alan charlesworth . eu
link to home page vertical black line link to tips hints and advice vertical black line link to interesting articles vertical black line link to good and bad practice vertical black line link to alan's musings vertical black line link to contact page

IS THE DEFINITION OF E-COMMERCE
THE SAME AS THE DEFINITION OF E-BUSINESS?

lecturers, trainers & students :
to see how you can benefit from this article click here

Is it e-Commerce or e-Business? And does it really matter what we call it if no one knows what it is?

Personally, I don't really care. And in business environments I don't think it matters what the job that people are doing is called - and it is unlikely that they really care either. However, I work in an academic environment - an environment where things that are not clearly labelled make life awkward. For example, how do you prepare, deliver and assess a module in e-commerce or e-business if no one really knows to what either term refers?

I recall one vociferous altercation with a group of students in Skopje, Macedonia [don't ask!] who considered that a e-commerce was how to set up a 'dot com' company - including all the finance, HRM and legal issues that go with it. I had great difficulty in getting across the point that [for example] raising finance and the control of income and costs for an online business is just plain finance, not e-finance and is a generic element of business and not e-business.

e-commerce or e-business

From a personal standpoint, the term e-commerce came late to me. I still have notes [yes, I know - sad] of presentations I made to SMEs around 1997/98 in which I was introducing the Internet and advising of how it would impact on business in the near future - and there is no mention of the term, even if I was describing elements of what is commonly recognised as e-commerce.

Who came up with the phrase originally is unclear, though it is likely that academics and techies using the Internet prior to its birth as a commercial entity - commonly recognised as October 1994 when the first banner ad appeared - were using the term, indeed, the domain name e-commerce.com was created on the 19th of April that year. Although they do not claim to be the originators, Kalakota and Whinston certainly propagated the term in their 1996 book 'Frontiers of e-Commerce'.

The first definition of e-business came from IBM in 1997, saying that it is:

'...a secure, flexible and integrated approach to delivering differentiated business value by combining the systems and processes that run core business operations with the simplicity and reach made possible by internet technology.'

In other words, e-business refers to any aspect of any element of the business in which Internet technology is used in any form.

I can live with this - if I have to - but I do have problems with it. I would argue that the raising and control of funds for a pure-play online business is finance - not e-finance. Employing and training staff for that online venture would be human resource management, not e-HRM, and the control and organization of those staff requires management skills, not e-management skills. Similarly, if we used a 'traditional' business model to organize that online business, we don't prefix it with an 'e' - would Amazon have to use the e-BCG matrix to identify the cash cows and problem children of its business empire? Sorry - should that be e-cash cows and e-problem children? Broadening the issue away from pure 'business/commerce' - what about the impact of the Internet on society? The Internet has spawned 'social networking websites' - yet social networking has be around for ... well, forever - so why was it not e-social networking? And what about the absence of 'e-not-for-profit' for online charities or 'e-green' for environmental websites or 'e-gambling' - although 'e-government' seems to be hanging on in there?

So if we're not 'e-ing' all the elements of business that might use the Internet [is there any aspect of business that does not use email, for example?] why are we talking about 'e' business as if it is fundamentally different to non-electronic business?

I'll take this line of argument even further and ask why we categorize aspects of business that are Internet based, but don't bother doing the same for other media? For example, it is common to refer to online job sites as 'e-recruitment'. And yet we don't have 'TV-recruitment', 'radio-recruitment', 'newspaper-recruitment' and so on. Surely, online recruitment is - like these other examples - simply recruitment? By the same token, 'e-law' is frequently used to describe elements of law that are Internet-specific. Quite right too - and there are e-law specialists within that profession. But where are the 'newspaper-law', 'magazine-law' 'telephone-law' specialists? I'm sure there must be lawyers who concentrate on specific media, but we do not see those bandied about.

So where does that leave 'e-commerce' - and what is it anyway?

