Instructor’s Manual
Chapter 5
B2B E-Commerce
Learning Objectives
Upon completion of this chapter, you will be able to:
1. Describe the B2B field.
3. Discuss the characteristics of the sell-side marketplace, including auctions.
4. Describe the sell-side intermediaries.
5. Describe the characteristics of the buy-side marketplace and e-procurement.
7. Describe B2B aggregation and group purchasing models.
8. Describe other procurement methods.
9. Define exchanges and describe their major types.
11. Describe third-party exchanges.
12. Describe how B2B can benefit from social networking and Web 2.0.
13. Describe Internet marketing in B2B, including organizational buyer behavior.
Content
Opening Case: Auction for Supplies Helps Portsmouth Hospitals
5.1 Concepts, Characteristics, and Models of B2B E-Commerce
5.3 Selling via Distributors and Other Intermediaries
5.4 Selling via E-Auctions
5.5 One-from-Many: Buy-Side E-Marketplaces and E-Procurement
5.7 Other E-Procurement Methods
5.8 B2B Electronic Exchanges: Definitions and Concepts
5.9 B2B Portals, Directories, and Ownership of B2B Marketplaces
5.11 Internet Marketing in B2B EC
Managerial Issues
Closing Case: iMarketKorea
Supplementary Videos for this Chapter
1. Dana Gardner discusses The Cloud and B2B Commerce @AribaLIVE 2010 (6:16 min)
Applications of cloud computing for B2B buying and selling online.
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Discussion of successful online B2B applications
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Answers to Pause/Break Section Review Questions
Section 5.1 Review Questions
1. Define B2B.
2. Discuss the following: Spot buying versus strategic sourcing, direct materials versus
indirect materials, and vertical markets versus horizontal markets.
Spot buying is the purchase of goods and services as they are needed, usually at
3. What are company-centric marketplaces? Are they public or private?
4. Define B2B exchanges.
5. Relate the supply chain concept to B2B transactions.
6. List the B2B online services.
7. Summarize the benefits of B2B.
Section 5.2 Review Questions
1. List the types of sell-side B2B transaction models.
2. Distinguish between use and nonuse of intermediaries in B2B sell-side transactions.
In some cases, firms may use an intermediary to provide some or all of their sell-side
3. What are buy-side and sell-side transactions? How do they differ?
4. Describe customer service in B2B systems.
Customer service in B2B systems is very similar to the customer service provided in B2C
5. Describe direct online B2B sales from catalogs.
B2B can use catalogs in much the same way that B2C merchants can. Merchants are able
6. Discuss the benefits and limitations of direct B2B sales from catalogs.
There are several benefits to direct sales including: Lower order processing costs, a faster
Section 5.3 Review Questions
1. What are the advantages of using intermediaries in B2B sales?
2. What types of intermediaries exist in B2B?
3. What special services are provided to buyers by Boeing Parts? (Online File W5.7.)
4. Compare an e-distributor in B2B to Amazon.com. What are the similarities? What are
the differences?
Section 5.4 Review Questions
1. List the benefits of using B2B auctions for selling.
2. List the benefits of using auction intermediaries.
3. What are the major purposes of forward auctions, and how are they conducted?
Section 5.5 Review Questions
1. Define procurement and list the major procurement methods.
2. Describe the inefficiencies of traditional procurement.
The traditional procurement system is inefficient because it involves large amounts of
3. Define e-procurement and its goals.
E-procurement is the electronic acquisition of goods and services for a business. E–
4. List the major e-procurement segments and some activities in each.
5. List the benefits of e-procurement.
Section 5.6 Review Questions
1. Describe the manual tendering system.
2. How do online reverse auctions work?
3. List the benefits of Web-based reverse auctions.
4. Describe the business drivers of GE’s TPN (now (GXS)) and its evolution over time.
(See Online File W5.11.)
Section 5.7 Review Questions
1. Describe a buyer-operated procurement marketplace and list its benefits.
2. Describe the benefits of desktop purchasing.
3. Discuss the relationship of desktop purchasing with internal procurement
marketplaces and group purchasing.
