E-Business

Updated on March 20, 2024
Article byWallstreetmojo Team
Edited byWallstreetmojo Team
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Electronic Business (E-Business)?

Electronic business (E-business), refers to the conduct of business activities using the internet and other electronic means. Its purpose is to facilitate and streamline business processes. In addition, it aims to leverage technology to increase efficiency, expand market reach, and enhance the customer experience in the digital age.

E-Business

You are free to use this image on your website, templates, etc, Please provide us with an attribution linkHow to Provide Attribution?Article Link to be Hyperlinked
For eg:
Source: E-Business (wallstreetmojo.com)

E-business empowers customers to shop and purchase products or services seamlessly, anytime, and from anywhere. It liberates businesses from the constraints of physical storefronts while reducing marketing and customer acquisition costs. Furthermore, e-business fosters agility and responsiveness to changing market dynamics, enabling businesses to outpace their competitors in today’s dynamic market landscape.

Key Takeaways

  • Electronic business refers to using the Internet to conduct business activities such as purchasing and selling goods and services, advertising, and communicating with customers.
  • E-commerce is a subset of e-business since it focuses on exchanging goods and services between businesses and consumers.
  • E-business involves using technology to automate internal corporate processes and interactions with customers, suppliers, and partners.
  • It eliminates the need for physical shops, lowers the expense of marketing, and allows customers to shop and buy goods or services whenever they want, from anywhere.

Electronic Business Explained

Electronic business, the practice of conducting business online, encompasses various activities, including buying and selling goods and services, advertising, and customer communication. E-businesses typically operate through websites or online platforms that serve as the main interface for transactions, utilizing secure payment gateways for financial transactions. Back-end systems such as inventory management, customer management, and order processing are crucial for e-business operations. Success in e-business is contingent upon product offerings, user experience, marketing strategies, efficient delivery, and superior customer service.

The origins of e-business can be traced back to the early days of the Internet in the 1960s, but it wasn’t until the 1990s that it began to take shape as a distinct concept. The mid-90s saw the emergence of online retailers, such as Amazon and eBay. The introduction of secure online payment systems like PayPal in the late 90s gave consumers the confidence to shop online. Since then, e-business has continued to grow and evolve, becoming an increasingly integral part of the global economy.

Financial Modeling & Valuation Courses Bundle (25+ Hours Video Series)

–>> If you want to learn Financial Modeling & Valuation professionally , then do check this ​Financial Modeling & Valuation Course Bundle​ (25+ hours of video tutorials with step by step McDonald’s Financial Model). Unlock the art of financial modeling and valuation with a comprehensive course covering McDonald’s forecast methodologies, advanced valuation techniques, and financial statements.

Types

There are several types of e-businesses, each with its unique characteristics and business models:

  1. B2C (Business-to-Consumer): A B2C e-business sells products or services directly to consumers through its website or mobile app. Examples include Amazon, eBay, and Uber.
  2. B2B (Business-to-Business): A B2B e-business sells products or services to other businesses. Examples include Alibaba, ThomasNet, and Salesforce.
  3. C2C (Consumer-to-Consumer): A C2C e-business allows consumers to buy and sell goods and services directly to each other. Examples include eBay, Etsy, and Airbnb.
  4. B2G (Business-to-Government): A B2G e-business sells products or services to government agencies or departments. Examples include Oracle, IBM, and Deloitte.
  5. C2B (Consumer-to-Business): A C2B e-business allows consumers to provide products or services to businesses through freelance or gig-based platforms like Fiverr and Upwork.
  6. Mobile Commerce: Mobile commerce refers to buying and selling products or services through mobile devices like smartphones or tablets.
  7. Social Commerce: Social commerce refers to buying and selling products or services through social media platforms like Facebook Marketplace or Instagram Shopping.
  8. Marketplace: A marketplace platform brings buyers and sellers worldwide, facilitating transactions and providing payment processing and shipping services. Examples include Amazon, eBay, and Etsy.

Examples

Let us look at e-businesses examples to understand the concept better:

Example #1

GreenEarth Organics Ltd. sells environmentally friendly products online, such as reusable water bottles, cloth bags, and biodegradable cleaning products. Their B2C e-commerce website offers a wide range of products with a user-friendly shopping cart and secure payment gateway. In addition, they effectively use technology, including a content management system (CMS), email marketing, social media advertising, and analytics, to manage their website, reach new customers, and make data-driven decisions.

Efficient inventory management is a priority for GreenEarth Organics Ltd., utilizing an inventory management system to monitor stock levels and sales. They also employ a customer relationship management (CRM) system to enhance customer interactions and satisfaction. This e-business is a prime example of how technology can facilitate a sustainable and eco-friendly business model, minimizing environmental impact while providing customer value through e-commerce, CMS, email marketing, social media advertising, analytics, and inventory and customer management systems.

