E-commerce explained

E-commerce is the buying and selling of goods and services over the internet


Electronic commerce, popularly known as e-commerce, is a business model that allows people and companies to do business transactions primarily over the internet using devices such as computers, smartphones, and tablets.

E-commerce meaning

E-commerce is made possible through a number of technologies such as online marketing, online transaction processing, mobile commerce, supply chain management, data collection systems, electronic funds transfer, and electronic data interchange, among others.

E-commerce transactions operate in the following market segments:


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


Present-day e-commerce relies on the world wide web for at least one part of the entire transaction cycle. The three main areas of electronic commerce include electronic markets, online auctions, and online retailing.

E-commerce helps businesses to cast their market net wider by providing cheaper and more efficient distribution channels for their products or services.

Major e-commerce businesses include Amazon, e-Bay, Alibaba, and Overstock.com. Global retail e-commerce sales reached $2.304 trillion in 2017, a growth of 24.8 per cent from the previous year.

E-commerce history

The history of e-commerce dates back to 1971 or 1972 when APARNET – the first network using TCP/IP protocol suite – was used to facilitate a cannabis sale between Massachusetts of Technology (MIT) and the Stanford Artificial Intelligence Laboratory students.

Steady progress has been made since then including the development of cheaper computers and web browsers.

E-commerce regulation

The regulation of electronic commerce varies from country to country. A number of e-commerce activities are regulated by the Federal Trade Commission (FTC) in the United States. Other countries such as India, China, the United Kingdom, and Australia have their own set of regulations to govern e-commerce activities.

Advantages of e-commerce


  • Convenience – e-commerce businesses are open 24/7 every single day of the week. This is convenient for consumers who can transact even outside office hours.
  • Increased selection – several stores have a wider range of products on their online stores than they have in their physical stores.


Disadvantages of e-commerce


  • Customer service – e-commerce customer service is limited due to a lack of employees that shoppers can talk to and ask questions. Modern e-commerce businesses allow customers to chat with customer support online.
  • Waiting period – there is no instant gratification for consumers who have to wait for days, and sometimes months, before the arrival of the items they have purchased.
  • What you see may not be what you get – online images that influence consumers to make buying options may not tell the whole story. Some customers may be dissatisfied when they receive items that don’t meet their expectations.


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