E-business vs. E-commerce

Understanding the Difference

Fashion Designer Answering Smart Phone While Using Laptop
Neustockimages/E+/Getty Images

Some people use the terms "e-business" and "e-commerce" interchangeably. After all, they both involve business processes conducted electronically -- quite likely on the Internet. Others view e-commerce to be a subset of e-business.

E-commerce Is Narrower

If we regard e-commerce as different from e-business, then the only valid view we can adopt is that e-commerce is a narrower discipline. E-business accounts for all business processes conducted online, while e-commerce is restricted to buying and selling.

Of course, this narrower definition flies in the face of many of the articles I have written in the past, such as the advantages and disadvantages of e-commerce. In most such articles several of the characteristics I attribute to e-commerce are actually broader than merely buying and selling.

What Is E-business?

So that we do not end up splitting hair, it is best to understand e-business with the help of examples:

  • Email marketing to existing customers and prospects is an e-business activity, as it electronically conducts a business process -- in this case marketing.
  • An online system that tracks inventory and triggers alerts at specific levels is also e-business. Inventory management is a business process. When facilitated electronically, it becomes part of e-business.
  • A content management system that manages the work flow between a content developer, editor, manager, and publisher is another example of a business. In the absence of an electronic workflow, the physical movement of paper files would conduct this process. By electronically enabling it, we are now in the realm of e-business.
  • An online induction program for new employees automates part of the whole of its offline counterpart.

I guess you get the idea. As long as something is a business process conducted on electronic networks, it is fair to call it an e-business process.

Is E-business a Business That Is Conducted Online?

Some authors have taken the view that an e-business is not about business processes being conducted electronically.

Instead, an e-business is a special type of business -- one that exists online. So if you are an advisory firm helping people choose the right furniture, then you are a business. But if you run a website where people can compare furniture options, then you are an e-business.

This view of an e-business is significantly more limited in its scope. And in this avatar, it starts getting synonymous with e-commerce.

Will the Real E-business Please Stand Up?

What exactly is e-business? It is not a question that bothers me too much, as it is simply a matter of semantics. My jargon is not necessarily superior to your jargon.

But deliberating over the e-business vs. e-commerce dilemma is not a complete waste of time. Unless I understand the intended meaning of the speaker, I am likely to misinterpret. Imagine the confusion that would be caused by a piece of legislation that talks about e-business, but does not adequately describe it!

What Is E-commerce? 

Compared to the murky definitions of e-business, e-commerce is clearer. In its basic form, it involves placing orders online and making payments online. Especially in the B2C (business to consumer) type of e-commerce, we have a website that sells goods on one end, and a buyer of those goods on the other.

Is Business to Business Ecommerce the Same as E-business?

I have not seen this issue being addressed elsewhere, but I think that it is at the heart of the e-business vs. e-commerce dilemma.

If you read about business to business (B2B) e-commerce, you will invariably come across references to sharing data, supply chain management, logistics management and other core business processes that are not directly related to buying and selling. So which is it then: B2B e-commerce or e-business?

In my analysis, people who can clearly differentiate between e-business and e-commerce are only thinking about B2C e-commerce. And those who find e-commerce and e-business to be synonyms are thinking about all forms of e-commerce, including B2B e-commerce.