B2B Vs. B2C
Length: 1197 words (3.4 double-spaced pages)
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Supply chain management, whether in a traditional or E-commerce environment, involves distributing products, goods and services from point of manufacture to the delivery of the final product. Supply chain management, whether related to B2B or B2C retailers involves manufacturing, storage, distribution and delivery of products and services to consumers and other businesses. In addition, the supply chain philosophy ensures that customers receive the right products at the right time at an acceptable price and at the desired location. Increasing competition, complexity, and geographical scope in the business world have led to the continuing improvements in the capabilities of the personal computer and have made the optimization of supply chain performance possible. Electronic mail and the Internet have revolutionized communication and data exchange, facilitating the necessary flow of information between businesses, suppliers and customers within the supply chain (Helms, Marilyn, 2008). B2B supply chain management is slightly more complex than B2C transactions, as B2B wholesalers, distributors and manufacturers are typically working with larger corporate entities. For supply chain management to work in a B2B or in a B2C environment, the focus must be on providing customers with the utmost in quality services. This is especially the case since in today's economy what firms are mainly selling to each other is information, not just in the case of services such as banking and digital applications, but even when the product concerned is a physical product. The real value added comes from optimizing price and specification, as opposed to the physical transfer of the product (Vasarhelyi, Miklos, 2007).
The specific differences and similarities between supply chain management for B2B and B2C are explored in greater detail below.
B2C e-commerce refers to the emerging commerce model where businesses or companies and consumers interact electronically or digitally in some way. In a B2C e-commerce, the focus is more about enticing prospects and converting them into customers, retaining them and sharing value created during the process. The ultimate goal is the conversion of shoppers into buyers as aggressively and consistently as possible. The typical B2C flow of information between a business and the consumer is typically through the medium of Internet. This flow includes product orders/service requests from customers, product information, specifications and providing of services. In addition, B2C offers many benefits to both the company and the customers as well. The company can expect to see benefits such as increased demand, a low-cost route to the global market, cost reduction of promotion and sales and most importantly, overall reduced cost. Furthermore, the customers will benefit from lower process, wider choices, better information and most of all, convenience (Patton,S, 2001).
B2B commerce is basically doing business electronically or conducting business over the internet from business to business. It is usually associated with buying and selling information, products, and services by way of the internet or by using private Helms, Marilyn networks shared among business partners. B2B also know as emarkets allow companies to synchronize activities such as product design, procurement, transportation planning, production planning, and marketing. B2B markets give businesses a more flexible, open, reliable, highly available and scalable environment. There has to be a basic understanding of how a business buys and what a business buys in order to categorize the type of B2B markets. The volume of B2B transactions is much higher than the volume of B2C transactions. One reason for this is that businesses have adopted electronic commerce technologies in greater numbers than consumers. Also, in a typical supply chain there will be many B2B transactions but only one B2C transaction, as the completed product is retailed to the end customer (CIO Decisions, 2005).
B2B vs. B2C Supply Chain
The B2B and B2C supply chains might appear to be similar however, that assumption can not be further from the truth. The main difference between the two is the amount of channels a product must flow through before reaching the end user. With B2B there are less total channels however they are greater in size when compared to the greater amount of smaller channels with B2C. (Marketing Profs, 2005) The next difference comes with technology better known as integration. B2B needs to be integrated to their business partner’s software for smooth supply and billing. This is an aspect that the B2C does not have to worry about since the customer will return to them out of loyalty versus convenience. Supply chain in a B2B setting, tends to have to integrate 2 supply chains such as those of your business and the customer. In B2C there is only one supply chain. Distribution is more extensive in a B2C model than in a B2B model because compared to B2B there are more consumers in B2C. Furthermore, marketing, branding in particular, plays a more important role in B2B as compared to B2C. B2B concerns itself primarily with supply chain management. These are portals that allow businesses to deal directly with their suppliers and distributors online allowing electronic transfer of orders, invoicing and even payments. B2C concerns itself with selling to the end user. Typically these are sites like Amazon. In addition, B2C sites are more interested in passing the goods to the end user rather than the supplier.
In conclusion, E-business has been a powerful and compelling enabler of supply chain integration across a wide range of industries. As demonstrated, not only has technology changed the relation ship between a business and it customer, it has also changed the relation of business to business. The supply chains of both have become faster moving yet still as challenging and as different as ever. As a result of e-business, many of the core supply chain concepts and principles have been put in to practice in an effective manner. These concepts as they pertain to B2B and B2C sites are information sharing, multi part collaboration, design for supply chain management, customization, partnerships and most of all, joint performance measures. The internet has allowed companies to come up with highly innovative solutions that accelerated the widespread adoption of these core supply chain principles.