One of the fascinating facts about Web commerce is that while marketing and selling to consumers has become all the rage and is soaking up the spotlight, a quiet revolution of much more startling proportions has been happening, unheralded and unnoticed.
Here are the eye-popping statistics:
As of 2007 (the most recent reliable data), business-to-business (B2B) e-commerce is far outstripping business-to-consumer (B2C or Retail) e-commerce by a ten-fold factor in the case of the manufacturing sector.
In Manufacturing, e-commerce accounts for 35% of total B2B sales; in the Merchant Wholesalers category, the figure is 21%.
E-commerce in the B2C area accounts for only 3.2% of total B2C Retail sales in the United States.
What is going on here?
To find out, Dr. Bob had a conversation with Chetan Amalean, President of Digital Sabre Solutions, LLC out of Charlotte, N.C. Chetan is a customer software developer and helps clients, especially mid-tier companies, establish and grow their e-commerce businesses.
Dr. Bob: Chetan, what is driving an e-commerce explosion in the B2B market, while B2C is a laggard?
Chetan: What we are witnessing is a rapid move to efficiency. Before e-commerce, manufacturers and wholesalers had no choice but to stock supplies; communication was relatively slow and lead times were long. There were bottlenecks throughout the supply chain.
What e-commerce has allowed is a massive shrinking of lead times in the supply chains. E-commerce has allowed businesses to fully realize the potential of just-in-time ordering and lean practices, moving closer and closer to real-time, rather than having to actually have stock in the warehouse.
E-commerce has affected everything: document exchanges, sourcing agreements, purchase orders, shipping notices, inspections, billing and payments. Before, this all happened via fax or snail mail. Now it’s all e-commerce.
It’s all driven by demand and scale and quantity. E-commerce allows for much greater efficiency, because every partner in the supply chain knows exactly what is expected of them and when on a coordinated basis. It’s all right there on the e-commerce systems.
Part 2 to follow.
Comments welcome!
Dr. Bob
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