Do you know the difference between e-business and e-commerce? Have you been using these terms synonymously and wonder if you are really using them correctly? In order to have a better understanding of these two terms, let us define each of them separately.

E-commerce or electronic commerce covers business activities that are conducted through the Internet or other electronic systems. In e-commerce, products and services are bought and sold over the Internet and transactions are completed automatically. E-commerce websites have the ability to accept orders online through a checkout feature that is provided by e-commerce or shopping cart software. E-commerce is grounded in the usage of technologies such as electronic funds transfer, online marketing, supply chain management, data collection systems, inventory management systems, and electronic data interchange.

E-commerce software solutions uses all previously mentioned technologies to create fully functional e-commerce websites. E-commerce websites are also called virtual storefronts or virtual malls, because they are known to be product catalogs. The stores selling products as opposed to services may offer tangible products as well as intangible ones such as digital downloads of music, software or books. To put this into simple terms, e-commerce is online trading. All business transactions are exclusively done through the Internet.

E-business or electronic business, on the other hand, is considered the integration of e-commerce activities into your company’s business flow. For example, you have a business, and you decide to start accepting purchases made online, then your company has transitioned from being a traditional business to an e-business. When the e-commerce activities become an integral part of your overall business that is when you can call your business an e-business. Businesses that integrate standard activities in their websites are called e-businesses because their website becomes a sales tool to generate even more profits.

An e-business is harder to maintain because merchants have to manage both the website and its other internal business functions such as the production of goods or services, product development, finance, human resources, etc. Most traditional businesses transition to e-businesses because they can capture more customers through the World Wide Web. It also makes their company more professional-looking and legitimate because customers can easily contact them through the website or look up their company profile to learn more about the business.

The terms e-business and e-commerce are usually used interchangeably, but it should be used correctly so that people will know the true nature of each. Now that you have a good idea of what differentiates the two, which direction do you want your business to move towards? Include it into your business plan so you have the right goal to aim for.