E-Businesses: Types & Examples
What is 'e-Business'?
Simply defined, an e-business is an electronic business activity. It's an older term, just like
many of the terms created in the late 1980s and early 1990s as the Internet started becoming
part of everyday life: first for researchers, then for many businesses, and then for consumers.
Just like 'e-mail,' the abbreviation 'e' - meaning electronic - was put in front of words already
used to describe how the Internet was changing our lives.
At first, e-business generally referred to businesses that interfaced with their consumers almost
exclusively over the Internet. For example, one of the earliest e-businesses that aimed to serve
a broad market was [Link]. The [Link] of 1994 was very different than the
[Link] of today. Even if you could compare their homepage in 1994 to their current
homepage, you'd be shocked at how much technology has changed. But you would also notice
that, in 1994, [Link] was a specialty bookstore.
Today, while it still sells books, it also sells nearly every other product you can think of: clothes,
electronics, toys, household goods, music, movies, and even food! Amazon Dash is a service
available in many large U.S. cities where you can order fresh vegetables, fruit, and other food
on Amazon and it is delivered the same day. [Link] also includes the Amazon
Marketplace, which is where third-party vendors can sell on Amazon, much like eBay (but
Amazon Marketplace doesn't use bidding). As the 'e' part of 'e-business' has changed, Amazon
is a great example of a company that has changed with it.
But not all e-businesses were intended for consumers to see and use. As the Internet developed,
so did the type of businesses on it.
The Development of e-Business
Think of all the types of businesses in a normal economy. You have retailers that sell directly
to the consumer. You have wholesalers who sell to the retailers. You have manufacturers who
sell to the wholesalers. You have service providers that sell services to help the rest of the
economy work.
Throughout the 1990s and 2000s, all of those businesses found ways to use the Internet to be
more productive, thus, in some way, becoming e-businesses. Soon, the term 'e-commerce' was
in use, still referring to e-business activities, but often being more focused on the buying or
selling transactions.
Types of e-Businesses
Earlier, we discussed Amazon. Amazon is a great example of a direct-to-consumer e-business.
Their marketing, distribution system, and website is all aimed at the end user - me and you -
using their website and buying something, without ever leaving our home. When you think
about e-businesses, these might be the first to come to mind. These are often called B2C or
business-to-consumer companies. But there are other types.
How about eBay or Craigslist? eBay may sound like a direct-to-consumer business, but really,
it's a third-party service provider. When you buy something from eBay, you don't really buy
it from eBay, you buy it from someone that has listed an item for sale on eBay. In that way, a
third-party service provider isn't selling you something directly, but is facilitating a transaction
between the buyer and seller. Companies like eBay that connect two consumers are sometimes
called C2C, or consumer-to-consumer businesses.
Third-party service providers are popular on the internet. Think about PayPal. PayPal isn't a
bank, but it helps you send and receive money from other people. And how about Gmail, AOL,
Yahoo! Mail, or any other email provider? They facilitate communication between two or more
other people. These third-party service providers have become big businesses on the Internet.
Another type of e-business that quickly became popular were business-to-business
wholesalers, or B2B. Companies no longer needed to call one of their manufacturers when they
needed new inventory, ask for a catalog, fax or call in an order of something, and then wait for
it to arrive. Much of that process could be automated by keeping track of inventory online, so
restock triggers could be automatic, sending a new order for a predetermined amount directly
to the manufacturer. This benefited both the wholesaler and the manufacturer.
A good example of a business-to-business company that had an early online presence
is Sony. Sony doesn't have physical stores, so before the Internet, they sold their goods through
wholesalers and retailers. When there are two parties in between the producer and end
consumer, costs rise. But when Sony could eliminate much of the waste in the process by
communicating with their wholesalers online, they saved money, time, and waste. An
interesting point about these pre-Internet manufacturers is that many have now skipped the
traditional distribution channels and have started selling directly to consumers, since the
Internet allows them to do so.
Lesson Summary
The Internet really did change the world. Soon, you could start putting an 'e' before anything
because it could happen online: e-banking, e-shopping, e-dating, e-mail, and e-business! Earlier
on, business models were very simple; the only thing that changed about the business model
was that instead of going into a store to make a purchase, you communicated your order online.
But as the Internet developed and reached the necessary critical mass of consumers, e-
commerce and the Internet economy exploded. Now, if business managers aren't asking
themselves 'how can we be more effective online?' then they should probably be asking
themselves 'where will I find my next job?
