E-Business Vs E-Commerce

Unit structure

* Introduction

* Origin of E-Business

* Types of E-Business

* E-Business Vs Traditional Business

* Advantages and disadvantages of E-Business

* E-commerce

* Differences between E-Business and E-Commerce

* Types of E-Commerce

Learning Objectives

At the conclusion of this unit, you should be able to:

* Define E-Business

* Identify various E-Business types

* Explain various advantages and disadvantages of E-Business

* Define E-Commerce and describe its categories

* Differentiate E-Business and E-Commerce.

Introduction

Electronic business, or E-Business, is the online process of business. It can be defined as business
conducted with the help of the internet or electronic data interchange. This includes buying and selling
goods and services, as well as providing technical or customer support through the internet.

Origin of E-Business

In the 1950s, computers were used for processing and storing internal transaction records, but
information exchange between businesses still relied on paper. By the 1960s, transaction information
was exchanged using punched cards or magnetic tapes, and later, data transfer occurred over
telephones instead of shipping physical cards or tapes. The 1970s saw the introduction of Electronic
Data Interchange (EDI) between banks over secured private networks, which transformed the financial
market. EDI is the transfer of data from one computer system to another using standardized message
formatting without human intervention, allowing multiple companies, even in different countries, to
exchange documents electronically. IBM used the term 'e-business' in 1972, and it became widespread
within companies through electronic messaging technologies like EDI and email.

E-Business vs Traditional Business

| Basis | E-Business | Traditional Business |

|---|---|---|

| Reduction of Data error | Data goes directly from one computer to another without human
involvement. | Data was entered manually at every level. |

| Paper Work | Electronic form. | Involves a lot of paper and if there is an error, it may lead to wastage
of time and money. Orders are in paper format, the data is entered into the system. |

| Cost | Initial cost is high, but over time, it is effective. | Involves a lot of time and if there is an error, it
may lead to wastage of money. |

| Process cycle time | E-Business reduces the processing cycle time as the data is re-entered into the
seller's computer. | This creates error. |

Types of E-Business

* Pure-play: A business that has an electronic existence only, such as Hotels.com. A pure play company
focuses on a single line of business, unlike diversified companies with varied product lines and revenue
sources. Pure plays have easy-to-understand cash flows and revenues, and often cater to a niche
market.

* Brick and click: This business model involves both an online (electronic) and offline (physical)
presence. It integrates an online store (the clicks) with a physical store (the bricks) into a single entity.

Advantages of E-Business

* E-Business Saves Money: Small-business owners save a significant amount of money at startup by
foregoing a traditional brick-and-mortar location. Costs like storefront rent, utilities, and building
maintenance are eliminated, and time is saved by not having to manage them. For product sales, items
can go directly from the manufacturer to the customer's virtual cart, reducing shipping costs and making
products cheaper overall.

* Better Communication and Faster Decision-Making: E-business enables quick conversations, leading to
faster decision-making, which saves time and money. It facilitates understanding through various
communication methods like messaging, emailing, and video chat. Translation software programs even
allow communication between people who do not speak the same language.

* The Office Can Be Anywhere: Any internet-connected device, such as a tablet, phone, or computer,
can serve as an e-business tool, enabling 21st-century work tasks with a few clicks. Social media, email,
and teleconferencing mean that any location with internet access can be an office. Software supporting
e-commerce professional endeavors is crucial, opening avenues for creating and sustaining various e-
business products and services. E-business owners can work globally, allowing for a healthy work-life
balance and the pursuit of personal passions while building a business.

* Cheaper Marketing, More Control: Unlike traditional reliance on advertising agencies, e-business
offers many ways to invest money back into the business. Controlling how a product is represented gives
owners more control over their company than ever before.

* Less Restrictive Hours: Customers no longer have to wait for stores to open; they can shop anytime
and arrange for delivery or pickup. Information, such as planning for events or accessing supplier
websites, is available at all hours, providing a more pleasant experience for both the e-business and the
customer.

* More Avenues for Making Money: Most traditionally available products and services can be managed
and sold online due to technological advantages. This includes selling goods or services, virtual retail
stores, education, legal services, and medical services. Existing businesses can expand into e-businesses,
and entrepreneurs can start new ones quickly and less expensively than in the past.

* The In-Person Experience Still Has a Place: E-business advantages do not negate the importance of
traditional commerce stores where immediate purchases can be made or service shops where direct
interaction with experts is possible.

