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What is Electronic Commerce? - Definition, Types, Advantages & Disadvantages

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  • 0:00 What Is Electronic Commerce?
  • 1:07 Types Of E-commerce
  • 2:10 Advantages and Disadvantages
  • 3:34 Lesson Summary
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Lesson Transcript
Instructor: Steven Coleman

Steven has his Bachelors in Communication and has earned his Masters in Education. He is also in the process of pursuing his Doctorate degree.

In this lesson, learn about electronic commerce and its importance in our modern world. You will also learn about types of electronic commerce, as well as some pros and cons of the process.

What Is Electronic Commerce?

Have you ever purchased a pair of shoes over the Internet? Or, maybe you've used your computer to sell an old phone? If so, you've taken part in electronic commerce. Also known as e-commerce, electronic commerce is the process by which businesses and consumers buy and sell goods and services through an electronic medium.

Electronic commerce emerged in the early 1990s, and its use has increased at a rapid rate. Today, the majority of companies have an online presence. In fact, having the ability to conduct business through the Internet has become a necessity. Everything from food and clothes to entertainment and furniture can be purchased online.

Two familiar examples of electronic commerce companies are eBay and Amazon. Both of these companies allow consumers to purchase a variety of goods and services online from businesses and other consumers, while eBay also hosts online auctions. Consumers on these sites typically have numerous payment options, as well as choices for how their products are delivered.

Types of E-Commerce

There are several types of electronic commerce. The most common is business to consumer, in which a business sells products or services directly to consumers over the Internet. An example of a business to consumer e-commerce transaction would be an individual purchasing a pair of sneakers through Nike's website.

Another type of electronic commerce is business to business, where companies sell products or services to other companies over the Internet. An example would be the company GoDaddy, which sells domain names, websites, and hosting services to other businesses.

Consumer to business electronic commerce involves consumers selling products or services to businesses. You've taken part in this form of e-commerce if you've ever completed a paid online survey where you've given your opinion about a product.

Finally, there is consumer to consumer e-commerce, which is where consumers sell products to other consumers. An example would be one consumer selling something that he or she no longer needs or wants to another consumer via a site like eBay or Amazon.

Advantages and Disadvantages

Let's take a look at some of the advantages and disadvantages of electronic commerce.

Advantages - Electronic commerce can allow consumers to access their favorite store at any time, day or night. This benefits both buyers, who might not be able to visit a store during typical business hours, and sellers, who can peddle their products around the clock.

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