by When eCommerce is extended to supply chain management between and among businesses, we get a new concept, which is called Business to business (B2B). B2B area is nowadays growing much faster than B2C and about 80% of the e-commerce is this type.
Companies are able to manage different element along the supply chain like manufacturers, distributors and dealers. So B2B e-commerce is simply e-commerce between two or more companies. Main focus in B2B is on procurement where as B2C already focuses on selling and marketing.
There are two distinct aspects of B2B e-commerce that separate it from the more familiar business-to-consumer (B2C):
Flexibility in pricing: Transactions between businesses often require variability in the pricing of products between purchasers whereas B2C the price is same for everybody or varies rarely in the B2C marketplace.
Integration of business systems: to realize increased productivity and savings, businesses involved in B2B will integrate their internal systems together, enabling less human intervention.
B2B on the internet sounds very attempting, but before making any investment in B2B e-commerce, a company must identify the value created and the effort required for implementation under each of the three categories.
The relative position of the three categories will not be the same for all firms, and position will vary based on the supply chain strategy and competitive environment.
A company must tailor its e-commerce implementation to support categories where the value created is high relative to the cost of implementation.
There are five main ways to send and receive B2B payments:
- Checks: This category includes traditional paper checks and electronic checks issued by a buyer to a seller. When the check is deposited, the seller’s bank will request payment from the buyer’s bank.
- Wire transfers: These are funds transfers between banks that are routed through a financial network like SWIFT. Wire transfers usually deliver money within hours.
- Electronic bank transfers: These are payments between banks that are routed through the Automated Clearing House (ACH). This is one of the safest and reliable payment systems, but bank transfers take a few days longer than wire transfers.
- Credit cards (including one-time use virtual credit cards): Credit cards allow the seller to receive payment quickly, but the buyer can defer payment for one or more billing cycles.
- Payment gateway: A payment gateway is an online payment platform that allows the buyer to pay for goods or services online during the checkout process.
Each option differs in ease of use for the sender and recipient, cost, and security. That said, most businesses are shifting away from paper checks and moving toward electronic and digital payments. Below, we’ll introduce you to some B2B payment products that cover the range of different payment processing options.