Example #2

Netflix is an e-business that has disrupted the entertainment industry with its innovative use of technology. As a popular streaming service, it offers on-demand access to an extensive library of movies and TV shows, providing a convenient and user-friendly experience.

Netflix’s recommendation algorithm analyzes viewing history and preferences, suggesting content of interest to keep customers engaged and help them discover new content. With a subscription-based model, customers pay a monthly fee for unlimited access to the library, eliminating the need to purchase individual movies or TV shows and providing a steady revenue stream.

Through the strategic use of technology and a commitment to user-friendly experiences, Netflix has revolutionized the industry and emerged as a leader in the streaming space, showcasing how e-businesses can leverage technology to disrupt and transform traditional industries.

Advantages And Disadvantages 

The advantages and disadvantages of e-businesses are as follows:

Advantages

  • Increased reach: E-businesses can easily reach a global audience, expanding their market and customer base.
  • 24/7 availability: E-businesses are available 24/7, allowing customers to shop or interact with the business anytime.
  • Reduced costs: E-businesses can reduce costs associated with traditional brick-and-mortar operations, such as rent, utilities, and staffing.
  • Improved customer experience: E-businesses can use technology to enhance the customer experience, such as personalized recommendations and easy-to-use interfaces.
  • Increased efficiency: E-businesses can automate many processes, such as inventory management, accounting, and customer service, improving efficiency and reducing the risk of errors.
  • Access to real-time data: E-businesses can use analytics tools to track their performance and make data-driven decisions.
  • Increased competitiveness: E-businesses can compete more effectively against larger traditional businesses by leveraging technology and offering unique, innovative products or services.
  • Flexibility: E-businesses can adapt quickly to changing market conditions, customer needs, and technological advancements, providing a competitive advantage.

Disadvantages

  • Security concerns: One of the biggest concerns with electronic business is the security of sensitive information such as credit card numbers and personal data.
  • Technical difficulties: Technical problems, such as website crashes, can disrupt business operations and result in lost sales.
  • Lack of personal interaction: Electronic business transactions can lack the personal touch of traditional in-person transactions, leading to customer dissatisfaction.
  • Cost: Setting up and maintaining an electronic business can be expensive, requiring investments in technology, website development, and ongoing maintenance.
  • Competition: Electronic business can be highly competitive, with many businesses offering similar products and services online.

Electronic Business vs Electronic Commerce  

AspectElectronic Business (e-business) Electronic Commerce (e-commerce)
DefinitionConducting business activities electronically using digital technologies like the Internet, including buying, selling, marketing, customer service, and supply chain management.Buying and selling goods and services online involves businesses (B2B), businesses and consumers (B2C), or consumers and consumers (C2C).
ScopeBroad and comprehensive, covering various aspects of conducting business online.Narrower in scope, primarily focused on online buying and selling.
NatureEncompassing, involving an entire range of business activities conducted electronically, beyond just transactions.Transaction-oriented, focused on the exchange of goods and services.
InvolvesOnline transactions, marketing, customer relationship management, and supply chain management.Online transactions between businesses, consumers, or both, typically through e-commerce platforms or online marketplaces.
FocusEntire digital transformation of a business, incorporating online and digital technologies.Online buying and selling goods and services, typically through electronic platforms or marketplaces.
Business ModelIt can include B2B, B2C, C2C, and hybrid models.Primarily includes online transactions with B2B, B2C, or C2C models.
TechnologyThe Internet, mobile devices, cloud computing, data analytics, and other digital tools are involved.Relies on internet-based technologies like online platforms, websites, and payment gateways.

Frequently Asked Questions (FAQs)

What is e-business vs e-enterprise?

E-business refers to the conduct of business activities electronically using digital technologies. On the other hand, e-enterprise refers to the integration of e-business principles and technologies across the entire organization, encompassing all aspects of the business, including internal processes, external interactions, and overall business strategy, to achieve digital transformation and competitive advantage in the digital economy.

What are the main features of e-business?

The main features of e-business include conducting business activities electronically using digital technologies like the Internet, including online transactions, marketing, customer relationship management, and supply chain management.

What is the future of e-business?

The future of e-business is expected to continue evolving with technological advancements, leading to increased automation, improved customer experiences through personalization and customization, wider global reach, and enhanced data analytics for better decision-making. However, it may also face challenges related to cybersecurity, data privacy, regulatory compliance, and changing consumer preferences.

This has been a guide to what is E-Business (Electronic Business). We explain it with examples, types, advantages, disadvantages, and comparison with e-commerce. You can learn more about it from the following articles –