Understanding the difference between e-commerce and e-business

Editorial Team

4 min read
Woman writing in notebook

“Commerce” refers to the trade or the exchange of money, goods, and/or services. By contrast, “business” is an umbrella term that applies to all the activities and processes companies engage in throughout the day – including commerce.

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This distinction remains intact even when you apply an “e” prefix to these terms to reflect the electronic channels throughout which modern e-commerce and e-business happen. In other words, e-commerce refers to any purchases made online – including the capture and transmission of payment details via the internet. E-business refers to all business activities and processes conducted through the internet or other electronic channels.

This short definition captures the core difference between electronic commerce and electronic business. This post will help to highlight some additional examples so you can better distinguish between e-commerce and e-business – and understand how using either (or both) can help grow your operations.

Examples of common e-commerce and e-business differences

Ad campaigns, email marketing, and research and development all fall under the category of e-business. These activities often generate expenses that business owners may be able to deduct from their taxes. Companies take on these costs if doing so allows them to become more efficient, productive, or profitable.

By contrast, e-commerce specifically requires a transaction of some kind. While it’s technically possible to process payments offline, in-person, or with a merchant-facing virtual terminal, most online sales are initiated remotely by the customer – whether they pay via credit card, ACH, gift card, or some other digital payment option.

What are the benefits of e-business and e-commerce?

E-businesses can use software integrations and internet connectivity to automate, scale, or speed up many time-consuming processes that used to be done manually.

  • Cloud-based storage, for example, removes the need to physically organize and store paper-based records. It also enables you to access files from anywhere, anytime, while helping to protect your data from being destroyed or damaged by fires, floods, or theft.
  • Email has emerged as a cost-efficient and faster way to correspond with colleagues and customers – replacing many slower methods such as snail mail and fax.

Many brick-and-mortar companies rely on a range of digital tools, including inventory management, customer relationship management (CRM), or accounting software. As such, they all qualify as e-businesses to varying degrees. However, a growing number of companies now manage their entire operations remotely – without ever needing to rent physical office spaces.

With e-commerce, merchants use the internet to connect their products and services with customers around the world. Just as with an e-business, managing an e-commerce store can be done entirely from any PC or smart device. As an online retailer, however, there is no requirement that your operations be 100% digital.

For example:

  • An artisan carpenter might produce goods in his or her workshop – but sell finished products through an online marketplace.
  • Many restaurants and fast food chains now offer online ordering and curbside pickup as a result of social distancing guidelines during the pandemic.

Against this backdrop, the differences between digital businesses and e-commerce are becoming less pronounced.

The pros and cons of e-commerce vs. e-business

There’s a reason why e-business and e-commerce are on the rise worldwide. They both leverage internet technology and computational processing power to help you:

  • Scale operations
  • Reach more stakeholders
  • Reduce operating costs
  • Communicate faster

What used to take hours by hand can now be performed in mere seconds by computers. This has helped lower the barrier to entry, allowing startups to compete with more established businesses. Before moving your sales funnel or entire operations to the cloud, it’s important to understand some of the potential challenges involved.

  • Regardless of the differences between digital business and e-commerce, succeeding in either requires having sufficient in-house IT expertise. Fortunately, this is changing as more user-friendly solutions emerge. For example, designing a website from scratch no longer requires learning PHP and HTML. Thanks to drag-and-drop content management systems, anyone can build an attractive website in just a few hours.
  • Because digital technology has lowered the barrier to entry, businesses of all sizes now face greater competition than ever. Long-term growth favors those who can adapt quickly to today’s rapidly changing digital landscape.
  • The internet has made communication faster and more cost-efficient. Yet, it has also introduced more vulnerabilities – such as cyberattacks and data breaches. Although many fraudulent attacks target payment data (e.g., consumer credit cards), criminals don’t distinguish between e-commerce and e-business victims. They’ll happily steal any information, including social media account logins, email passwords, and other sensitive information.

Ready to grow your digital business and/or online sales?

Whether you’re looking to manage more of your business in the cloud, or are ready to start selling your products and services online, Clover has the tools to help your organization grow. To learn more about our e-commerce solutions and business insights, contact a Clover Business Consultant today.