The difference between e-business and e-commerce

By Andrew Bartels
October 30, 2000 12:00 PM ET

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Computerworld - E -business and e-commerce are terms that are sometimes used interchangeably, and sometimes they're used to differentiate one vendor's product from another. But the terms are different, and that difference matters to today's companies. In both cases, the e stands for "electronic networks" and describes the application of electronic network technology - including Internet and electronic data interchange (EDI) - to improve and change business processes. E-commerce covers outward-facing processes that touch customers, suppliers and external partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating-expense items, such as office supplies. It involves new business models and the potential to gain new revenue or lose some existing revenue to new competitors. It's ambitious but relatively easy to implement because it involves only three types of integration: vertical integration of front-end Web site applications to existing transaction systems; cross-business integration of a company with Web sites of customers, suppliers or intermediaries such as Web-based marketplaces; and integration of technology with modestly redesigned processes for order handling, purchasing or customer service. E-business includes e-commerce but also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources. E-business strategy is more complex, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings. An e-business strategy is also more difficult to execute, with four directions of integration: vertically, between Web front- and back-end systems; laterally, between a company and its customers, business partners, suppliers or intermediaries; horizontally, among e-commerce, enterprise resource planning (ERP), customer relationship management (CRM), knowledge management and supply-chain management systems; and downward through the enterprise, for integration of new technologies with radically redesigned business processes. But e-business has a higher payoff in the form of more efficient processes, lower costs and potentially greater profits. E-commerce and e-business both address these processes, as well as a technology infrastructure of databases, application servers, security tools, systems management and legacy systems. And both involve the creation of new value chains between a company and its customers and suppliers, as well as within the company itself. All companies should have an e-commerce strategy. (Governments should have an e-public service strategy.) Electronic networks in general and the Internet in particular are too important for firms to ignore if they want to interact with customers, suppliers or distribution partners. But some companies need to move beyond e-commerce and form e-business strategies - especially large companies that already have links

Electronic commerce or e-commerce refers to a wide range of online business activities for products and services. [1] It also pertains to any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact. [2] E-commerce is usually associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network.[3] Though popular, this definition is not comprehensive enough to capture recent developments in this new and revolutionary business phenomenon. A more complete definition is: E-commerce is the use of electronic communications and digital information processing technology in business transactions to create, transform, and redefine relationships for value creation between or among organizations, and between organizations and individuals. [4] International Data Corp (IDC) estimates the value of global e-commerce in 2000 at US$350.38 billion. This is projected to climb to as high as US$3.14 trillion by 2004. IDC also predicts an increase in Asias percentage share in worldwide e-commerce revenue from 5% in 2000 to 10% in 2004 (See Figure 1).

What is B2C e-commerce? Business-to-consumer e-commerce, or commerce between companies and consumers, involves customers gathering information; purchasing physical goods (i.e., tangibles such as books or consumer products) or information goods (or goods of electronic material or digitized content, such as software, or e-books); and, for information goods, receiving products over an electronic network.12 It is the second largest and the earliest form of e-commerce. Its origins can be traced to online retailing (or e-tailing).13 Thus, the more common B2C business models are the online retailing companies such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and ToysRus. Other B2C examples involving information goods are E-Trade and Travelocity. The more common applications of this type of e-commerce are in the areas of purchasing products and information, and personal finance management, which pertains to the management of personal investments and finances with the use of online banking tools (e.g., Quicken).14 eMarketer estimates that worldwide B2C e-commerce revenues will increase from US$59.7 billion in 2000 to US$428.1 billion by 2004. Online retailing transactions make up a significant share of this market. eMarketer also estimates that in the Asia-Pacific region, B2C revenues, while registering a modest figure

