As a part of the trend towards a more global economy, the final decades of the twentieth century saw the birth of electronic commerce (e-commerce). E-commerce, the buying and selling of goods and services over electronic channels, has become an exploding phenomenon. E-commerce can be divided into three major categories:
- B2C - Business to Consumer: Those aspects of e-commerce that involve Internet sales by businesses to consumers.
- B2B - Business to Business: Those aspects of e-commerce that involve the exchange of goods or services between companies over the Internet.
- C2C - Consumer to Consumer: Those aspects of e-commerce that involve Internet sales by consumers to consumers.
The B2B category involves the exchange of goods or services between companies with the receiving company intending to use the received good or service in the furtherance of its own production processes (not the final consumption of that good or service). Still, one must remember that all businesses are both the suppliers and customers of other businesses. B2B is thus involved in ALL aspects of the supply chain. Therefore, B2B systems are a part of the efforts of a company to monitor and improve its external relationships with the other businesses in its supply chain.
But e-commerce is not only about buying and selling in the global marketplace, it is about being aware of global opportunities and reducing the production and sales cost of the business. You may be more familiar with the B2C type of business, as you may have personally purchased something over the Internet. However, by far the greatest volume of e-commerce is found in B2B transactions. A recent study by the US Department of Commerce found that sales via e-commerce had a reported growth of 24.6% for the year 2005 versus 2004 [6]. Another recent report from Forrester Research projects that the European Union's online B2B transactions will surge from the 2001 figure of 77 billion to 2.2 trillion in 2006 - increasing from less than 1 percent of total business trade to 22 percent [7].
This is an information systems book; hence the B2B systems discussed in this chapter involve the combination of information technologies and the business processes that support the exchange of goods, services, information, or money between organizations. However, we must acknowledge those B2B systems that have existed long before computers or the Internet were invented. Such systems include those that were not originally technology-based, such as the postal system, the banking system, the accounting system, the legal system, the taxation system, etc. In their own times, these systems were considered exemplars of innovative means to facilitate the exchange of both information and goods between business entities. Nowadays, all of these systems utilize technology to a great extent. Other technology based-systems that fulfilled similar roles in the recent past include the telegraph, telephone, and television systems. Taking this perspective, we can say that B2B systems are not new but have evolved from the older manual or paper-based systems of the past. The main difference however is that information and communication technologies (ICT) are now key components of B2B systems. As a result, ICT have both accelerated the business processes they are supporting and reduced their costs.
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