Define E-Business
E-business (electronic business) is the conduct of business processes on the internet. These e-business processes include buying and selling goods and services, servicing customers, processing payments, managing production control, collaborating with business partners, sharing information, running automated employee services, recruiting, and more.
E-business can comprise a range of functions and services. They range from the development of intranets and extranets to the provision of e-services over the internet by application service providers.
Today, as corporations continuously rethink their businesses in terms of the internet — specifically, the internet’s availability, reach, and ever-changing capabilities — they are conducting e-business to buy parts and supplies from other companies, collaborate on sales promotions, and conduct joint research.
The Growth of E-Business
The growth of e-business in recent decades has given rise to new business requirements.
On the customer front:
- Consumers expect organizations to offer self-service options for conducting transactions.
- They expect personalized experiences.
- They want speedy, secure interactions.
On the regulatory front:
- New laws and best practices for keeping electronic data secure have been instated.
- As e-commerce accelerated, companies have adopted stringent security protocols and tools, including encryption and digital certificates, to protect against hackers, fraud, and theft.
With the security built into browsers and with digital certificates now available for individuals and companies from various vendors providing cybersecurity tools and technologies, cybersecurity has become ingrained in e-business. However, the security of business transactions on the web remains a pressing issue for consumers and enterprises alike, even as that concern has not slowed the growth of e-business.
Examples of E-Businesses
Examples of e-businesses include both older companies that successfully transformed themselves for the digital age, as well as newer, born-digital entities. The latter are organizations that advisory firm Gartner has defined as starting after 1995 and as having “operating models and capabilities [that] are based on exploiting internet-era information and digital technologies as a core competency.”
Some notable examples:
- Amazon – The world’s largest e-commerce marketplace and largest internet company based on revenue.
- Uber and Lyft – Built businesses that match drivers with people needing rides.
- Uber Eats – Uber’s food ordering and delivery platform launched in 2014.
- Travel sites like Expedia, Travelocity, and TripAdvisor – Enable consumers to research, plan, and book all or parts of their trips based on personalized criteria such as price, consumer ratings, and location.
- Schindler Group – A Switzerland-based elevator company founded in 1874, now using IoT and other digital services to transform products and services beyond elevators and escalators into internet and mobility services.
Advantages of E-Business
E-business has drastically changed how corporations — as well as non-profits, government agencies, and other such institutions — operate, allowing them to increase productivity, lower costs, and move more quickly.
For example:
- Electronic invoicing, automated billing, and digital payment systems decrease the time workers must devote to tasks that were manual just a few decades ago.
- The time savings allow businesses to either decrease head count or shift worker time to higher-value tasks.
- Such digital systems reduce the time between invoicing and payment, improving cash flow.
Electronic communication systems — email, video conferencing, and online collaboration platforms — also increase productivity by decreasing delays between inquiries and responses, whether communication is between employees, partners, or customers. This leads to faster decision-making and more agile responses to market demands.
These systems also save money by eliminating some employee travel while supporting open, collaborative cultures. Employees, regardless of role or location, can contribute ideas.
Cloud-based business applications allow work from home or remote sites, and the internet’s 24/7 nature enables global transactions at any time. Even small businesses can act as global enterprises.
Emerging technologies like machine learning and AI improve archiving, searching data, recording transactions, and sending personalized messages to customers.
E-commerce software has enabled:
- New capabilities like email marketing
- New selling avenues such as online stores
- Entirely new business models, such as eBay (C2C and B2C) and Facebook as a social commerce platform
- Platforms like Shopify that provide infrastructure and software for people to create online stores
Types of E-Business
Most organizations today have at least some e-business capabilities to support core or ancillary functions.
The amount of e-business varies:
- Limited – A small business using a mobile payment service like Square but no other digital services.
- Fully empowered – A company like Rocket Mortgage, whose business model operates entirely online.
Business and digital authorities still frequently classify e-business as:
- B2B (Business-to-Business)
- B2C (Business-to-Consumer)
- C2C (Consumer-to-Consumer)
- C2B (Consumer-to-Business)
Some add categories like B2G (Business-to-Government) and B2E (Business-to-Employee).
Challenges of E-Business
The level and types of challenges vary depending on factors like how digital services are used, the company’s infrastructure, and whether it was born digital.
Common challenges include:
- Securing e-business services against cyberattacks
- Scaling services fast enough to meet demand without hurting performance
- Evolving technologies to keep up with market changes
- Finding and training workers with constantly changing skills
- Keeping e-business capabilities running 24/7
Many companies also struggle to integrate e-business services into a seamless digital operation instead of having them isolated in silos.
Security and Risks
E-business offers advantages like reaching a wider customer base and faster transactions, but it comes with risks.
Data security risks:
- Customers must often provide sensitive details like contact info and credit card numbers.
- This attracts hackers and increases vulnerability to breaches.
- Businesses must use encryption and secure methods to protect transactions.
- Failing to protect data risks fines and loss of customer trust.
Operational risks:
- Poor web hosting can lead to downtime and customer dissatisfaction.
- Companies must invest in reliable hosting providers, which increases operational costs.
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