The B-to-B Virtual Bazaar

Abstract

The Internet is reshaping--and elevating--the professional role of CPAs. EXECUTIVE SUMMARY * ALMOST OVERNIGHT, A MULTITRILLION-DOLLAR worldwide bazaar is blossoming out of the Internet, and companies that had never heard of each other before suddenly are buying and selling from each other. * THIS IS HAVING A MASSIVE IMPACT on the professional role of corporate CPAs and financial managers. With the automation and efficiencies inherently built into Internet transactions, suddenly financial managers find themselves free of such mundane chores as preparing purchase orders. Instead, they can focus on more strategic efforts, such as analyzing purchase and use patterns and seeking the best B-to-B relationships--activities that translate quickly into improved profits. * WHAT MAKES THE B-to-B MARKET so popular to business? Despite keener competition, the Internet reduces the cost of buying and selling and provides a fast, effective trading network for nearly every conceivable product and resource. * B-to-B SITES OFFER A BUFFER to supply-chain upheavals. When unpredictable factors such as customer demand, plant capacity or the weather create supply-demand imbalances, the e-marketplaces can make real-time trading available for everything from chemicals to sneakers and ballpoint pens. * SIGNING UP FOR A SITE IS EASY, but deciding which one--or, more likely, which ones--to join is a bit more complicated. There are many models to choose from, including e-marketplaces that buy and sell at auctions and others that use electronic exchanges similar to the services provided by traditional offline intermediaries. Almost overnight, a multitrillion-dollar worldwide bazaar has emerged from the Internet, and companies that never heard of each other before suddenly are trading partners. Being left in the dust is the relationship-based system in which corporate buyers and sellers deal with a familiar and relatively fixed pool of suppliers and customers. Although signing up for a business-to-business (B-to-B) site is easy, deciding which one--or, more likely, which ones--to join is a bit more complicated. There are many models to choose from, including those that buy and sell at auctions and others that use electronic exchanges similar to the services provided by traditional offline intermediaries. The fast-moving swing to conducting B-to-B buying and selling on the Internet also is having a massive impact on the professional role of corporate CPAs and financial managers. With the automation and efficiencies inherently built into Internet transactions, suddenly financial managers find themselves free of such mundane chores as preparing purchase orders. Instead, they can focus on more strategic efforts, such as analyzing purchase and use patterns and seeking the best B-to-B relationships--activities that translate quickly into improved profits. EFFICIENCY COUNTS What's behind the sudden surge in the B-to-B e-marketplace? Price competition doesn't leave businesses much choice, for one thing. A company--whether buyer or seller--that remains on the sidelines while its rivals trade online will have higher costs. B-to-B trade on the Internet is much cheaper than fielding a huge sales staff to knock on prospects' doors or maintaining a large purchasing department to hunt for the best price or seek products and resources that are in short supply. But that's not the main incentive. Although B-to-B sites intensify the already keen rivalry that exists among competitors, most companies recognize that as the price of admission. Where else can they have exposure to a worldwide market with just a mouse click? A B-to-B e-marketplace provides an efficient and effective trading network for nearly every conceivable product and resource. So despite the intense competition, the e-marketplaces offer an opportunity to expand, or at least maintain, market share. …

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