What is E-commerce?
The meaning and scope of electronic commerce.
Learning Objectives
- Define e-commerce in formal terms using the Laudon & Traver definition.
- Identify the three technological building blocks that make e-commerce possible.
- Explain the role of an exchange of value in defining e-commerce.
- Distinguish e-commerce from generic digital activity.
Explanation
E-commerce means buying and selling goods or services over the Internet using websites or mobile apps, where money (or value) changes hands digitally.
E-commerce involves the use of the Internet, the World Wide Web, and mobile apps and browsers running on mobile devices to transact business. More formally, Laudon and Traver define e-commerce as digitally enabled commercial transactions between and among organizations and individuals. Each part of this definition matters: digitally enabled transactions are mediated by digital technology, while commercial transactions involve an exchange of value (such as money) across organizational or individual boundaries in return for products and services.
The terms Internet and Web are often used interchangeably, but they are different. The Internet is a worldwide network of computer networks, whereas the Web is one of the Internet's most popular services, providing access to billions of web pages. A mobile browser is a version of web browser software accessed via a mobile device, and an app is a software application, typically referring to mobile applications. Together these three layers — Internet, Web, and mobile platform — form the technological juggernaut behind e-commerce.
The exchange-of-value criterion is critical. Without an exchange of value, no commerce occurs. This is what separates e-commerce from purely informational online activity. For instance, a firm's online inventory control mechanism does not directly generate revenue from outside businesses or consumers, so it is not e-commerce.
Although the term e-commerce is sometimes used interchangeably with digital commerce, Laudon and Traver treat the two as synonymous. The professional literature also uses both terms to refer to transactions mediated by digital technology, primarily over the Internet, the Web, and mobile devices.
Key Points & Important Terms
Key Points
- •E-commerce = digitally enabled commercial transactions involving an exchange of value.
- •Three building blocks: Internet, Web, and mobile platform.
- •Internet and Web are different things: the Internet is the network; the Web is a service on it.
- •Without an exchange of value, no commerce occurs.
- •E-commerce and digital commerce are treated as synonymous.
- •Mobile devices have become the primary client for accessing e-commerce.
Important Terms
- E-commerce
- Digitally enabled commercial transactions between and among organizations and individuals.
- Internet
- A worldwide network of computer networks built on common standards.
- World Wide Web
- An information system on the Internet providing access to billions of web pages.
- Mobile app
- A software application, typically running on a smartphone or tablet, used to engage in e-commerce.
- Exchange of value
- The transfer of money or other value across organizational or individual boundaries in return for products or services.