E-commerce and E-business: What’s the difference?

E-commerce and E-business: What’s the difference?

The often incorrectly interchangeably used “e-commerce” and “e-business” mean two completely different things. Their differentiation is necessary for businesses and clients to speak a common language and understand each other, as well as the nature of the business. We break down the definitions and differences of both:

The E in e-commerce and e-business

Rather than just “electronic”, the E in both these words stands for “electronic networks” and refers to the application of the technology – such as electronic data exchange (EDI – as on the Internet) – in order to run an efficient business. Including electronic elements of business in an organisation’s processes requires the expertise of many people in IT jobs, be they network specialists, website designers or developers, content managers, webmasters, or online security specialists.

E-business definition

Many people think that e-business refers to any business that’s run online. While this may be the case of many businesses that can be run from a smartphone, it’s not the full definition of e-business. E-business is actually a business process (or processes) than can be run electronically or even automated. Email marketing, for instance, is an aspect of e-business; as is the use of a CRM system; or the electronic facilitation of business processes like inventory management, performance management, sales management, etc.

A skilled software developer would be required to design some form of integration between all these processes and their relevant applications to ensure that the e-business side of the organisation operates smoothly and efficiently.

E-business has a strategic focus and assists the internal workings of the business. It can encompass the entire length of the value chain, whereas e-commerce is a lot narrower than e-business and falls into a sub-set of activities under the umbrella of e-business.

E-commerce definition

E-commerce has revolutionised traditional retailing in that one can buy a laptop instead of a store, and sell products in the cloud. E-commerce is the specific technology that adds streams of revenue in an online buying and selling environment and can fall into the e-business value chain. Specifically, e-commerce involves a process that increases revenue generation and profit, for instance, selling individual product units or services from a website via secure credit card transactions. It involves electronic sales and purchasing, and is an outward-facing process that involves partners, suppliers, customers, and all the processes that make it successful.

E-commerce activities can be linked back to the e-business function via an integrated system that reports back on e-commerce performance. This is where e-commerce would tie back into e-business. The two concepts are different from each other, but still very closely linked. Also, just because an organisation has some e-business processes (let’s say automated project management and a CRM), doesn’t mean to say the organisation would necessarily have an e-commerce component.

We hope that the differentiation makes sense now.