The terms “ecommerce” and “e-business” may sound interchangeable, and in fact the terms are commonly confused with one another. But while these enterprises share a lot of similarities, they have some very important distinctions.
E-Commerce vs E-Business
Every ecommerce organisation falls under the umbrella of e-business, but not every e-business is considered electronic commerce.
E-business is a broad, blanket term that refers to any type of business operation that’s conducted—in whole or in part—using the internet. The organisation itself may be run predominantly offline, but it’s still part of the e-business landscape if it uses online technologies as an integral part of the business model. For example, an independent psychiatry practice that offers a telemedicine option to patients would be an example of an e-business.
Ecommerce, on the other hand, refers to the specific sector of e-business that’s concerned with the online transaction of goods and services. You use your credit card to pay for a new laptop on Amazon, and Amazon ships the laptop to your home.
The main difference between ecommerce and e-business is that e-business typically stresses long-term relationships while e-commerce is concerned with individual transactions.
The Basics of E-Business
An e-business is any business in which online technology is essential to the business model. The term “business model” is key here, because not every business that uses the internet is considered an e-business.
For example, if you run a local ice cream shop with no online presence, and you use QuickBooks Online to manage your bookkeeping and taxes, you’re not an e-business. The internet may help you to run your business, but it’s entirely separate from your essential business activities.
However, if you use Instagram as a tool to draw customers into your ice cream shop, you would meet the criteria of an e-business. Now you’re actually using the internet as a marketing tool to build your brand and showcase your flavours, making it an imperative part of your store’s success.
Other examples of e-businesses include:
- Ecommerce stores. As previously noted, ecommerce is one aspect of e-business. It’s just not the only aspect.
- Ad-revenue based businesses. These would include online news services, many blogs, video platforms, affiliate websites, education resources, and any organisation or influencer that relies on banner or ad clicks as its main source of funding.
- Lead-based businesses. Web design agencies, marketing firms, local contractors, and other professionals who attract clients via the internet are examples of e-businesses that fall just outside of the ecommerce space.
- Companies that design web-based technologies. Online software designers are considered e-business professionals even if their tools are sold offline. Examples include companies that design customer relationship management (CRM) applications, SEO tools, and other online resources.
Requirements for E-Business
To be part of the e-business landscape, you just need the following essentials:
- A computer with an internet connection.
- A way to collect funds. This may be a merchant service provider, a merchant aggregator like PayPal, a partnership with an affiliate provider, or the means to accept cash or checks.
- Web hosting and a domain. This is the case if you’re running your e-business through your own website. However, it is possible to succeed without your own hosting. For example, you can publish content and earn revenue via YouTube, mobile app stores, and sites like Etsy and Amazon.
If any facet of your revenue is the product of online interaction or marketing, you’re part of the e-business world.
The Basics of E-Commerce
As previously noted, ecommerce is one category of e-business. It’s the category concerned with the commercial transaction of goods and services online. There are five main types of ecommerce:
- Business to Consumer (B2C). This is where you sell goods or online services to an individual consumer. For example, if you run an online auto parts store that’s open to the public, you’re a B2C seller.
- Business to Business (B2B). B2B businesses sell goods or services specifically to other businesses. For example, if you specialise in industrial-grade insecticide sprayers designed for professional exterminators, you might focus on a B2B marketing approach.
- Direct to Consumer (D2C). With direct-to-consumer sales, there is no middleman. A brand or manufacturer develops its own product and sells the inventory directly to the end customer: no wholesaler, no retailer, no distributor. Apple is an example of a D2C business. The majority of their products are sold directly through their own e-commerce website and Apple Store locations. D2C is not mutually exclusive. A business can be both B2C and D2C.
- Consumer to Consumer (C2C). If you’re just a consumer selling items to fellow consumers, the sales are considered C2C. An example would be if you sold your video game collection on a C2C platform like eBay or Facebook Marketplace.
- Consumer to Business (C2B). This is a relatively new business model that’s gaining popularity in the social media age. If a business pays a popular Instagram celebrity to promote its products, this is an example of consumer-to-business sales. Often, this type of business transaction is facilitated online via influencer platforms.
In addition, you don’t have to sell 100% online to be considered an ecommerce business. Ecommerce can fall into two distinct categories: Pure Play and Omnichannel.
- Pure Play ecommerce involves selling exclusively online. Etsy is an example of a Pure Play ecommerce platform. All sales are completed online and shipped to recipients’ homes, with no in-person interactions.
- Omnichannel ecommerce involves selling via both the internet and brick-and-mortar stores. Apple is a popular example of an omnichannel business. You can order products at Apple.com, or you can shop in an Apple store.
Ecommerce businesses can include traditional online storefronts as well as online ticketing agencies and service providers. It’s any online business in which a customer is required to submit a credit card or other digitally transmitted payment in exchange for goods. For this reason, digital security is especially critical for ecommerce. When users are transmitting sensitive credit card data, they need to know that their transactions are encrypted and secure.
Requirements for Ecommerce
To operate an ecommerce enterprise, you’ll need the following:
- A computer with an internet connection
- A product or service to offer to the public
- Web hosting and a web domain (unless you choose to sell on a platform like Amazon, Etsy, etc…—not recommended for serious businesses)
- An online shopping cart provider or e-commerce platform like BigCommerce, Shopify, WooCommerce, etc…
- A merchant services provider and payment gateway, so you can accept credit card transactions from customers
If you sell physical products or digital products online, you’ll also need to ensure that your site maintains PCI compliance to protect your customers’ financial data. It’s not just recommended; it’s required by all of the major credit card providers.
Getting Down to E-Business
Ultimately, it’s not the terminology that matters. What matters is having a solid business plan to meet your goals and also ensuring that you have all of the necessary tools and resources. If you’re just getting started in ecommerce, Unicorn Payment can help you to get set up with reliable merchant services. We can handle nearly 200 forms of currency from all corners of the globe, and we offer competitive rates.
No matter what type of online business you’re trying to start, there has never been a better time. The COVID pandemic has transformed the global community, and e-business is bigger than ever. Savvy business owners are already taking advantage. Are you ready to claim your piece of the pie?