* E-Business Means Freedom: Technology has empowered many small businesses. Opening an e-
business offers freedom of location, control over work hours, and the ability to guide the company in
ways that align with lifestyle, goals, and needs.

Disadvantages of E-Business

* Lack of Personal Touch: E-business lacks the ability for consumers to physically touch or feel a
product, making it difficult to assess quality. The absence of human interaction, present in traditional
business with salespeople, diminishes credibility and trust with customers.

* Delivery Time: Unlike traditional business where products are received immediately, online purchases
involve a delivery time, which can discourage customers. While e-businesses are attempting to reduce
this lag, such as Amazon's one-day delivery for some orders, the issue is not entirely resolved.

* Security Issues: Online businesses are susceptible to scams, and hackers can easily access financial
details, leading to security and integrity concerns that foster distrust among potential customers.

* Quicker Market Share Loss Due to Competition: E-businesses face corporate vulnerability and the risk
of faster market share loss from both domestic and international competition. This necessitates
constant innovation to retain customer patronage and avoid substantial business losses.
 * High Startup Costs Especially with Marketing: Competing with other merchants globally increases
startup and marketing costs for e-businesses. If direct spending competition is not feasible, businesses
must be creative and find alternative ways to capture audience attention.

* Handling Returns: The inability to fully describe a product on screen often leads to returns if the
consumer's expectations are not met upon delivery. Businesses must be prepared to accommodate
returned products and absorb requests for refunds, as poor handling of returns and chargebacks can
have long-term legal and financial implications, especially for those dealing with physical products.

* Innovation Pressure: Operating in a global competitive field, e-businesses risk their brand voice being
lost among numerous competitors. This creates constant pressure to innovate to attract and retain
customers, otherwise market share will be lost to other brands.

* Customers Can Remain Anonymous: Depending on the e-commerce platform, customers in an e-

business setting may remain anonymous due to the lack of face-to-face interaction, and their business
dealings might be one-off occurrences.

E-Commerce

E-commerce, short for electronic commerce, is the process of buying, selling, dealing, ordering, and
paying for goods and services over the internet. In these online commercial transactions, sellers can
communicate with buyers without direct face-to-face interaction. Examples of real-world e-commerce
applications include online banking, online shopping, and online ticket booking.

Key Differences between E-Commerce and E-Business

* E-business primarily refers to the digital enablement of transactions and processes within a firm,
managed by internal information systems. E-commerce, on the other hand, involves commercial
transactions with an exchange of value across organizational boundaries.

* E-commerce is the buying and selling of goods and services via the internet. E-business, in contrast, is
the electronic presence of a business, encompassing all business activities conducted through the
internet.

* E-commerce is a major component of e-business. E-commerce focuses on monetary transactions,

while e-business includes both monetary and allied activities.

* E-commerce has an extroverted approach, covering customers, suppliers, and distributors. E-business,
however, has an approach that includes both internal and external processes.

* E-commerce requires a website to represent the business. Conversely, e-business needs a website,
Customer Relationship Management (CRM), and Enterprise Resource Planning (ERP) to operate over the
internet.

* E-commerce uses the internet to connect with the rest of the world. In contrast, e-business uses the
internet, intranet, and extranet for connecting with various parties.
Types of E-Commerce

The types of e-commerce depend on the final consumer:

* Business-to-Business (B2B): Transactions that occur between two organizations. Producers and
traditional commerce wholesalers typically operate with this type of electronic commerce, which
significantly improves company efficiency.

* Business-to-Consumer (B2C): When a consumer buys products from a seller. Examples include
shopping from platforms like Kikuu, Alibaba, or Amazon, where the final consumer directly purchases
from the seller.

* Consumer-to-Consumer (C2C): A consumer selling a product or service to another consumer. This

often involves second-hand products, with examples being ads on Instagram or Facebook for items
people want to sell. The website acts as a facilitator, not the provider of goods or services.

* Consumer-to-Business (C2B): A complete reversal of the traditional exchange of goods. This type of e-
commerce is common in crowdsourcing projects, where many individuals make their services or
products available for companies seeking those specific services or products.

* Consumer-to-Administration (C2A): Encompasses all electronic transactions between individuals and

public administration. Examples include:

* Education: Disseminating information, distance learning.

* Social Security: Information distribution, making payments.

* Taxes: Filing tax returns, payments.

* Health: Appointments, information about illnesses, and payment of health services.

