Digitizing B2B workflows has led to an entirely new way of describing business transactions. Ecommerce, eProcurement, ERPs, PIMs, Punchout catalogs – if it isn’t “i” something it’s “e” something else. No wonder it gets confusing. Often, Oro is asked if OroCommerce is an eProcurement system or how it is related to Punchout catalogs. So, we thought we would take the time to dot those i’s, cross those t’s and clear up any confusion. In today’s post, we’ll start with eProcurement systems definition, but stay tuned for the next installment on Punchout catalogs too.
The source of confusion between eProcurement and eCommerce
Both electronic procurement (eProcurement) and electronic commerce (eCommerce) systems are routinely used in B2B commerce. Medium to large size companies use them for sales/marketing and purchasing. Remember that for every sale by one party there is a purchase by another party. These are the two sides (buyer and seller) of the same coin (the purchase/sale transaction).
All B2B eCommerce platforms can handle online transactions and some eProcurement systems do this too. Some eCommerce systems (like OroCommerce) can handle RFQ (request for quotation) workflows, but all eProcurement systems have this functionality. The same is true for handling credit limits. But this is where the similarities end. In a nutshell, the eCommerce platform is designed around the business needs of the seller and the eProcurement platform is developed for the purchaser. Let’s take a closer look.
eProcurement systems are used for the B2B purchase of supplies and services through the internet. It’s a way to make the requisition and payment process easier while driving down the cost per transaction. It brings the ease of eCommerce to business purchasing and provides a means of better managing expenditures. While the features of such popular applications as Coupa or Gatekeeper vary, most eProcurement solutions provide:
- Pre-purchase approval workflow
- Manageable list of preferred/approved supplies
- Expenditure tracking
- Purchase order generation
- Receiving of goods/services against a PO/WO
- Multiple levels of user access
- Budgeting tools
The customer or purchaser of an eProcurement system is the organization making the purchases. The eProcurement system is developed for the use of the buyer in B2B transactions. Manufacturers may use eProcurement to facilitate purchasing of direct goods for the production process. Governmental and public-sector entities may use an eProcurement system to simplify the RFQ process and leverage spending power. Because purchases can be directed to select vendors, better pricing can be negotiated. There is tighter budgetary control when spending is managed more closely at the approval process and the risk of fraud is reduced by separating duties. Cost centers are established and each purchase can be allocated accordingly. The system gives employees access to a preapproved catalog of the goods and services they need at set pricing. Purchasing, accounting, and all other related functions operate more efficiently.
Sellers are a part of an eProcurement system only at the request or approval of the buyer. Sellers join to facilitate interaction with the buyer, but it is a system designed and maintained for the buyer.
B2B eCommerce systems are used by manufacturers, distributors and other B2B businesses to market and sell goods and services. Where eProcurement systems are built around the needs of the buyer, eCommerce systems are built around the needs of the seller. It can be confusing because sellers are all about giving buyers what they want. Many B2B eCommerce platforms are just B2C platforms repurposed for B2B applications. However, systems like OroCommerce are built from the ground up for the special needs of eCommerce. These solutions provide capabilities for:
- Content management
- Shopping cart for online purchasing
- Custom catalog management
- Multiple levels of customer access
- Multiple price lists
- User-created shopping lists
- Price list and catalog personalization capabilities
- On-line submission of RFQs and RFPs
- Customer relationship management
- Customizable workflows
The customer or purchaser of an eCommerce platform is the organization making the sales. While the buyers use the website to make purchases and submit requests for proposals, eCommerce systems are developed for the use of the seller in the B2B transaction. Distributors of products such as Animal Supply Company use eCommerce to accept orders, maintain customer relationships and execute marketing strategies to build their business. Manufacturers such as ARC use eCommerce platforms to reach into new markets, serve existing customers, and reinforce corporate identity while digitizing workflows on the seller side.
Buyers participate in an eCommerce system when they fill out a contact form, place an order online or submit a digital RFQ. Buyers engage in the eCommerce system because it makes the purchase process easier. The eCommerce platform is designed for the benefit of the seller to engage with their customers, grow their business and digitize workflows.
One Transaction – Two Sides
With any given business transaction, the buyer and the seller may have a common goal – to finalize the deal – but they have very different needs. That’s why they use two very different systems to automate and digitize their workflows. eProcurement systems are designed with the buyer in mind and eCommerce system are designed to meet the needs of sellers. The two systems are not interchangeable and any attempt to do so is a recipe for disaster.
Want to learn more about how OroCommerce meets B2B eCommerce needs? Get started with a free demonstration today.