E-commerce, also called electronic commerce or e-business, is the electronic exchange of money or other valuables for goods and services. The Internet enables businesses to participate in e-commerce with other businesses and with consumers.
Business-to-business transactions,
also called B2B transactions, involve the coordination of purchases and deliveries over the Internet or over a private company-to-company network known as an extranet. In a B2B transaction, a manufacturing company might transmit an order for raw materials. The materials provider would, in turn, transmit a bill to the purchaser, who might pay the bill electronically. Only the materials are transported physically. Computers handle everything else.
An e-commerce trading exchange is a central Internet site where many buyers and sellers gather electronically. There, multiple suppliers can bid on a company’s request. That company can select the bid that best suits its needs and budget, and it can then arrange for purchase and delivery.
Business-to-consumer transactions
involve direct sales to individuals. Many businesses operate online stores on the Internet. Internet-based merchants can present far more products than would be possible in the physical space of a walk-in store. Online merchants deliver some products, such as computer software or data files, to a customer’s computer over the Internet. Sellers generally deliver physical products to the purchaser or ship them to a local store, where the purchaser may pick them up.
Most consumers make e-commerce purchases with credit cards or debit cards, which deduct purchase costs directly from a bank account. Others use special accounts created solely for electronic purchases. Most e-commerce sales are secure transactions, which encode card and purchase information as it leaves the consumer’s computer and then decode it for the retailer.
Another popular form of consumer e-commerce is the online auction, at which sellers present items for examination by Internet shoppers who bid against one another for the right to purchase them. The largest and most popular online auction site is eBay. Online auction sites earn money by charging the seller a small fee or by collecting a portion of the purchase price of items sold.
Banks and government institutions offer many e-commerce services to consumers over the Internet. Consumers can use the Internet to access their accounts, pay bills, and even pay taxes.