* Business-to-Administration (B2A): Includes all online transactions conducted by companies and public
administration or government agencies. These services have increased considerably in recent years due
to investments in e-government.

Summary

E-business primarily refers to the digital enablement of transactions and processes within a firm,
involving information systems under the firm's control. E-commerce includes commercial transactions
involving an exchange of value across organizational boundaries.

Keywords

* EDI (Electronic Data Interchange): The transfer of data from one computer system to another using
standardized message formatting, without human intervention. EDI allows multiple companies,
potentially in different countries, to exchange documents electronically.
 * ERP (ENTERPRISE RESOURCE PLANNING): A category of business-management software, typically a
suite of integrated applications, that an organization uses to collect, store, manage, and interpret data
from various business activities. This includes product planning, cost manufacturing or service delivery,
marketing and sales, inventory management, shipping, and payment.

* Pure-play: A business that has an electronic existence only, such as Hotels.com.

* Brick and click: A business model where the business exists both in online (electronic) and offline
(physical) mode.

Conclusion

E-business broadly encompasses all online business activities, including internal processes and external
interactions with stakeholders like customers and suppliers. It has evolved significantly since computers
were first used for internal transaction records in the 1950s, with key milestones like the introduction of
Electronic Data Interchange (EDI) in the 1970s revolutionizing financial markets and data transfer. E-
business offers numerous advantages, such as cost savings by eliminating the need for physical
storefronts, improved communication and faster decision-making, location flexibility, cheaper
marketing, and less restrictive operating hours. It also opens up more avenues for making money and
provides businesses with greater freedom and control.

However, e-business also presents challenges. These include a lack of personal touch, extended delivery
times for products, significant security concerns, and the risk of rapid market share loss due to intense
global competition. Additionally, businesses face high startup and marketing costs, complexities in
handling returns, and constant pressure to innovate to remain competitive.

E-commerce, a vital component of e-business, specifically refers to commercial transactions involving

the exchange of value across organizational boundaries through the internet. It facilitates the buying,
selling, dealing, ordering, and paying for goods and services online without face-to-face interaction.
While e-commerce is primarily concerned with monetary transactions and external interactions with
customers and suppliers, e-business has a broader scope, encompassing internal and external processes,
and utilizes a wider range of technologies including the internet, intranet, and extranet. Various types of
e-commerce models exist, categorized by the parties involved, such as Business-to-Business (B2B),
Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), Consumer-to-
Administration (C2A), and Business-to-Administration (B2A).

In conclusion, e-business and e-commerce are integral to the modern business landscape, offering
unparalleled opportunities for growth and efficiency while demanding strategic navigation of their
inherent challenges.

Recommendations

To succeed in the e-business and e-commerce environment, organizations should consider the following
recommendations:
 * Prioritize a Robust Online Presence: Develop a comprehensive and user-friendly website that
represents the business effectively. For e-business, this should extend to implementing Customer
Relationship Management (CRM) and Enterprise Resource Planning (ERP) systems to manage operations
efficiently.

* Invest in Digital Security: Given the significant security issues and risks of financial detail exposure,
strong cybersecurity measures are paramount to build trust with customers and protect sensitive data.

* Enhance Customer Experience: Address the lack of personal touch by implementing excellent online
customer support, personalized communications, and detailed product descriptions with high-quality
visuals. For physical products, streamline the delivery process and provide clear, efficient return and
refund policies to mitigate delivery time and return handling challenges.

* Embrace Innovation Continuously: In a globally competitive market, constant innovation is crucial to

maintain market share and stand out amidst numerous competitors. This includes exploring new
technologies, refining business models, and finding creative ways to engage customers.

* Strategic Marketing and Cost Management: While initial marketing costs can be high, leverage various
digital marketing channels to promote the brand effectively and control how products are represented.
Focus on cost-effective strategies that provide a good return on investment.

* Leverage Data for Decision Making: Utilize the vast amounts of data available through online
interactions to understand customer behavior, identify trends, and make informed business decisions to
optimize operations and marketing efforts.

* Diversify Communication Channels: Offer multiple communication options (e.g., messaging, email,
video chat) to cater to different customer preferences and overcome language barriers with translation
software, fostering better understanding and faster decision-making.

* Foster Work-Life Balance: For e-business owners, embrace the flexibility of working from anywhere to
create a healthy work-life balance, which can lead to increased productivity and satisfaction.