus 5,68marketing 1,92

Market places are saturating