If you’re someone who’s just getting into online selling, then you’ve no doubt heard the terms “e-commerce” and “e-business” get thrown around. Being new to the scene, you probably think that these terms have similar meanings.
Funnily enough, the two terms aren’t similar at all! They are, however, related and this article will go over what the difference between them is.
Ecommerce: What Is It?
The word e-commerce is short for “electronic commerce.” The definition of e-commerce is the act of buying and selling things on the internet via monetary transactions. By using e-commerce, buyers and sellers don’t need to meet face-to-face in order to complete a transaction. All that needs to be done is for a buyer to simply place an order and wait for the seller to complete it.
On top of all of this, e-commerce gets rid of the need for in-person business transactions. All e-commerce is done online and purchases are completed through a variety of means or payment gateways. People can use credit or debit cards and gift cards if they have them. Cash is still an option. As a buyer, you can deliver the money in the time it takes to deliver the item.
It’s something that many people see a lot today. Also, plenty of people have started small businesses online to cash in on the e-commerce craze. This is doubly true since the pandemic, even larger retailers like Walmart have started their own e-commerce websites.
The Types of Ecommerce
While you might think of e-commerce as simply online shopping, such as Amazon or Walmart, that’s only part of it. In fact, there are several different types of e-commerce. The reason for this is because of how many applications that e-commerce has to the online world. For instance, online auctioning such as eBay and online ticket tools are types of e-commerce models.
In total, there are eight different types of e-commerce that you should make yourself familiar with. We’ll go over all of them briefly so you can get a better idea of the bigger picture.
Business-to-Business e-commerce (usually known as B2B) is when two businesses engage in the buying and selling process. It’s very likely that the buyer in this scenario won’t actually end up using the product that was purchased during a commercial transaction. Instead, they might intend on reselling the item. Many people create businesses around this model and an example would be an Alibaba user or someone who sells re-sells products on Amazon.
Business-to-Consumer (B2C) is the most common type of e-commerce that we see today. To put things simply, it’s the process of customers buying items from an online business. So, the consumer actually ends up using the product that was sold, instead of reselling it. There are tons of good examples of this such as Amazon, Walmart, even Facebook.
The Consumer-to-Business (C2B) model is when a consumer sells something to a business. Usually, a website or service will assist the consumer in selling their product to a business. For example, social media influencers conduct this type of e-commerce. By promoting a service or business, they’re selling a service to the business and receiving payment for it. Another example would be freelancers on various platforms.
This type of e-commerce happens when the buying and selling process is conducted between two separate consumers. Usually, this happens via the assistance of a third-party website or application. Amazon engages in this type of e-commerce but there are also better, more obvious examples such as eBay or the Uber app.
The Business-to-Administration (B2A) type of e-commerce happens when a business works with a public administration such as a government office. This usually happens when the business is contracted by a government to do a service or they’re paid for a product by the government. Essentially, you’re making a business partner out of the government. Think of something like a tax service.
What is known as Consumer-to-Administration (C2A) is similar to the B2A type of e-commerce. However, there’s one big difference in that the consumer is allowed to deal with the government. Essentially, the consumer can actually make sales or offer services to the government. An example would be tuition fees and income taxes.
7. Facebook Commerce
Facebook receives its own special brand of e-commerce platform because of how much influence it holds over the virtual world today.
Over half the population of the world are connected to the social media platform and it presents a lot of business opportunities for people from all walks of life. Not only does Facebook have a marketplace to sell items, but you can easily set up stores on the platform as well as an influencer page.
8. Mobile Commerce
Something that is becoming more and more common these days is Mobile Commerce (M-commerce). Simply put, this is a type of commerce that is conducted by using a mobile device like a smartphone, tablet, or similar device. A perfect example of this is app stores or in-app purchases.
E-Business: What Is It?
Now that you know about e-commerce and the different types, it’s time to look at e-business. Firstly, let’s define the term: An e-business is short for electronic business or business that’s done with the use of electronic data interchange. It’s when the entire business operation is managed through the internet, extranet, and intranet. Essentially, the overall business must be conducted using a website, CRM, ERP, etc.
But then, you might ask, what parts of the business process need to be completed over the internet for it to count as an e-business? There are three business activities that must be completed online: information collecting, communication, and transactions. Without one of these three things, your business cannot be considered an e-business. There are some nuances to this, of course.
For instance, you’re obviously allowed to have some sort of physical existence for your business. Obviously, you’ll need a place to store stock if you’re a reseller or something similar. Ebusiness can be an excellent and easy way to maintain records and manage other systems such as transactions.
Necessary Components of an E-Business
Now that you know what e-business is, it’s time to look at its components. There are four main ones to worry about and without any of these, an e-business won’t survive for very long.
