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For quite
a while, companies have automated manufacturing to improve efficiency
and cost-effectiveness. They have also applied new technologies
in human resources to make employee management more efficient
and less costly. Now, thanks to the Internet, the fastest growing
medium in history, new technologies are being developed to increase
the cost effectiveness of the operations aspect of business.
Although many of us had heard the term
only recently, business-to-business electronic commerce is not
a novel concept. As early as the mid-1980s, corporations engaged
in B2B eCommerce in various forms (SUCH AS EDI), but not at
levels seen today. Only since the emergence of the Internet
has the technology been developed to fully automate the process.
The increasing utilization of the Internet
as medium of communication has and will continue to change the
manner in which companies conduct business with one another.
Some estimate that third-party B2B eCommerce marketplaces (such
as Beautyportal.net) could feasibly seize as much as 25 percent
of the overall market, generating hundreds of billions in transaction
fees alone. Major trend and web analysts expect the volume of
non-financial goods through B2B e-commerce to reach $7.29 trillion
worldwide by 2004, more than eight times the volume of business-to-consumer
eCommerce.
Today, the widening use of B2B eCommerce
has altered long-established business traditions, and with this
utilization, businesses that have successfully been able to
venture onto the Internet have experienced faster sales growth,
higher margins and reduced fixed asset and working capital intensity.
On a single website, Buyers can find
new Suppliers and products, and automate the purchase and management
of goods easily and resourcefully in a secure environment. The
global marketplace offers Buyers access to Supplier content
(through online catalogues and links to their respective website)
and directs transactions between the two. Additional services
such as auctions, reverse auctions, bid and quote hosting, news,
and trends make the marketplace even more resourceful and keep
users coming back.
A snowball effect will happen in the
marketplace between Buyers and Suppliers. Adding more Suppliers
allows Buyers the opportunity to shop around for the best prices
and raises the level of competition. For Suppliers, the addition
of more Buyers enhances the prospective client base, which in
turn could augment revenues and profits.
Even with the recent collapse of many
B2B eCommerce businesses, the long-term potential is enormous
- in fact, B2B eCommerce is still the fastest growing segment
in the new economy, and it has only begun to assess its potential.
The automated systems that business-to-business
electronic commerce use can directly affect the company's bottom
line in a positive way. Suppliers are burdened with additional
costs caused by manual order processing and these costs are
relayed to the Buyer and end-user in the form of higher prices.
Previously, the process of managing operating resources - from
the creation and approval of requisitions to the processing
and matching of invoices - was long, labor-intensive and costly.
With the advent of electronic transactions, many of these costs
can be reduced and in some cases eliminated, leading to lower
prices for the Buyers.
Although perfume and cosmetics are consumable,
the Beauty Industry is not a tradable commodity like (OIL) petrol,
grain, or coffee even though it has started to look like it.
The perfume and cosmetics industry is one of the most complex
on the planet, which makes it a perfect cradle for a web-based
marketplace. The distribution of its goods is as complex as
the creation and manufacturing. With a myriad of Buyers and
Suppliers, its distribution is different in many countries.
The principal legitimate distribution channels are domestic
markets and duty-free markets. In most countries, they are both
handled through affiliates, distributors and agents.
In some cases, a master importer/distributor
has sub-distributors and agents. Besides the authorized distribution
channels, we have the so called parallel or gray market named
two years ago as the "secondary market." This market is very
important but not limited to the United States and is handled
by a network of illegitimate importers, distributors, and wholesalers
to service the non-agreed retailers, chain stores and other
discount retailers. This gray market is so complex due to national
and international sources coming from large duty-free retailers,
legitimate distributors from other countries needing to make
their quotas, as well as the brand factories themselves. A product
sold on the gray market in the U.S. is 65% to 70% cheaper than
the U.S. retail price.
The Beauty Industry is our Industry
- some of us know it partially, some of us know it more globally.
Maybe it is not a huge industry like the automobile industry
or the food industry, but it is ours and its complexity makes
it perfect for a global marketplace.
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