4. Explain the logic of group purchasing and how it is organized.
Group purchasing is based on the idea that individual buyers will be able to negotiate a
5. Describe how e-distributors operate and discuss their appeal to buyers.
6. How does B2B bartering work? What are its benefits?
1. Define B2B exchanges and list the various types of public exchanges.
2. List the major functions of exchanges.
3. What is dynamic pricing? How does it work?
4. List the potential advantages, gains, limitations, and risks of exchanges.
Section 5.9 Review Questions
1. Define B2B portals.
2. Distinguish a vortal from a horizontal portal.
3. Describe some directory services in B2B.
4. What is a third-party–owned exchange?
5. Define consortium trading exchanges.
Section 5.10 Review Questions
1. List some of the reasons corporations are using social networking in B2B EC.
Social networks allow businesses to identify decision makers and influences within firms,
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2. What are some of the benefits of social networking for B2B EC?
• Discover new business partners.
3. Discuss the strategies for B2B social networking.
4. Discuss the future of B2B social networking.
Student opinions will vary, but may focus on a larger role for social networking.
Section 5.11 Review Questions
1. Distinguish between organizational buyers and individual consumers.
2. Describe B2B EC marketing and advertising methods.
3. Explain how affiliate programs and data mining work in B2B EC.
4. What are infomediaries and what is their role in B2B?
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Answers to EC Application Case Questions
EC Application Case 5.1: BRADY CORPORATION REORGANIZES ITS E–
CATALOG PRODUCTION
1. Why did Brady need an e-catalog?
2. Why was the Excel-based catalog useless?
3. What are the benefits of the new e-catalog?
4. What did Endeca’s product contribute?
EC Application Case 5.2: W.W. Grainger and Goodrich Corporation
1. Enter grainger.com and review all services offered to buyers. Prepare a list of these
services.
2. Explain how Goodrich’s buyers save time and money.
3. What other benefits does Goodrich enjoy by using grainger.com?
4. How is desktop purchasing implemented at Goodrich Corporation?
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EC Application Case 5.3: AGENTRICS: A GIANT RETAIL EXCHANGE
1. Enter agentrics.com and find information about services offered, including auctions
and negotiations. Write a report.
2. Enter agentrics.com and identify the services offered and the benefits to retailers and
to suppliers. Write a summary.
3. Enter webmethods.com and find information about the item synchronization project
(for WWRE). Summarize the benefits to retailers and to suppliers.
EC Application Case 5.4: ALIBABA.COM
1. When the company’s IPO started trading, hundreds of large corporations rushed to
invest in it. Why?
2. Trace Alibaba.com’s revenue sources.
3. List the major services provided by Alibaba.com.
Answers to Individual Discussions Questions
1. Explain how a catalog-based sell-side e-marketplace works and discuss its benefits.
Sell-side catalog-based marketplaces are very similar to business-to-consumer catalog-
2. Discuss the advantages of selling through online auctions over selling from catalogs.
What are the disadvantages?
3. Discuss the role of intermediaries in B2B. Distinguish between buy-side and sell-side
intermediaries.
4. Discuss and compare all of the mechanisms that group-purchasing aggregators can
use.
5. Should desktop purchasing be implemented only through an internal marketplace?
6. Suppose a manufacturer uses an outside shipping company. How can the manufacturer
use an exchange?
7. Compare and contrast a privately owned exchange with a private e-marketplace.
8. How does ChemConnect change the market for commodity chemicals?
9. Compare external and internal aggregation of catalogs.
Answers to Class Discussions Questions
1. Discuss B2B opportunities in social networking.
2. Discuss risk in B2B social networking.
3. Discuss how globalization impacts B2B.
4. Relate B2B to the four P’s of marketing (product, pricing, placement, promotion).
5. Discuss potential channel conflict in B2B and how to deal with such conflicts.
6. What is the contribution of Alibaba.com to global trade? What are its potential
limitations?
7. Some say that exchanges must be owned by a third-party intermediary and that
consortiums should not be allowed to exist. Discuss.
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Internet Exercises
(Note: URLs may change over time; please check the Internet Exercises on the
1. Enter gxs.com and review GSX Express’s bidding process. Describe the preparations
your company would make in order to bid on a job.
