The Difference Between E-business and E-commerce

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Some people use the terms "e-business" and "e-commerce" interchangeably, but they're not synonymous. E-commerce refers to buying and selling online, while e-business encompasses all business conducted online. E-commerce can be viewed as a subset of e-business.

What Is an E-Business?

Perhaps the best way to understand e-businesses is with the help of examples:

  • Email marketing to existing and/or prospective customers is an e-business activity, as it electronically conducts a business process—in this case, marketing.
  • An online system that tracks inventory and triggers alerts at specific levels is also e-business. Inventory management is a business process, and when facilitated electronically, it becomes part of e-business.
  • A content management system that manages the workflow between a content developer, editor, manager and publisher is another example of an e-business. In the absence of an electronic workflow, the physical movement of paper files would conduct this process. By electronically enabling it, it becomes an e-business.
  • Online tools for human resources ranging from job listings and application processes to collecting and maintaining relative data about employees constitutes e-business.

Many processes that are described as e-business might be handled in-house through a company's own network, or it might be something the company outsources to a provider that specializes in whatever service is desired.

Sometimes the difference between a standard business and an e-business is just a matter of how business is conducted. For example, if you are an advisory firm helping people choose the right furniture, then you are a business, but if you run a website where people can compare furniture options, then you are an e-business.

What Is E-Commerce?

Compared to e-business, the definition of e-commerce is clearer. In its basic form, it involves placing orders online and making payments online. In the business-to-consumer (B2C) e-commerce, a business sells goods to consumers through its website.

E-commerce comes in multiple forms. Many brick-and-mortar stores also conduct sales through their websites. These sales can include every element of a sale: ordering a product, paying for a product, and having it delivered. It also might involve only part of the process. For example, a customer might order a product online to be picked up at the store. Payment might be conducted online or at the store when the item is picked up.

Many stores also sell through virtual marketplaces in addition to their own websites. For example, most popular brands in the U.S. sell products from their own websites, but they likely also have products listed on a site like Amazon.

Business-to-Business (B2B) E-commerce

Much of the e-commerce that takes place involves B2B relationships. Often this involves things like the purchasing of necessary supplies, and very often it will be automated. For example, if your business needs a particular tool or part or other supply items to function properly, you might have a contract with a supplier. To maintain efficiency, you might also have an automated process in place to track your supply levels and automatically place an order once those supplies drop below a certain level.