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The Difference Between e-Commerce and e-Business

In mid 1990s, the world was literally introduced to several new words that begin with an ‘e’, followed by a ‘hyphen’. The ‘e-‘ prefix, which is the shortening of the word ‘electronic’, has spread to many forms of human enterprise as they emerge on the Internet. It is also sometimes used without the hyphen. The sense of "electronic" in this usage generally had and has to do with telecommunications. Whatever it was you used to do before, now you can do it (send or receive it or have a transaction with others) electronically over a telecommunications line. The e-prefix have now gained currency as a prefix for a name that instantly associates it with the Internet.

Today, the e-prefix appears to be embedded in almost all conventional key words. From e-mail to e-stamp, and from e-banking to e-tailing, the world suddenly becomes e-everything. As the e-words trickle fast and furious into our everyday life and especially in the business world, many of us are getting confused with some of these new but important terms. Take two of the most used e-words in the business circle today for instance – e-commerce and e-business. Most of us tend to get these two words mixed up. They seem to mean the same thing to most people and often used interchangeably. After all, both have to do with effecting an electronic transaction via the Internet. Or do they?

According to, e-commerce is defined as "the buying and selling of goods and services on the Internet, especially the World Wide Web." It was not universally acknowledged when the term was first used but it had a strong association with the virtual bookstore giant Some experts opined that e-commerce was first concocted to define’s revolutionary nature of business way back in 1994. Basically, e-commerce can be divided into the following:

  • E-tailing or "virtual storefronts" on Web sites with online catalogues, sometimes gathered into a "virtual mall"

  • The gathering and use of demographic data through Web contacts

  • Electronic Data Interchange, the business-to-business exchange of data

  • e-mail and fax and their use as media for reaching prospects and established customers (for example, with newsletters)

  • Business-to-business buying and selling

  • The security of business transactions

On the other hand, e-business is defined as "the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners." One of the first to use this e-word was IBM, who claimed that it coined the term when it launched a thematic campaign built around the term in October 1997. E-business should essentially result in lower costs and faster responses, and the benefits of which can be passed on to the customer.

However, even today, Information Technology authorities are still searching for that common definition of e-commerce and e-business. While IBM’s e-business definition has been widely accepted by the world web community given that they were the first to introduce the term, a common interpretation of e-commerce has yet to be hammered out convincingly. The basic argument is that a distinction must be made between ‘electronic commerce’, in which all information is accessed and retrieved electronically (a definition that includes credit card transactions at your local supermarket), and ‘web-based commerce’, in which financial transactions take place through a virtual store or business web site and includes online customer-service and support.

For computer laymen, perhaps the most useful alternative to distinguish between e-commerce and e-business is to refer to their conventional meanings. According to Oxford dictionary, commerce is defined as "the exchange and distribution of goods; or trade (especially between companies or countries)", whereas business is defined as "commercial enterprise; buying and selling; trade; or commerce". Therefore, commerce is just a component or activity of a business, and logically, e-commerce is simply a subset of e-business.

In a sense, one of the tricks to comprehend these e-words fast is to simply dig out your old but trustworthy dictionary sitting somewhere on your book shelf and look for their traditional terms. For businesses in the real world, these e-words literally mean that IT and the Internet are groundbreaking enabling tools that can help them do what they always wanted to do – make more money faster, easier, and cheaper.




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