What is E-Business: Features and Types

E-businesses have become prominent with time due to globalization and digitalization. These are free of geographical limitations due to which they have wider reach.

In this article on what is e-business, we will discuss its components and advantages in the present scenario.

Table of Contents

• What is e-business?
• Advantages of e-business
• Limitations of e-business
• Types of e-business

What is e-business?

E-business is either a commercial or a business transaction where information is shared across the internet. It enables business processes within the value chain via internal and external networks. Amazon.com is one of the earliest e-businesses that has become extremely successful. It is a new business strategy that redesigns old business models and differentiates with information and communication technology in support of all business activities. 

It works for three segments of market participants, including businesses, consumers, and administration. E-business is a method of utilizing digital information and communication technologies to streamline and support business processes. It is a way of conducting business on the internet, which includes trading goods, servicing customers, and collaborating with business partners.  

Many misunderstand it to be a synonym for e-commerce; however, it is an aspect of e-business. According to organizations like IBM, e-business is defined as:

Advantages of e-business

The following are the features of an e-business:

• No geographical barriers: Since this is an online business model, it is not limited by geographical barriers. It can be expanded to any corner of the world.
• Large target audience: Due to a great scope of expansion, e-businesses have a hold on the larger target audiences. 
• More profits: Since the consumer base is large, e-businesses earn more profits.
• Flexibility: Business can be conducted at any hour of the day since there is no restriction of physical space. 
• Less cost: Since there is no need for setting up a space, buying resources and other inventory, operating cost is reduced significantly. This helps in utilizing capital for other useful business purposes.
• Better records: Since such businesses are digital, they operate paperlessly due to which makes maintaining records is easier. It is also possible to maintain records for the long term.

Limitations of e-business

The following are the limitations of e-business:

• It is not possible to build interpersonal relationships with customers in an e-business. Therefore, it is not suitable for those customers who require more attention. 
• E-businesses offer the privilege of privacy to businesses. However, this can be dangerous when the business is operating against the national interest.
• Businesses may misuse the records of their consumers for unethical purposes.

Types of e-business

The following are the different types of e-businesses.

1. Business to Business (B2B)

Also known as B-to-B, this type of e-business is a form of transaction among businesses. Instead of being conducted between individuals and companies, it is conducted among businesses. Such transactions occur in the supply chain where one company purchases raw materials from another for the manufacturing process.  There are two types of B2B models: including Vertical B2B and Horizontal B2B models. 

The vertical B2B model is oriented to manufacturing and business. This can be both upstream and downstream. Through the vertical B2B model, companies can more efficiently promote its product which enriches transactions as they help customers understand their products. The Horizontal B2B is a transaction pattern for the intermediate trading market. 

2. Business to Consumer (B2C)

It is the process of selling products and services between businesses and consumers who serve as the end users of products and services. This type of commerce transaction sells products and services to its customers directly. This e-business model has a higher number of clients, but the revenue is low since the sales cycle is shorter. It includes intermediaries, direct sellers, fee-based, community-based, and advertising-based. 

3. Business to Administration (B2A) 

It refers to every transaction between public administrations and companies. B2A refers to trade between the business sector as a supplier and a government body as a customer. It provides a platform to bid on government opportunities presented as solicitation in the form of RFPs through reverse auction. It includes the segment of business-to-business marketing known as public sector marketing that encompasses marketing services and products to different government levels. 

4. Consumer to Business (C2B)

It is an e-business where consumers offer products and services to companies. Unlike the traditional business model, it is a part of the bi-directional network where consumers can become their own businesses. This e-business model has become more prominent with the improvement in technologies so that consumers are easily able to build businesses. Through this model, both businesses and consumers benefit from C2B model.  

5. Consumer to Consumer (C2C)

This e-business model represents a market environment. Here, a customer purchases goods from another customer via a third-party platform for facilitating transactions. It provides a way to allow customers to interact with one another. In the consumer-to-consumer segment, electronically facilitated transactions between consumers through the third party is possible.

6. Consumer to Administration (C2A)

It is an e-commerce model where consumer utilizes electronic media to read out to the administration. Website, applications, and portals are used by consumers to interact with the government. Data collected via C2A systems is used for understanding lacunae in service delivery. For this purpose, citizen-generated data, such as big data analytics, is used.   

7. Intra B-commerce

This is a type of e-business where the parties involved in electronic transactions are from within a given business firm. This model of e-business allows businesses to allow flexible manufacturing. Computer networks allow departments to constantly interact with each and build customized products as per the requirement of individual customers.