An internationally agreed working definition of e-commerce is presented by the United Nations. It describes an Internet transaction as 'the sale or purchase of goods or services, whether between businesses, households, individuals, Governments and other public or private organisations, conducted over the Internet. The goods and services are ordered over the Internet, but the payment and the ultimate delivery of the good or service may be conducted on- or offline'. [source: UN Conference on Trade and Development 2001. E-Commerce and Development Report. Pg 80].

This definition deals only with 'transactions' between two or more parties, involving the agreement to buy or sell goods or services - in other words, a 'commercial' transaction conducted electronically.

An additional important interpretation comes from the DTI which states that: 'There is a distinction to be made between e-commerce and other web based applications where no transaction takes place.' [Department of Trade and Industry 2000 Clicks and Mortar: The new store fronts Pg 8 The Retail e- Commerce Task Force].

For further help, let's take a step back from 'e' variants and consider what the definition of 'commerce' is. The Collins Concise Dictionary says it is:

'The activity embracing all forms of the purchase and sale of goods and services.'

This reflects the way that the words 'commerce' and 'business' have been used over time, with commerce being more allied with direct trading business representing the bigger picture - the support mechanisms to facilitate commerce.

 e-commerce or e-business

Applying this definition to 'e' commerce, it would appear that e-commerce is actually a subsidiary of e-business along with, for example, e-logistics, e-HRM, e-project management and so on. I'm quite comfortable with this classification of e-commerce.

Which brings me to my next point, one that is a little more contentious.

If e-commerce is all about being able to purchase goods online [or at least order them, few B2B transactions are paid for in a cash-up-front approach] then that's about the completion of sales. Other elements of a sales environment would be the promotion of the goods on offer, the pricing of those goods, the method of making those goods available to the purchaser - in this case, a website - and the after sales service offered to customers. So in my definition of e-commerce, I have actually described the marketing function of the organization - effectively making e-commerce a sub-division of marketing.

One flaw to my argument is this - and this reflects the way in which I have taught the subject in the past - is that e-commerce has not only a sell-side [marketing], but also the various aspects of business that involves the procurement of goods and service - so called, buy-side e-commerce. And here we have another anomaly in the 'e-ing' process. Online procurement is dubbed 'e-procurement' - but have you ever heard of 'phone-procurement', 'fax-procurement' or even 'sales rep-procurement'? My pro-marketing stance is that procurement [and it is a much under-valued element of business] is the 'customer element' of marketing, and if ever anyone tries to teach you marketing without considering the customer, leave the room. That said, I would consider it reasonable to include e-procurement as part of that bigger picture called e-business - or should that be that procurement is part of that bigger picture called business?

So that is where I stand. I think e-commerce is a marketing discipline. I have maintained for years that e-marketing [or whatever you call it] has only three primary marketing objectives [1] brand development - where the online presence compliments and enhances the offline branding efforts of the organisation, [2] customer service / support - the provision of pre- and post-sales information, and [3] revenue generation through prospect generation, sales, direct marketing and advertising [by the way, I now say this in my books, so it must be true!].

Essentially, I am saying that e-commerce is actually a sub section of e-marketing.

I have been accused of hubris in identifying e-commerce as being a marketing practice - but surely I cannot be the only one thinking along these lines? I said earlier that in practice we are already seeing this notion being accepted. For example. In a recruitment ad for 'Marks & Spencer Money' in the Sunday Times at the end of January 2007, the vacancies listed included one for 'head of e-commerce'. Reading further into the job specification, however, revealed terms such as 'customer awareness' and 'sales share' - suggesting that the vacancy was actually for someone to head up their online-marketing efforts.

Best selling e-marketing-related author Dave Chaffey [my main competitor in the field] seems to be moving this way without actually declaring such. In the third edition of his 'Internet Marketing' book there are times when it seems that e-commerce and e-marketing become inter-changeable depending on the context of the content.

