What Is E-Commerce?

he term e-commerce was coined back in the 1960s, with the rise of electronic commerce – the buying and selling of goods through the transmission of data – which was made possible by the introduction of the electronic data interchange. Fast forward fifty years and e-commerce has changed the way in which society sells goods and services.

E-commerce has become one of the most popular methods of making money online and an attractive opportunity for investors. For those interested in buying an e-commerce business, this article serves to provide an introduction to e-commerce, covering the reasons for its popularity, the main distribution models and a comparison of the major e-commerce platforms available.

If you are interested in valuing or selling an e-commerce business, please take a look at our How to Value and Sell and E-Commerce Business article.

What is E-Commerce?
‘E-commerce’ and ‘online shopping’ are often used interchangeably but at its core e-commerce is much broader than this – it embodies a concept for doing business online, incorporating a multitude of different services e.g. making online payments, booking flights etc.

E-commerce has experienced rapid growth since its humble beginnings with e-commerce sales projected to grow to 434.2 billion USD by 2017. The power of e-commerce should not be underestimated as it continues to pervade everyday life and present significant opportunity for small, medium and large businesses and online investors. You don’t need to look far to see the potential of e-commerce businesses. Amazon, for example, which set the standard for customer-orientated websites as well as a lean supply chain, has been seen to sell in excess of 426 items per second.