Q. Define different e-commerce model with suitable examples. Explain the business benefits and limitations of B2B model. (6+4) marks
answer:
E-Commerce or Electronics Commerce is a methodology of modern business, which addresses the requirements of business organizations. It can be broadly defined as the process of buying or selling of goods or services using an electronic medium such as the Internet.
E-commerce business models can generally be categorized into the following categories.
- Business - to - Business (B2B)
- Business - to - Consumer (B2C)
- Consumer - to - Consumer (C2C)
- Consumer - to - Business (C2B)
- Business - to - Government (B2G)
- Government - to - Business (G2B)
- Government - to - Citizen (G2C)
Business-to-Business
Business to Business (B2B) is the direct sales of goods and services between two businesses. As an example, a wholesaler places an order from a company's website and after receiving the consignment, sells the end product to the final customer who comes to buy the product at one of its retail outlets.
Business-to-consumer
This eCommerce model involves a commercial transaction between a business and the end-user. Currently, this method is most common amongst online companies for several reasons. For example, A customer can view the products shown on the website. The customer can choose a product and order the same. The website will then send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.
Consumer-to-Consumer
In the C2C eCommerce model, the two traders involved are consumers. In other words, C2C is when a consumer sells a good or service to another consumer. For example, a website following the C2C business model helps consumers to sell their assets like residential property, cars, motorcycles, etc., or rent a room by publishing their information on the website and the another customer may buy the product by viewing the post/advertisement in the website.
Customer-to-Business
This model involves a consumer selling their products or services to a business or organization. Companies that use this model allow customers to showcase their work and bid for the offering. An excellent example of this service is Upwork, a freelance website that allows freelance creators the visibility needed for companies to employ their skills.
Business-to-Government
It is a variant of B2B model. In this sales model companies sell products, services and information to governments or government agencies. For example, a small IT business supporting services to a town government or the big company like Boeing company, the business that builds helicopters, fighter jets, missile defense systems and surveillance aircraft, etc. and provides to the government for its use.
Government-to-Business
G2B e-commerce is a business model were all the information and services are provided by the government to the business organizations. The information is shared through a vast network of different government websites. One common example of G2B/B2G collaboration is in government contracting. Government contract capture programs can collate the various tasks associated with viewing and applying for government contracts, making it easier for businesses to bid, win, and keep contracts in order.
Government-to-Citizen
Governments use G2C model websites to approach citizen in general. Such websites support auctions of vehicles, machinery, or any other material. Such website also provides services like registration for birth, marriage or death certificates. The main objective of G2C websites is to reduce the average time for fulfilling citizen’s requests for various government services.
Benefits of B2B model:
- Bigger sales with bigger values
- Partnerships with retailers that result in regular orders.
- Long term customer relationships
- Lower costs of operation resulting from being able to operate in bulk.
- Data centric process that drive effective supply chain management
Limitations of B2B model:
- Customers may make more demands, from pricing to customization.
- Businesses often have to please a set of buyers leading to a longer buying process.
- It is infinitely more difficult to use digital marketing for a B2B than it is for a B2C.
- There may be more time between sales.
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