Answers will vary.
2. Visit supplyworks.com and procure.com. Examine how each company streamlines the
purchase process. How do these companies differ from ariba.com?
3. Visit ebay.com and identify all activities related to its small business auctions. What
services are provided by eBay?
4. Enter ondemandsourcing.com and view the demo. Prepare a list of benefits to small
and mid-tier organizations.
5. Visit iasta.com, purchasing.com, and cognizant.com. Examine the tools they sell for
conducting various types of e-procurement. List and analyze each tool.
Student responses will vary.
6. Enter bambooweb.com and find information about EDI. Prepare a report.
Student responses will vary.
7. Enter thebuyinggroup.com, tidewatergpo.com, and other group purchasing sites.
Report on B2B group buying activities.
Student responses will vary.
8. Go to procurenet.com.au. Prepare a list of resources related to e-procurement.
Student responses will vary.
9. Go to alibaba.com and sign up as a member (membership is free). Create a product
and post it. Tell your instructor how to view this product.
Student responses will vary.
10. Compare the services offered by globalsources.com with those offered by
alibaba.com. Assuming you are a toy seller, with which would you register? Why? If you
are a buyer of auto parts, which would you join and why?
Student responses will vary.
11. Enter chemconnect.com and view the demos for different trading alternatives.
Examine the revenue model. Evaluate the services from both the buyer’s and seller’s
points of view. Also, examine the site policies and legal guidelines. Are they fair?
Compare chemconnect.com with chemicalonline.com and hubwoo.com. Which of these
do you think will survive? Explain your reasoning.
Student responses will vary.
12. Visit converge.com. What kind of exchange is this? What services does it provide?
How do its auctions work? Summarize in a report.
13. Enter dir.yahoo.com/Business_and_Economy/Business_to_Business. Prepare a list of
resources about exchanges and B2B directories.
Student responses will vary.
14. Enter smallbusiness.yahoo.com/r-mainCat-m-1-getting_started-i and summarize the
sell-side case.
Student responses will vary.
Team Assignments and Role Playing
1. Predictions about the future magnitude of B2B and statistics on its actual volume in
various countries keep changing. In this activity, each team will locate current B2B
predictions and statistics for different world regions (e.g. Asia, Europe, North America).
Using at least five sources, each team will find the predicted B2B volume (in dollars) for
the next 5 years in their assigned region. Possible sources of data are listed in Exhibit 3.1
(page 102).
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Student answers will vary based on which statistics are used and when statistics are
procured.
2. Each team should explore a different e-procurement method and prepare a paper for
class presentation. The paper should include the following about the e-procurement
method:
a. The mechanisms and technologies used
b. The benefits to buyers, suppliers, and others (if appropriate)
c. The limitations
d. The situations for which each method is recommended
Student answers will vary based on method selected.
3. Form two teams (A and B) of five or more members. On each team, person 1 plays the
role of an assembly company that produces television monitors. Persons 2 and 3 are
domestic parts suppliers to the assembling company, and persons 4 and 5 play foreign
parts suppliers. Assume that the TV monitor company wants to sell televisions directly to
business customers. Each team is to design an environment composed of membership in
exchanges they can use and present its results. A graphical display is recommended.
Student experiences and reports will vary.
4. Enter gtnexus.com and examine its offerings. Prepare a report on how exchanges can
benefit from its services. How does GT Nexus facilitate supply chains? Can it help e-
marketplaces?
End–of-Chapter Real-World Case: IMARKETKOREA
1. How do the support services benefit the exchange?
2. Relate this case to desktop purchasing.
3. Write a summary of the benefits of the exchange to buyers.
4. Write a summary of the benefits of the exchange to sellers.
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5. Compare iMK to Alibaba.com. What are the similarities and the differences?
6. Much of iMK’s success is attributed to the understanding of the Korean culture and
business environment. Given that iMK wants to expand internationally, what could be
some of its stumbling blocks?
7. Check the recent news and press releases (last 6 months) at imarketkorea.com. Identify
expansion patterns.
Student reports will vary.