E-commerce (or electronic commerce) refers to commercial activity conducted over the Internet. An e-commerce transaction occurs whenever someone buys goods or services from a business' website. An e-commerce transaction can take lots of forms, such as a person buying a piece of software that they can download, ordering a pair of shoes to be delivered, or hiring an artist to draw a picture.

E-commerce has several advantages over in-person commerce but also some drawbacks. Buying a digital good — like software, music, or a movie download — can happen instantly, but buying a physical product requires it to be shipped and delivered. An e-commerce retailer can have a large selection of products available to ship, but the customer does not have the opportunity to examine things in person. Advances in augmented reality (AR) are beginning to offer customers the chance to see what a product would look like in their homes.

There are four main types of e-commerce based on who is buying and who is selling.

  • Business to Consumer (B2C) is the most common form, where a person visits a website to buy something. A person buying a product or service from a business, once or on a subscription basis, is B2C e-commerce.
  • Business to Business (B2B) is when one business purchases goods or services from another business. A business selling to a government or other organization, while not strictly B2B, is also considered B2B e-commerce.
  • Consumer to Consumer (C2C) is when one person sells something to another person, facilitated by a website or other Internet service. Auction sites like eBay were the earliest forms of C2C e-commerce, and sites like Etsy now allow individuals offering products and services to find customers easily.
  • Consumer-to-Business (C2B) e-commerce is where an individual sells a product (or, more often, a service) to a business. One common form of this is freelance contract work, like a photographer licensing an image to a stock photo agency or a developer creating a custom application for a business.
Updated October 27, 2022 by Brian P.

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