compared to B2B, nonetheless went up to $8.2 billion by the end of 2001, with that figure doubling at the end of 2002-at total worldwide B2C sales below 10%. B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer access to information and allowing consumers to find the most competitive price for a product or service. B2C ecommerce also reduces market entry barriers since the cost of putting up and maintaining a Web site is much cheaper than installing a brick-and-mortar structure for a firm. In the case of information goods, B2C e-commerce is even more attractive because it saves firms from factoring in the additional cost of a physical distribution network. Moreover, for countries with a growing and robust Internet population, delivering information goods becomes increasingly feasible. What is B2G e-commerce? Business-to-government e-commerce or B2G is generally defined as commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. This kind of e-commerce has two features: first, the public sector assumes a pilot/leading role in establishing e-commerce; and second, it is assumed that the public sector has the greatest need for making its procurement system more effective.15 Web-based purchasing policies increase the transparency of the procurement process (and reduces the risk of irregularities). To date, however, the size of the B2G e-commerce market as a component of total e-commerce is insignificant, as government e-procurement systems remain undeveloped. What is C2C e-commerce? Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions, particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers.16 It perhaps has the greatest potential for developing new markets. This type of e-commerce comes in at least three forms:  auctions facilitated at a portal, such as eBay, which allows online real-time bidding on items being sold in the Web;  peer-to-peer systems, such as the Napster model (a protocol for sharing files between users used by chat forums similar to IRC) and other file exchange and later money exchange models; and  classified ads at portal sites such as Excite Classifieds and eWanted (an interactive, online marketplace where buyers and sellers can negotiate and which features Buyer Leads & Want Ads).

Consumer-to-business (C2B) transactions involve reverse auctions, which empower the consumer to drive transactions. A concrete example of this when competing airlines gives a traveler best travel and ticket offers in response to the travelers post that she wants to fly from New York to San Francisco. There is little information on the relative size of global C2C e-commerce. However, C2C figures of popular C2C sites such as eBay and Napster indicate that this market is quite large. These sites produce millions of dollars in sales every day. What is m-commerce? M-commerce (mobile commerce) is the buying and selling of goods and services through wireless technology-i.e., handheld devices such as cellular telephones and personal digital assistants (PDAs). Japan is seen as a global leader in m-commerce. As content delivery over wireless devices becomes faster, more secure, and scalable, some believe that m-commerce will surpass wireline e-commerce as the method of choice for digital commerce transactions. This may well be true for the Asia-Pacific where there are more mobile phone users than there are Internet users. Industries affected by m-commerce include:  Financial services, including mobile banking (when customers use their handheld devices to access their accounts and pay their bills), as well as brokerage services (in which stock quotes can be displayed and trading conducted from the same handheld device);  Telecommunications, in which service changes, bill payment and account reviews can all be conducted from the same handheld device;   Service/retail, as consumers are given the ability to place and pay for orders on-the-fly; and Information services, which include the delivery of entertainment, financial news, sports figures and traffic updates to a single mobile device.17 Forrester Research predicts US$3.4 billion sales closed using PDA and cell phones by 2005 (See Table 3).

Electronic commerce or in short e-commerce, refers to business activities like selling and purchasing of products and services carried out over electronic systems like the Internet and computer networks.

The history of e-commerce dates back to 1970, when for the first time, electronic data interchange (EDI) and electronic fund transfer were introduced. Since then, a rapid growth of e-commerce has pervaded almost every other aspects of business such as supply chain management, transaction processing, Internet marketing and inventory management. Advantages and Disadvantages of Electronic Commerce Like any conventional business, electronic commerce is also characterized by some advantages and inherent drawbacks. Let's have a look at some of these important advantages and disadvantages of electronic commerce. Advantages of Electronic Commerce The greatest and the most important advantage of e-commerce, is that it enables a business concern or individual to reach the global market. It caters to the demands of both the national and the international market, as your business activities are no longer restricted by geographical boundaries. With the help of electronic commerce, even small enterprises can access the global market for selling and purchasing products and services. Even time restrictions are nonexistent while conducting businesses, as e-commerce empowers one to execute business transactions 24 hours a day and even on holidays and weekends. This in turn significantly increases sales and profit. Electronic commerce gives the customers the opportunity to look for cheaper and quality products. With the help of e-commerce, consumers can easily research on a specific product and sometimes even find out the original manufacturer to purchase a product at a much cheaper price than that charged by the wholesaler. Shopping online is usually more convenient and time saving than conventional shopping. Besides these, people also come across reviews posted by other customers, about the products purchased from a particular e-commerce site, which can help make purchasing decisions. For business concerns, e-commerce significantly cuts down the cost associated with marketing, customer care, processing, information storage and inventory management. It reduces the time period involved with business process re-engineering, customization of products to meet the demand of particular customers, increasing productivity and customer care services. Electronic commerce reduces the burden of infrastructure to conduct businesses and thereby raises the amount of funds available for profitable investment. It also enables efficient customer care services. On the other hand, It collects and manages information related to customer behavior, which in turn helps develop and adopt an efficient marketing and promotional strategy. Disadvantages of Electronic Commerce Electronic commerce is also characterized by some technological and inherent limitations which has restricted the number of people using this revolutionary system. One important disadvantage of ecommerce is that the Internet has still not touched the lives of a great number of people, either due to the lack of knowledge or trust. A large number of people do not use the Internet for any kind of financial transaction. Some people simply refuse to trust the authenticity of completely impersonal business transactions, as in the case of e-commerce. Many people have reservations regarding the requirement to disclose personal and private information for security concerns. Many times, the legitimacy and authenticity of different e-commerce sites have also been questioned. Another limitation of e-commerce is that it is not suitable for perishable commodities like food items. People prefer to shop in the conventional way than to use e-commerce for purchasing food products. So e-commerce is not suitable for such business sectors. The time period required for delivering physical products can also be quite significant in case of e-commerce. A lot of phone calls and e-mails may be required till you get your desired products. However, returning the product and getting a refund can be even more troublesome and time consuming than purchasing, in case if you are not satisfied with a particular product. Thus, on evaluating the various pros and cons of electronic commerce, we can say that the advantages of e-commerce have the potential to outweigh the disadvantages. A proper strategy to