E-procurement is the process of buying your supplies or services over the internet. Usually, this process happens between a supplier and a customer in some sort of closed system or electronic network. Suppliers may only sell to business owners who are registered or verified with them. This is an important part of e-business as it opens up lines of communication between a company and supplier.
2. Online Store
This should go without saying, but some sort of online platform or e-commerce website that consumers or other businesses can use is very necessary. With an online store, customers will be able to complete the buying process smoothly via the internet. Additionally, an online store makes it very easy to do things like catalog stock, so it’s not just convenient for your customers.
3. Online Marketplace
If you’re planning on making a startup business similar to Amazon, Walmart, or even Facebook, it can help to give you customers access to an online marketplace. Here, you can partner with people where they will actually sell their products and you’ll take some of the profits from it. Additionally, you can sell a wide range of goods or capitalize on a particular market.
4. Online Community
Something that can be a big boon to budding e-commerce businesses is creating some sort of online community. This can be done by creating a forum, email marketing, or specialized pages on social media for your brand or service. An online presence is an excellent way to gather data about customers and is a great tool for customer relationship management or customer support.
Along with the different components of e-business, there are also different business models that can be used. There are two significant types of business that we’ll discuss right now.
This e-business model is relevant to a company that only focuses on one type of product line. Plenty of virtual retailers and e-commerce companies use this type of business model. These retailers will sell one type of product, meaning that if interest in that product falls, it can severely impact sales and overall revenue.
A good example to consider is something like a coffee and donut shop. It’s a pretty safe bet because most people love coffee and donuts. But, the value of the said company could fall if interest in it goes away. Even a slight decline in interest in a specific product can have horrible repercussions on a company that is using a pure-play business model.
To contrast that, an online retailer like Amazon would not be considered a pure-play. This is because Amazon sells a large variety of different products. It doesn’t sink all of its time and resources around a singular product line.
When it comes to an online version of this business model, you won’t usually have a physical presence. What this means is that the business doesn’t have some sort of store or shop that you can go to and do the same thing you could do online. A perfect example of this is the various streaming services you’ll encounter today.
Brick and Click
This business model is quite different because it involves your business actually having a physical presence. While you might have a big focus on the online or virtual aspect, you will also have some sort of physical store that you can go to instead. This will give customers an online and offline channel to do their shopping.
This can be a boon in the event that there’s some sort of widespread technical issue or something else comes up. For instance, if you’re website goes down for some reason, you can always just drive down to the actual store. Many physical stores are making a transition to this route as e-commerce becomes an increasingly popular business venture.
Creating an e-business using the Brick and Click model can be extremely lucrative and allow you to reach a wider range of customers. With an online store, you can ship to places that are out of your store’s local reach as well as make use of social media, possible mobile apps, and other advantages.
The Brick and Click model effectively creates the best of both worlds. People who prefer to shop in person can simply go to your physical location, meanwhile, people who enjoy your products but don’t live close to your store can make orders online. Running this type of business model is another type of beast altogether and not something we can cover during the course of this article.
This business model can also be similar to a Pure Play model depending on the type of product or service that you’re selling. Again, going back to the coffee and donut shop example, you could set up a website for your shop to allow online orders and set up a delivery service. This might not be the most practical idea, but you get the picture. But, you have to remember that the physical presence is what really makes the Brick and Click method stand out from Pure Play.
Now that you’ve gotten a crash course about both topics, it’s time to bring it all together and take a look at them side-by-side to see the difference between e-business and e-commerce. We’ll talk about the most notable points in a list, to make things succinct.
1. E-commerce is the act of buying or selling goods and services online. Meanwhile, e-business encompasses all aspects of running a business in an online space such as inventory management, hiring staff, online sales, and so on. Therefore, e-commerce is a big part of a successful e-business.
2. E-commerce only includes transactions that are related to money. E-business, on the other hand, deals with transactions of general monetary value. These transactions can include trades or other such activities.
3. E-commerce uses what is known as an extroverted approach. This means that it covers things like customers and suppliers. Essentially, factors outside of the company. Meanwhile, an e-business has to deal with internal factors such as employees, human resources, and other factors requiring an ambivert approach.
4. With e-commerce, you only need a website that represents your company. E-business, while still requiring a website, demands other things such as dealing with customers online and other factors that are required to run an entire business on the internet.
Ultimately, e-commerce is a subset of e-business. However, the two things are not the same. E-business does not always involve e-commerce as there are other factors that you have to worry about besides buying and selling your goods and services.
If you’d like to learn more about the world of e-commerce, supply chain management, and how it affects big businesses like Walmart, take a look at our other blog posts. We can fill you in on all you need to know about the retail giant and how you can make money using their online marketplace.