What are E-business and E-commerce?

In chapter 1, I define E-business and E-commerce as follows:

E-commerce definition

"Electronic commerce (e-commerce) is often thought simply to refer to buying and selling using the Internet; people immediately think of consumer retail purchases from companies such as Amazon. But e-commerce involves much more than electronically mediated financial transactions between organizations and customers. Many commentators refer to e-commerce as all electronically mediated transactions between an organization and any third party it deals with. By this definition, non-financial transactions such as customer requests for further information would also be considered to be part of e-commerce."

"When evaluating the strategic impact of e-commerce on an organization, it is useful to identify opportunities for buy-side and sell-side e-commerce transactions as depicted in Figure 1.1, since systems with different functionalities will need to be created in an organization to accommodate transactions with buyers and with suppliers. Buy-side e-commerce refers to transactions to procure resources needed by an organization from its suppliers. Sell-side e-commerce refers to transactions involved with selling products to an organization’s customers. So e-commerce transaction between organizations can be considered from two perspectives: sell-side from the perspective of the selling organization and buy-side from the perspective of the buying organization."

Types of sell-side E-commerce

How E-commerce can apply E-commerce varies a lot according to the market they are in. I identify four main types of site which you will commonly see, although they do overlap. These are:

1. Transactional e-commerce site. These enable purchase of products online. The main business contribution of the site is through sale of these products. The sites also support the business by providing information for consumers that prefer to purchase products offline. These include retail sites, travel sites and online banking services.
2. Services oriented relationship building web site. Provides information to stimulate purchase and build relationships Products are not typically available for purchase online. Information is provided through the web site and e-newsletters to inform purchase decisions. The main business contribution is through encouraging offline sales and generating enquires or leads from potential customers. Such sites also add value to existing customers by providing them with detailed information to help them support them in their lives at work or at home.
3. Brand building site. Provide an experience to support the brand. Products are not typically available for online purchase. Their main focus is to support the brand by developing an online experience of the brand. They are typical for low-value, high volume Fast Moving Consumer Goods (FMCG brands) for consumers.
4. Portal or media site. Provide information or news about a range of topics. Portal refers to a gateway of information. This is information both on the site and links through other sites. Portals have a diversity of options for generating revenue including advertising, commission-based sales, sale of customer data (lists).

E-business definition

Let’s start from the original definition (now moved) by IBM (www.ibm.com/e-business), which was one of the first suppliers to use the term in 1997 to promote its services:

"e-business (e’biz’nis) – the transformation of key business processes through the use of Internet technologies".

The key business processes referred to in the IBM definitions are the organizational processes or units in the centre of Figure 1.1. They include research and development, marketing, manufacturing and inbound and outbound logistics. The buy-side e-commerce transactions with suppliers and the sell-side e-commerce transactions with customers can also be considered to be key business processes.

The majority of Internet services are available to any business or consumer that has access to the Internet. However, many e-business applications that access sensitive company information require access to be limited to qualified individuals or partners.

If information is restricted to employees inside an organization, this is an intranet. If access is extended to some others, but not everyone beyond the organization, this is an extranet. Whenever you log-on to an Internet service such as that for an e-retailer or online news site, this is effectively an extranet arrangement, although the term is most often used to mean a business-to-business application

How is E-business and E-commerce management used

You will find that the term E-business is used in two main ways within organizations.

The first is as a concept which can be applied to strategy and operations. For example, ‘our organistion needs an improved e-business strategy (or E-business technology)’.

Secondly E-business is used as an adjective to describe businesses that mainly operate online, i.e. they have no physical presence on the high-streets and seek to minimize customer-service and support through enabling ‘web self-service’.

In the dot-com era they used to be known as ‘pure-plays’. For example Amazon (www.amazon.com) and eBay (www.ebay.com, Case study 1.3) are the world’s two biggest e-businesses.