address the technical issues and to build up customers trust in the system, can change the present scenario and help e-commerce adapt to the changing needs of the world.

By Chandramita Bora

E-commerce is the most efficient method of making online transactions. Be it stock trade, buying and selling or exchanging vital information, the e-commerce tool saves cost and time. E-commerce is the most efficient method of making online transactions. Be it stock trade, buying and selling or exchanging vital information, the e-commerce tool saves cost and time. While the benefits are many, people are also concerned over the limitations of e-commerce solutions. It is true that shopping online has been made easy today. One doesnt need to go all the way to the market to purchase clothes and dresses, electronic accessories, groceries or even sports goods and many other products associated with online marketing. These transactions of goods, making online payments and making money transfers from one account to another raises a lot of concerns of safety standards. The main reason is that an expert hacker can easily track account transactions and steal credit card codes or even ATM pin numbers. Some sites which offer genuine services act as scam. So, the first and basic limitation of e-commerce is technical limitation. There is a lack of security in this system along with reliability. The standards of security cannot be completely trusted and the communication protocol is also according to some a little bit not up to the mark. There is insufficient telecommunication bandwidth. This is mostly needed for B2C clients where large number of business transactions needs to take place and the lack of bandwidth usually slows down the complete process of work. Major tasks suffer backlog when huge amount of information is not able to pass through minimum bandwidth and this also extends the time of work. The next limitation is that software tools are constantly evolving. This means you need to keep on making constant changes to your website and e-business modules. You may also have to bring new improvisations and business presentations to keep track of time. Nature of online advertisement banners may have to be evolved according to the new changes in web browsers and graphics and animations. Digital and non-digital sales and production information needs to be integrated and this doesnt become easy when using the e-commerce medium. The different internet mediums like cable, dialup, ISDN and wireless have their own access limitations. They dont always work efficiently and they have their own bandwidth restrictions. Different internet

providers come up with different package plans which sometimes work to the disadvantage of the consumer and retailer. There are high-speed internet service providers but these are only affordable by the rich in most countries which means a low-scale business operator or consumer will have to compromise with lesser speed for access of any information or transaction. Some of the browsers dont display advertisements as they dont have special standards of software. This means vendors will not be able to reach out to the global audience in a uniform manner. There is great amount of difficulty in integrating the infrastructure of e-commerce with IT systems currently. Apart from this, there are many other non-technical limitations as we will look into them. As mentioned earlier, most consumers dont feel secure about the online transaction of money. The trust factor is very low when coming to the faceless seller whom they have never met before. There is always an element of risk that customer information can be misused. There are too many websites which give out personal details of e-mail records and other contact information. There are conflicting laws between different countries and differences of languages pose a huge problem. The difference of cultures also does not make the understanding easy across borders. There are many concerns raised over these issues by both businessmen and consumers. Apart from all of these limitations, there is a resistance from people to change and trust the internet medium of transaction.