Similarly, a major research document from MarketingSherpa was published in March '07 under the title: 'Ecommerce Benchmark Guide'. The contents are dedicated almost totally on B2C online retailing - with only ten pages of the 287 being on 'B2B e-commerce' - suggesting that that organization considers e-commerce to be limited to B2C transactions, with no other element of 'business' being a part of it. By the way, the use of the term 'ecommerce' - ie with no dash - seems to be becoming more common. Sorry, but I'm not sure I will ever be able to get used to that - though if you use the upper-case 'c' it does have a certain appeal : eCommerce.

Another MarketingSherpa report - the Landing page Handbook - refers to information on landing pages for: blogs, organic search traffic, email campaigns, and ... ecommerce sites - once again, seemingly differentiating transactional and 'promotional' sites.

A website of an organization that I feel is a leading commentator on the subject of online marketing is e–consultancy.com - and it commonly refers to online retail sites as 'e-commerce'. A story about ' ... e-commerce start-up Glasses Direct ...', for example.

Further endorsement comes from the exclusive [you have to be invited to join] 'European eCommerce Forum' - which is made up of Internet retailers.

Bryan Eisnberg is an e-marketing practitioner of note, and in one of his 'grokdotcom' newsletters he said that ' ... Hitwise published their 2007 list of the top 50 e-commerce websites in the UK ...'. And yet the list was actually titled 'The IMRG-Hitwise Hot Shops List'] suggesting that he too might consider e–commerce to be online retailing. Similarly, In the USA, Stores magazine [stores.org] uses the term e–commerce for online retail sites.

Or what about Todd Miechiels writing in the 'strictly business' column of Searchengineland.com? In an article called 'Why might your visitors be anxious?' he lists four likely sources: Quality of the product, service, or information, credibility of the company, credit card security (eCommerce) and price (eCommerce) - you will notice that the latter refer to sites that take payments online.

Another example comes from Garreth Griffith, head of trust and safety at eBay UK. Speaking on BBC TV's Breakfast news on March 26th 08, he described eBay as 'an e-commerce site'. I would contest that if anyone carries weight in support of my notion it is a representative of one of the Internet's major global brands.

It is also the case that firms that specialise in developing B2C sales sites [e-commerce?] commonly refer to such web presences as 'retail websites' - practicing 'e-tail'... cor blimey governor, that's another term - but you know what? I think it makes the most sense. When teaching both 'e-commerce' and 'e-marketing' over the years I have always emphasized that selling to B2C customers from a website is retailing - and as such uses the skills, knowledge and experience of [offline] retailers gained over the past centuries [see another of my musings - there nothing new in marketing on the web].

Perhaps supporting this e-tail view is another definition of e-commerce, this one from the Office for National Statistics [ONS], which classifies e-commerce as 'transactions over the Internet or over other computer mediated networks [eg EDI]. The goods and services are ordered over these networks, but payment and the delivery of the goods or servicies may be concluded on or offline.' This suggests to me that we can differentiate beween B2B [e-commerce; order-no-payment] and B2C [e-tail; order-and-pay].

A further consideration might be the include the order management and 'back-office' operations of online sales - downloading and processing orders, picking and packing goods for shipping as well as handling returns for example. I would be happy to include these things as 'e-commerce' in much the same way that stock control, shelf filling and checkout operations are all part of 'traditional' retail.

I said at the start of this musing that I didn't really care what we called the 'e' malarkey, but do you know what? I think I do. Why? Because the Internet has, and will continue to, change business. It is now an important - and essential - element of business, and all the other elements (HR, Law etc) have a definition.

Someone out there, please sort out what e-commerce actually is.

I have considered this issue in a very limited way. If you want to read about the bigger picture of what e-commerce is and its role in a country's economy, take a look at: The Connected Kingdom [note that this is a large pdf file that will open in a new browser window].

Note that whilst I wrote the original version of this article in January 2007 when I first put together my my website. Since then I have been adding to it as I have come across, or thought of, additional material.

return to Alan's musings home page

link to home page vertical black line link to tips hints and advice vertical black line link to interesting articles vertical black line link to good and bad practice vertical black line link to alan's musings vertical black line link to contact page
Alan Charlesworth copyright notice