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Business-to-business (B2B) is the exchange of products, services, or information between businesses rather than between businesses and consumers (B2C).

History

Electronic commerce as such exists already for over 20 years. In sectors such as retail and automotive, Electronic Date Interchange (EDI) for application-to-application interaction has been used. For defence and manufacturing, Computer Aided Logistics Support (CALS) has been developed to integrate information across larger parts of the value chain. These forms of electronic commerce have however been fairly limited in their diffusion and take up.

With the advent of the Internet, B2B electronic commerce has taken an explosive development. B2B e-commerce is accounting for the main share of electronic commerce. According to CAGR, the money volume of B2B exceeds that of B2C by about 10 to 1, with 149.1 bn Euro in 2001 for B2B in Western Europe compared with 22.5 bn Euro for B2C.

Trends

Despite the dot.com crisis, B2B is expected to grow considerably in the coming years. In its July 2002 report The Future Of Europe's Online B2B Trade, Forrester research estimates B2B revenue worldwide to be $2.2 trillion Euro in 2006, and net trade to surge from 2% of total business trade in 2002 to 10% in 2004.

Companies have many options to buy and sell over the Internet. Besides EDI, which is still widely used, they can buy on a supplier’s website or sell over their own Internet portal. An option widely used are also B2B electronic marketplaces.

Benefits for companies

The main benefits companies undertaking B2B have are

Cost savings due to savings in electronic purchasing and sales, effective supply chain management, collaboration, increased market transparency, increased global sourcing possibilities and the expansion of existing and new markets.
Innovation orientation for new products and services, due to the possibility for close interaction and cooperation with customers and suppliers through technology partnership and collaborative commerce.
Increased time to market.

According to a Goldman Sachs study, B2B estimated cost savings by sector range from 5 % in the health care sector up to 29-39 % in the electronic component sector. For more information and case studies on cost savings achieved see the report Impact of E-Commerce on the Economy .

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