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Characteristics of B2B EC

  1. Parties to the Transaction: B2B commerce can be conducted directly between a buyer and a seller or it can be conducted via an online intermediary. The intermediary is an online third party that brokers the transaction between the buyer and seller; it may be a virtual intermediary or a click-and-mortar intermediary. 
  2. Types of Transactions: B2B transactions are of two basic types: 
    1. Spot Buying: It refers to the purchasing of goods and services as they are needed, usually at prevailing market prices, which are determined dynamically by supply and demand. The buyers and the sellers may not even know each other. Stock exchanges and commodity exchanges (oil. sugar, com, etc.) are examples of spot buying. Spot buying may be conducted most economically on the public exchanges. 
    2. Strategic (Systematic) Sourcing: This involves purchases based on long-term contracts. Strategic purchases can be supported more effectively and efficiently through direct buyer-seller online negotiations, which can be done in private exchanges or private trading rooms in pub- lic exchanges.
  3. Types of Materials Traded: Two types of materials and supplies are traded in B2B:
    1. Direct Materials: These materials are materials used in making the products, such as steel in a car or paper in a book. The characteristics of direct materials are that their use is scheduled and planned for. They are usually not shelf items, and they are frequently purchased in large quantities after extensive negotiation and contracting. 
    2. Indirect Materials: These are items, such as office supplies or light bulbs that support production. They are usually used in Maintenance, Repair, and Operation (MRO) activities. Collectively, they are known as non-production materials. 
  4. Direction of Trade: B2B marketplaces may be classified as vertical or horizontal. 
    1. Vertical Marketplaces: They deal with one industry or industry segment. For example, marketplaces specialising in electronics, cars, steel, or chemicals. 
    2. Horizontal Marketplaces: These marketplaces concentrate on a service or a product that is used in all types of industries. For example, office supplies, PCs, or travel services.
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