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The difference between eCommerce and eBusiness is important to understand if you want to be up to date with the current global business trends.
It is a secret to no one that businesses are experiencing a digital transformation, and this is quickly changing the global business landscape. This has had an impact on the physical-versus-internet balance of commercial transactions and the rise of omnichannel strategies. Although not everyone might agree on the extent to which this process has been accelerated throughout the pandemic, we can surely say that the Internet seems to have finally caught up with all types of companies, not just the big ones, and across all industries.
To explain this shift towards digital environments and omnichannel strategies and why it matters, I will focus on the difference between eCommerce and eBusiness, analyzing their business models, and how to think about eCommerce properly.
Commercial transactions are part of how human societies work. It was just a matter of time for companies, small and large, to migrate almost entirely to the internet. However powerful this transformation has been, it has not meant the complete disappearance of the physical aspects of the business world.
This digital shift has meant a number of benefits like increased productivity, cost reduction, and greater efficiency, simplifying routine tasks like inventory management, transaction process, coordination between business partners, and so on. Although there is still a long way to go, electronic commerce is here to stay.
An important technological element that has allowed this transformation to occur is the use of electronic data interchange, also known as EDI. Thanks to the possibility of exchanging business information through digital channels, companies have been able to migrate their operations to digital environments. This has meant a major shift in mentality and how things are done. In particular, it has revolutionized traditional business models.
The idea of a business model is not new. However, it was introduced to an entire generation during the past decade thanks to the book Business Model Generation. In it, a simple yet complete business model framework was introduced: the Business Model CANVAS.
With this tool, existing companies and entrepreneurs alike were able to think of their businesses in a new and integrative way that made it easy to understand a considerable amount of information. It allowed a systemic perspective of business, looking at it as an integral concept, all thanks to the power of digital tools.
The business model approach has changed many rules of the game. In particular, it has given all sorts of companies the conceptual tools to think big, improve their processes, increase their revenue, and establish unique relationships with their customers.
It is virtually impossible for any business to avoid, in one way or another, the power of the Internet and the use of EDI tools. The resulting shift in business has been a move from a traditional business model, that is, in the physical world, to one where the Internet cannot be overlooked. A traditional business model refers to one where digital tools are not at the center of how business is done, while an eBusiness model refers to a business that uses digital tools as a fundamental part of its process.
As the Internet engulfs every aspect of our lives, terms like eTail have become popular; this is the selling of retail products and services over the Internet. Other ones like eCommerce and eBusiness are more popular. These two terms are often used interchangeably as if they were the same. In practical terms, they are two different concepts, and understanding the difference between them can be beneficial to how you run your company.
The difference between eCommerce and eBusiness is one of scope. eCommerce is the way in which digital or online commerce is done, in contrast to how traditional brick and mortar commerce is done. This includes a set of activities like eTail, electronic commercial transactions, online supply chains, mCommerce, digital marketing, and data analytics.
In contrast, eBusiness is the broader and more inclusive digital version of business. This sounds pretty general, and that’s because eBusiness is a very wide concept. It includes things as diverse as eCommerce and Digital Therapeutics: two business models that belong to the Retail and MedTech industries respectively, but digital nonetheless.
In short, eCommerce refers to online commercial transactions, while eBusiness refers to all sorts of online businesses. eCommerce is included within the scope of eBusiness.
Just as eTail belongs to the broader eCommerce category, so does eCommerce in relation to eBusiness. So, one could say that the difference between eBusiness and eCommerce is that the latter is a specific set of the former. This has important implications, like the fact that eCommerce can be considered as being similar to retail, whereas eBusiness can include other business models like those of the FinTech and MedTech industries. However, no matter the industry, there seems to be a way to think of eBusiness models in general that can also apply to eCommerce.
There are four main types of business models:
These models, or ways to segment your channels, can be referred to as different types of both eBusiness and eCommerce models.
Understanding the differences between each of the four models is important for any type of company. By having clear differentiated channels, your company can build different ways to reach customers, helping it become better positioned to outpace competitors and expand its growth rate and bottom line.
If you run a business, what you do and how you do it certainly differs from what a consumer does in order to close a transaction with another consumer. Things like communication and sales channels, the way you produce revenue, and who your target audience is might be completely different.
In this first type of business model, a commercial transaction occurs between a business and another business, hence it is known as B2B. Because fewer transactions might occur here than at the consumer level, the products and services offered tend to be more expensive and produce higher profit margins. However, consider also that high volumes are handled in some cases as the supply chain model is Business to Business (B2B).
B2C is probably the most common business model and the one most people think of when they think about how a business operates. This model refers to the commercial transactions of products and services that occur between regular businesses and customers. This segment has seen an important increase in online sales thanks to an improved customer experience through retail apps.
Thanks to the possibilities that the Internet offers, consumers can easily sell their products and services to other consumers through C2C channels. Solutions like marketplaces have become really popular within this segment, as they help to match customers who want to sell something with those who want to buy it.
The idea of C2B, a consumer selling his products or services, sounds strange but is possible. This is thanks to the power of the Internet together with some powerful eCommerce tools. Thanks to digital transformation processes, an individual can sell products and services easily and in a secure way to businesses all over the world.
Digital tools have had a considerable impact on eBusiness models. This has also been the case for eCommerce. For any eCommerce company with a strong online presence, or wishing to have one, it is important to consider the following aspects and how they relate to each individual eBusiness model.
The idea of shopping online sounds simple. You go to a website, you select what you want, you pay, and you wait for it to be delivered. However, most companies seem to lack this basic understanding of how their eCommerce systems should work.
Most companies still think that eCommerce is just literally electronic commerce and not something new. To deliver your customers a seamless online shopping experience, it is necessary to use the right tools and adapt your processes to a new way of thinking about your business. Shopify Plus is a great way to do so.
One thing the Internet has drastically changed for businesses is how they relate to customers. It is now possible to keep track of a great deal of information that can be used to create a better User Experience (UX). Companies can target specific products to consumers based on their preferences, letting them know when an offer will take place, and much more.
In the past, we saw how few specific products and services sold by the numbers. Another important aspect that eBusiness has changed is the possibility that many more products are sold, even if at low numbers in individual terms. An item unlikely to be found due to its low volume of sales can now be easily found thanks to online retail tools. This phenomenon is referred to as the long tail.
To take advantage of this possibility, it is necessary to have the right tools. A retail app becomes very important for companies that want to benefit from the long tail and similar market phenomenon. The best way to start doing so is through a retail MVP.
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