TRADING RELATIONSHIPS IN B2B MARKETSinformed about a potential purchase, thereby reducing the risks associated with the
functionality of a particular product or service. However, online fraud and forgery are
increasing and global legal systems do not yet have laws to protect every aspect of
commercial use of the Internet, especially online contracts (Sparrow, 2000). Therefore,
the advantage of accessing a wide range of new trading partners across the Internet’s
global trading network is somewhat reduced by the threat of a previously unknown
party entering into a contract fraudulently. As a result, the risk of trading with new
suppliers via the Internet is potentially higher than in a face-to-face situation.A key consideration is how Internet technologies can be used to facilitate a dialogue
with the various members of the buying group. A possible approach to consider is selec-
tive targeting, a process involving carefully examining specific aspects of the target
market and then preferentially targeting the selected market with specific online offer-
ings. Some examples of customer segments that are commonly targeted online include:
customers who are difficult to reach using other media – an insurance company look-
ing to target younger drivers could use the web in this way;
customers who are brand loyal – services to appeal to brand loyalists can be provided
to support them in their role as advocates of a brand as suggested by Aaker and
Joachimsthaler (2000);
customers who are not brand loyal – conversely, incentives, promotion and a good level
of service quality could be provided by the web site to try and retain such customers.
The same principles can be applied to organisational markets whereby larger customers
could be offered preferential access through an extranet. Smaller companies might be
offered additional services to enhance buyer–supplier relationships: online transactions,
Internet-based EDI and specialist portals providing detailed information for different
interests that support the buying decision.
Trading partnerships
The final consideration in this section is trading partnerships. Potentially, the impact of
trading in the online environment is a change in the numberof suppliers and the struc-
ture of the supply chain. In the case of Bass Breweries, adoption of an e-procurement
system led to a reduction in the number of suppliers but engendered closer cooperation
between the buyer and the retained suppliers.
Additionally, organisations are engaging in the exchange process with an increasingly
wide range of trading partners: for example, manufacturers are directly selling to con-
sumers, which can result in channel restructuring. There is evidence of such changes
resulting from adoption of Internet technologies to buyer–supplier relationships within
the financial service industry: large banking corporations supplying financial services
directly to cherry picked retail customers via the Internet. Disintermediated market
transactions of this kind are efficient because they remove the need to compensate
agents and intermediaries in the supply chain. High-tech transactional solutions of this
kind pose a serious threat to ‘retail’ banks that rely on a physical branch network to
serve their most valuable customers (Ellis-Chadwick et al., 2002). Channel restructuring
can also mean adding trading partners. A barrier for many organisations wishing to
operate in digital markets is the lack of technological and logistical knowledge. Faced
with this situation, a possible solution is to buy in expertise. New media intermediaries
offer a wide range of services from web development and management to operational
logistics. Wrigley and Lowe (2001) suggest that delivery and a company’s capacity to
fulfil orders is a critically important limiting factor that affects the growth of online