Definition: e-Commerce/e-business are business models that utilize the internet as a mechanism through which companies, vendors, and customers interact.

Overview

e-Commerce originated with the deregulation of the internet in 1995. It was originally conceived as a business-to-customer (B2C) model of commerce, and corporations were formed to provide services and products over the internet without having any physical retail presence (e.g., Amazon.com, the well-known online book seller).

The term e-Business was coined by Lou Gerstner, then CEO of IBM, who looked beyond the B2C model to use the internet for delivering services and supporting physical business channels.

The start-up companies that adopted pure B2C commerce, for which there is no physical retail store, together with startup business-to-business (B2B) organizations, which also owned no physical retailing or warehousing capacity, aimed to “disintermediate” the established companies by having lower internal and distribution-channel costs. Unfortunately, this model proved to be very expensive to support as the businesses attempted to scale up and reach profitability, and the majority ran out of capital following the decline in the US stock market of 2000 and closed down. Those that survived the stock-market crash endured a market consolidation and continue to attempt to build market share, drive down costs, and become profitable or maintain profitability.