Electronic Commerce (E-Commerce) essentially has two facets when transactions / business take place: Business-to-Consumers (B2C) and Business-to-Business (B2B). B2C are consumer oriented services - tailored to meet voluminous amounts of users / visitors. Per Transaction Dollar value is low. Retail market is what B2C is all about. Alternatively, B2B are transactions between businesses - wholesale market - tailored to meet mid-to-high volume transactions, where each transaction carries a high-dollar price. In an ideal B2B transaction financial settlement can be done online, usually that is not the case.
In recent months, the Internet has experienced immense growth in the arena of E-Commerce. E-enabled sites are capable of performing financial transactions where money is (usually) exchanged electronically for good / services bought / sold.
The whole thing is very simple: there are sellers, wanting to sell their goods / services. Now if only these sellers could meet their buyers, chances are a lot of things would be bought and many transactions (or "sales") would be completed. Very simply it gives buyers and sellers the very plateau to trade on. Sellers post the description of products / services they are wanting to sell, including pricing, specifications, shipping information, perhaps even a digital picture of what they are selling, etc. Buyers scroll (or search) through the myriads of postings, see what they like and communicate with the buyers. The very essence of bringing buyers and sellers together is what trading is all about. E-Commerce facilitates this 'bringing-together' by employing very simple models, that are coupled with ancillary functions / services like credit check on the buyer / seller, fulfillment, detailed specifications on the transaction, shipping information / quotes derived directly from the source itself, add to this escrow services, referral fees / selection, auctioning and the whole idea of selling online seems more appealing and plausible.
The B2B model accommodates this one-step further, by ensuring (typically) that the transactions are at wholesale level and not retail level. This is to ensure perhaps more so the seriousness of businesses not-wanting to waste time and doing business with both existing and new partners.
FYI: Both B2B / B2C transactions ride on top of the EDI (Electronic Date Interchange) mechanism for transactions to be completed. In B2C transactions, EDI is handled between the credit card processors and the merchant, with B2B, EDI takes a different form / shape, allowing the two businesses to share financial data and/or information that is shaped, structured and formatted as per each business' criteria.
B2B transactions today represent the bulk of the E-Commerce market on the Internet. Consider the Pareto values, where Twenty percent of the customers account for Eighty percent of your revenues, B2B model is meant to serve this model.
To better understand what B2B does, it is imperative to understand some governing principals, which are,

(i) B2B transactions are generally classified as wholesale transactions large quantity of goods / services translate to a high-Dollar value for the transaction.

(ii) it is implemented on an institutional level, i.e. bringing buyers and sellers who are not individuals, but corporate entities (usually).

(iii) B2B transactions do not necessarily have to complete the loop by conducting a financial transaction it can stop before that.

B2B being a very diversified field, can take in many forms and shapes. Lets consider a practical example of B2B. A mid-size business that is involved in say advertising can use B2B in various way. For back-office administration purposes, the Purchasing Department can connect to all the (wholesale) suppliers of stationery, printing paper, printing inks, printers, copiers, etc. and offer (a price) for supplies they would like to purchase. They can do this by searing through their catalog, order items and settle the financial payments on-line (if applicable) or off-line. The Seller can also check in real-time on the credit rating of the advertising firm, arrange for a local distributor to drop shipments and use a bank for escrow services. Alternatively, the Purchasing Department can also post their requirements online (on some website even their own) with an extended forecast on their possible future purchases. This would enable all the suppliers (who visit this website) to "bid" on the advertising firm's purchasing requirement thus enabling lower (and more competitive) prices.
On the front-office, existing client wishing to do more business with the firm, can log onto the firm's extranet, be able to look up their current orders, budget, be able to request an RFQ (Request For Quote) online based on the pricing structures / rates / slabs that the firm provides. The Client can then get an internal approval which can take some time notifying the same to the advertising firm (allowing them time to budget for the work that could possibly be coming their way). Once management approval is obtained, the Client, can generate an electronic Purchase Order to the Client, ensuring that the PO relates to the formats and procedural checks as required by the Advertising firm's format. Once the firm decides to take on the contract, electronic invoices (bills) can be generated, and the Purchasing Department can now instantly post their queries for future procurement based on the work order accepted. Financial transaction between the client and the firm can be settled electronically (if both are party to it) or on a physical basis, via electronic wire transfer. Having B2B incorporation does not necessarily translate to, that all transactions must be dealt with electronically. Physical paper work and some of the existing traits of everyday business at times cannot be modeled electronically. Likewise, it is also not necessarily true that all B2B models are to work best for you. Sometimes it may very well back fire.
In any event, businesses must realize the following before trying to implement any variant of e-commerce. (a) They (themselves) must have the time (b) They must also have all the necessary ingredients (pre-requisites) and finally (c) it must be the right time. The first two items a company has control over, but the latter one, it does not. Sometimes ideas may be too advance and the timing is totally off. At other times, you may find out the timing is right but either you are lacking the ingredients or the time to actually implement it or perhaps both. While implementing e-commerce would not make you a paperless office, it would however, enable your office to have less paper, be more efficient, increase productivity (now that you have saved time). Moreover, if carefully evaluated and implemented, e-commerce can help you out in the long-run and enable you to reap the benefits of going digital.