Transactions between two companies or businesses conducted over the internet, extranet, intranet or other networks are referred to as B2B. Efraim Turban (2008:219). This type of transactions takes place in e-marketplaces which can be private, public or consortia. They allow for a situation where one or many businesses are able to supply or purchase goods and services from another set of one or many businesses. In the case of an organization that does not previously have an e-marketplace, auctions can take place through the use of intermediaries whose job it is to attract many potential buyers to the auction site in the case of a sell side or many potential sellers to the auction site in case of a buy-side.
ROLE OF INTERMEDIARIES IN B2B
The word intermediaries in B2B refers to electronic middlemen as mentioned by Kourgiantakis and Petrakis (2007), they are necessary to facilitate online trades between buyers and sellers who are businesses. Nilsson and Lundqvist (2006:7) reported that according to Murtaza, Gupta and Carrol (2004), B2B transactions are projected to exceed $16 trillion in the US alone. They also claimed that Lu and Anthony (2003) estimated that there are 4000 e-marketplaces worldwide. The e-marketplaces can be described as an online market where buyers and sellers exchange goods and services. Though this type of market is different from an offline arrangement as seen in auctions or our traditional brick and mortar stores it makes use of intermediaries just like in the traditional markets. The intermediaries stand in between the two parties involved in the transaction ensuring that a double coincidence of want occurs. Such coincidence of wants can either be many-to-one or one-to- many i.e the buyer side and the seller side respectively.
The significance of using intermediaries in B2B transactions cannot be overemphasized; they assist in the following areas
-Businesses are able to concentrate their resources on their core activities instead of uncoordinated and multiple searches for other businesses to transact with
-The supply chain is shortened, reducing the number of weeks and months involved to conclude a transaction; businesses are able to do more in a short period.
-Huge reduction in cost in procurement and sales
-The use intermediaries improves the online of experience of all the parties to a transaction through regularly updated means of collaboration
-Use of intermediaries help in organizing suppliers and purchasers for easy and timely occurrence of transactions
BUY-SIDE AND SELL-SIDE INREMEDIARIES
The two types of intermediaries are used in private e-marketplaces, in the case of the buy-side; one buyer who buys from many sellers hires the intermediary and may maintain control of who is invited to participate in the auction. A similar situation is noticed in the case of a sell-side where one seller who sells to many buyers hires the intermediary and as such maintains the control of the whole event by deciding which buyer participates or not.
The difference between the two intermediaries lies in the activities carried out by the two. While the buy-side intermediary is responsible for inviting many sellers who will sell to the single buyer, the sell-side intermediary is responsible for inviting many buyers who will be buying from the single seller. Any scenario different from one to many and many to one is referring to another type of B2B transaction that can either be:-
2.Supply chain improvements and collaborative commerce
Businesses always have buying and selling needs, its either the company wants to dispose of old assets or wants to buy raw materials for its business activities. Materials purchased in a B2B transaction can be described as direct (when it is useful in only one industry or production of one product) or indirect (when it is used to support production in general and not one particular product).
Intermediaries have great roles to play in transactions that occur between businesses, especially when the hiring business does not have its own e-marketplace, this makes it important for the sell-side to be able to identify an effective intermediary laden with the duty of inviting many buyers while the buy side identifies an effective intermediary as well to invite many sellers for the purpose of shortening the length of the supply chain. This arrangement has been found to reduce the cost of business procurements and asset disposals in many organizations. Turban et al (2008:222)
Daniel Nilsson and Krister Lundqvist (2006), Understanding B2B e-hubs and the value they provide Department of Business Administration, Lulea University of Technology.
Markos Kourgiantakis and Emmanuel Petrakis (2007), Modelling B2B E-Marketplaces: The role of intermediaries Department of Economics, University of Crete.
Efraim Turban, David King, Judy McKay, Peter Marshall, Jae Lee, Dennis Viehland, (2008) Electronic Commerc – A Managerial Perspecive ISBN 9780135135440 Intl Ed. Pearson Education Ltd. london