In business-to-business e-commerce, business organisations buy and sell goods and services to and from each other. In this type of e-commerce, buyers can place their requests for new bids for suppliers on their e-commerce sites, and the sellers from all over the world have a chance to bid. The more buyers there are, the better off sellers will be and vice versa. More buyers means sellers will have more customers for their products and services. More sellers means there will be more choices for buyers. The more sellers, the better it is for all sellers, especially when they can learn from each other or produce complementary products or services.

However, if there are too many small buyers and sellers (i.e. buyers and sellers are highly fragmented) a seller may not even know who all the buyers are. Similarly a buyer may not know who all the sellers are either. Each seller has to search through all the e-commerce sites (could be Web pages) of all the buyers to find out what they want, give them the product descriptions that they need, find out about their credit worthiness, complete the buyers' requests for quotation (RFQs), and so on. Thus, the more sellers and buyers and the more fragmented both are, the higher the transaction costs. In order to reduce this transaction cost, we use what is called the 'B2B hubs' - also known as B2B intermediaries or B2B exchanges. They provide a central point in the value chain where sellers and buyers can go to find each other (Fig.1.1).

In business-to-consumer e-commerce, business organisations sell to consumers. These are retailing transactions with individual shoppers. The advantage of this type of e-commerce is that consumers have access to the 'electronic shops' 24 hours everyday. The consumers also do not face any queues anytime they go shopping! Also there is almost no limit to the number of goods that an on-line retailer can display on its 'electronic storefront or mall'. Furthermore, the sellers also get an opportunity to collect rich data about their customers while they are interacting, and use it to 'personalise' service for these customers and, in case of some goods bought electronically, such as music and computer software, they can be received instantaneously. Since the consumers can interact from their home computers, they can shop electronically in the privacy of their homes.

In consumer-to-consumer e-commerce, consumers sell to other consumers. Since there could be a large number of consumers who want to sell different goods, as well as a large number of consumers who want to buy these goods; the cost to sellers and buyers of finding each other could be exorbitant. The solution is to have an intermediary (as shown in Fig.1.1). Rather than having an exchange in this case, 'electronic auction houses', such as eBay, act as an intermediary among the buyer and seller consumers.

This type of e-commerce has started only recently, and in early 2000 was not as developed as B2B, B2C, and C2C e-commerce. In C2B e-commerce, consumers state their price for a product or service, and businesses either accept it or leave it. For example, potential customers give their price for taking a flight and leave it for the airlines to accept it or reject. This contrasts with B2C e-commerce, where a business usually states its price for a product or service and consumers can accept it or reject it.