Impact of b2b markets on the economy of developing countries, Other Subject

The impact of B2B markets on the economy of developing countries is marked in the following:

Transaction costs-There is three cost areas that are considerably reduced throughout the conduct of B2B e-commerce.

 First is the cutback of search costs, as buyers require not go through multiple mediators to look for information about suppliers, prices and products as in a conventional supply chain. In terms of time, money and efforts spent, the Internet is a more capable information channel than its conventional counterpart. In B2B markets, buyers and sellers are gathered jointly into a single online trading society, dropping search costs even further.

Second is the decrease in the expenses of processing transactions (e.g. invoices, payment schemes and purchase orders) as B2B allows for the computerization of transaction processes and therefore, the rapid execution of the same compared to other channels (such as the fax and telephone). Effectiveness in trading transactions and processes is also improved through the B2B e-market's capability to process sales through online auctions.

Third online processing improves inventory management and logistics.

Disintermediation- Through B2B e-markets, suppliers are able to cooperate and manage directly with buyers, thereby eliminating mediators and distributors. However new forms of mediators are emerging. For example e-markets themselves can be measured as mediators because they come between suppliers and customers in the supply chain.

Transparency in pricing- Among the more obvious benefits of e-markets is the increase in price transparency. The gathering of a large number of buyers and sellers in a single e- market reveals market price information and transaction processing to Internet allows for the publication of information on a single transaction or purchase, making the information enthusiastically available and accessible to all members of the e-market. Improved price transparency has the effect of pulling down price differentials in the market. In this framework buyers are provided much more time to evaluate prices and make improved buying decisions. Moreover B2B e-markets enlarge boundaries for negotiated and dynamic pricing where in multiple buyers and sellers cooperatively contribute in price-setting and two-way auctions. In such environments prices can be set through automatic matching of offers and bids. In the e-marketplace, the necessities of both buyers and sellers are thus aggregated to reach competitive prices, which are lower than those resulting from individual actions.

Economies of scale and network effects- The fast growth of B2B e-markets creates conventional supply-side cost-based economies of range. In addition the bringing together of a considerable number of buyers and sellers provides the demand-side network effects or economies of scale. Each further incremental participant in the e-market creates value for all participants in the demand side. More participants form a vital mass, which is key in attracting more users to an e-market.

Posted Date: 10/12/2012 6:49:43 AM | Location : United States







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