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What is an E-commerce Business?

The Oxford Dictionary has defined electronic commerce, popularly known as e-commerce as commercial transactions conducted electronically over the internet. On its part, the Business Dictionary defines e-commerce more widely as business conducted through the use of computers, barcode readers, fax machines, credit cards and other electronic appliances. Whether or not using the internet, e-commerce is not associated with the exchange of paper documents. Some of the activities that characterize e-commerce include:

  • Electronic funds transfer
  • Supply chain management
  • Electronic data interchange
  • Online transaction processing
  • Internet marketing
  • Authentication and non-repudiation
  • Inventory control
  • Order fulfillment and customer support

Therefore, e-commerce is best defined as a business model or a segment of a larger model that enables an individual or a firm to conduct business (buy or sell goods or services) over an electronic network, usually the internet. Indeed, modern e-commerce will use the world wide web in one way or another.

E-commerce operates in the four major segments of the market.

  • Business to consumer
  • Business to business
  • Consumer to consumer
  • Consumer to business

The term commerce is synonymous with business, therefore, e-commerce is often used interchangeably with e-business.

A historical perspective

Historically, e-commerce can be traced to the 1960s when individual traders and businesses began to use electronic data interchange (EDI) to transmit business documents among themselves. Later, in 1979, the American National Standards Institute came up with ASC X12, a universal standard for businesses to share documents electronically. Subsequently, the number of people and businesses sharing documents electronically grew. The modern e-commerce revolution came in the 1990s with the rise of eBay and Amazon.

Ecommerce applications   

There are various applications used in the conduct of e-commerce businesses. Some of the most common ones are email, file transfer protocols, online catalogues, web services, shopping carts and Payment checkouts. Emails are used in sending e-newsletters to subscribers. Today, there are many companies that are trying to entice consumers directly using such tools as targeted advertising, digital coupons and social media marketing.

Advantages of e-commerce

  • Speed of access
  • Availability on a round the clock basis
  • Avails a variety of goods and services to a consumer who can check different providers online without the need to travel to each store
  • Businesses can reach international clients with much ease.

Disadvantages of e-commerce

  • Limited customer service
  • Product shipping may take longer than the consumer would otherwise desire
  • Consumers have no opportunity to see and examine the physical goods until they have been supplied. Even where the seller allows the customer to examine and reject the goods if not satisfied with them, the parties will have incurred substantial delay and expense in shipping the goods.
  • Where the online platform does not have an elaborate dispute resolution mechanism, difficulties of jurisdiction are experienced.

Essentially, e-commerce is expected to continue growing especially with the influence of financial technology innovations and Big data analytics insights. Businesses should, therefore embrace latest technology innovations to find ways of improving the effectiveness, privacy and security of online business transactions. This could take the form of authentication of business transactions, easy checkout, encryption of communications and implementation of other technologies that boost security.

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