Daily Archives: February 15, 2016

Have We Reached B2B 3.0 Yet? Part 1: B2B 1.0, A History Lesson

Over seven years ago, Sourcing Innovation published Introducing B2B 3.0 and Simplicity for All, which is available as a free download, to help educate you on the next generation of B2B and prepare you for what comes next. The expectation was that, by now, we would be awash in B2B 3.0 (Business to Business 3.0), which was simply defined as the first generation of technology that actually puts business users on the same footing as consumers, but are we?

SI would like to jump right in and answer that question, but first we have to discuss B2B 1.0 and B2B 2.0 to get our terminology straight.

B2B 1.0: The “Free Network” era

In the early nineties, a time when our current Hindsight would have been useful, the Internet burst onto the scene. Almost immediately, entrepreneurs saw the potential of the Internet to grow consumer-based business of all types, and B2C 1.0 was born. And although it was primitive by today’s standards, it took mail order to a whole new level. It wasn’t long before big business took note and decided that the internet would benefit them too, allowing new customers to find them and place orders, and suppliers to participate in reverse auctions to allow them to serve more customers at a lower price point. B2B 1.0 arrived.

B2B 1.0 was largely powered by the “free” connectivity of the internet as opposed to the costly EDI (Electronic Data Interchange) alternatives that ran over private networks that had to be maintained by the business. However, since bandwidth was still quite expensive (as it cost thousands of dollars a month for a dedicated 1.54 mbps T1 line as opposed to the 100 a month you can now pay for 100 mbps cable modem, and since network infrastructure technology was still quite expensive (as it could cost almost 10K for a multi-port enterprise router and switch), B2B 1.0 was still limited to large organizations, who nonetheless saw significant savings potential. (Considering that first generation reverse auctions often saved Millions, what’s a 100K for infrastructure?)

However, while “big buyers” won big, suppliers lost bigger as they ended up having to

  • maintain expensive internet connectivity and infrastructure, which was sometimes considerably more expensive in their rural factory locations versus dense urban business centres
  • support the different EDI and data standards required by different buyers, greatly increasing their IT support costs and
  • maintain different catalog versions for each buyer, with different pricing, buyer SKUS, etc., further increasing their IT support costs.

And these suppliers were the lucky ones. Some suppliers didn’t get to participate at all.

In short, suppliers lost. Lucky buyers broke even. And only the first-generation enterprise e-Procurement vendors, who laughed all the way to the bank, won.

Lesson learned? Functionality, and even connectivity, is useless without content and community.