Most of the examples we’ve described so far are examples of sell-side e-commerce sites. A sell-side site is a site in which a single seller sells products to many different buyers. Figure 4.5 An Example of a Sell-Side B2B Web site shows the direction of the sale of goods and services sold on a sell-side site, such as the Hubert Company has.
But there are buy-side e-commerce sites as well. A buy-side site is one in which a business buys products from multiple sellers that go there to do business with the firm. Some government agencies have buy-side sites. B2B exchanges are e-commerce sites where multiple buyers and sellers go to find and do business with one another. (You can think of the exchanges as being somewhat like Craigslist but composed solely of business buyers and sellers.) Sites such as these make their money by charging buyers and sellers a fee when they conduct transactions with one another. In the late 1990s and early 2000s, B2B exchanges sprouted up on the Internet like weeds. Cyber entrepreneurs took a “build it and they will come” attitude, hoping to earn a fee off the transactions conducted on site. Many of these sites have failed, but not all of them. One of the most successful and largest exchanges is Alibaba.com, founded in 1999 as a trading platform for small and medium manufacturers to sell their wares. 1ChemNet.com is a global exchange where companies go to buy and sell chemicals of all kinds. The homepage for ChemNet is shown in Figure 4.6 Need chemicals? You can find them on the B2B exchange Web site ChemNet. . (Ammonium, sodium, or potassium, anyone?)
B2B auctions are Web-based auctions that occur between businesses. The auctions can be either sell side or buy side. An example of a sell-side auction is a B2B auction that occurs on eBay or a site like AssetAuctions.com where surplus industrial equipment is sold. Motorola regularly sells small quantities of products at the end of their life cycles on eBay. Motorola has found that eBay is a good way to make some money from products that businesses are reluctant to buy otherwise because they are being discontinued. 2 Sell-side auctions are sometimes referred to as forward auctions.
Buy-side auctions, by contrast, reverse the traditional auction formula, which is to help the seller get the highest price for the product. Instead, the buyer initiates the auction in order to find the cheapest supplier of a product. Sellers then bid against one another, offering the lowest prices they can for their products, in order to get the buyer’s business. Because the roles of the buyers and sellers are reversed in buy-side auctions, they are often referred to as reverse auctions.
Not all companies use an intermediary like eBay or AssetAuctions to conduct their auctions, though. Some companies conduct their own auctions on their Web sites so they don’t have to pay a fee to an intermediary. For example, General Motors auctions off reconditioned vehicles to auto dealers on its own Web site, http://www.gmonlineauctions.com.
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