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Electronic Commerce Ch05
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Part 3: Business-to-Business E-Commerce
B2B E-COMMERCE: SELLING
AND BUYING IN PRIVATE
General Motors’ B2B Initiatives
5.1 Concepts, Characteristics, and Models of
5.2 One-to-Many: Sell-Side E-Marketplaces
5.3 Selling via Intermediaries and
5.4 Selling via Auctions
5.5 One-from-Many: Buy-Side
E-Marketplaces and E-Procurement
5.6 Buy-Side E-Marketplaces: Reverse
5.7 Other E-Procurement Methods
5.8 Automating B2B Tasks
5.9 Infrastructure, Integration, and
Software Agents in B2B EC
Real-World Case: Eastman Chemical Makes
Procurement a Strategic Advantage
Upon completion of this chapter, you will be
1. Describe the B2B field.
2. Describe the major types of B2B models.
3. Discuss the characteristics of the sell-side
marketplace, including auctions.
4. Describe the sell-side intermediary models.
5. Describe the characteristics of the buy-side
marketplace and e-procurement.
6. Explain how reverse auctions work in B2B.
7. Describe B2B aggregation and grouppurchasing
8. Describe other procurement methods.
9. Explain how B2B administrative tasks can be
10. Describe infrastructure and standards
requirements for B2B.
11. Describe Web EDI, XML, and Web Services.
Electronic Commerce 2008: A Managerial Perspective, by Efraim Turban, David King, Judy McKay, Peter Marshall, Jae Lee, and Dennis Viehland. Published by Prentice Hall. Copyright © 2008 by Pearson Education, Inc. The Solution
To solve the problem of connecting dealers and suppliers, GM established an extranet infrastructure called ANX (Automotive Network eXchange). ANX, which was supported by other
automakers, has evolved into a B2B exchange, Covisint
(covisint.com), which is described in more detail in
Online File W6.2. To address the capital assets problem,
in early 2000 GM implemented its own electronic
market on covisint.com from which forward auctions are
conducted. The first items put up for bid were eight 75-ton
stamping presses. GM invited 140 certified bidders to view the pictures and service records of the presses online. After only 1 week of preparation, the auction went live online, and the presses were sold in less than 2 hours.
For the resource procurement problem, GM automated the
bidding process using reverse auctions on its e-procurement site. Qualified suppliers use the Internet to bid on each item GM
needs to purchase. Bids are “open,” meaning that all bidders can see the bids of their competitors. GM is able to accept bids from many suppliers concurrently and, using predetermined criteria, such as price, delivery date, and payment terms, can award jobs quickly to the most suitable bidder.
Within just 89 minutes of the opening of the first forward auction, eight stamping presses were sold for $1.8 million. With the
old offline method, a similar item would have sold for less than half of its online price, and the process would have taken 4 to 6 weeks. Since 2001, GM has conducted hundreds of other electronic auctions. Other sellers were encouraged to put their items
up for sale at the site as well, paying GM a commission on the final sales price.
In the first online reverse auction, GM purchased a large
volume of rubber sealing packages for vehicle production. The price GM paid was significantly lower than the price the company had been...
References: Ariba.com. ariba.com (accessed March 2007).
Boucher-Ferguson, R. “Writing the Playbook for B2B.”
Wilson Internet, January 29, 2002.
Bush, D. “e-Sourcing Does Not Equal Reverse Auction.”
E-Sourcing Forum, March 24, 2006
com/?cat=8 (accessed September 2006).
March 24, 2003.
Cisco Annual Report. Cisco Systems, 2005. cisco.com/web/
“Dynamic Pricing for E-Commerce,” in Khosrow-Pour
Eastman. eastman.com (accessed November 2006).
eMarketer. “Has B2B E-Commerce Stagnated?”
Emarketer.com, February 3, 2003
Sources: Compiled from eastman.com (accessed November
2006), Aberdeen Group (2006), King (2001), Business Wire
(2003), and Microsoft (2000).
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