The key difference between e-commerce and e-business is the fact that e-commerce is a division of the larger e-business world and encompasses only the external aspects of the electronic business. These external processes include any facets of the e-business that affect customers, suppliers, and peripheral partners. The larger delineation of e-business involves these external processes as well as internal ones. Examples of internal procedures include finance, inventory control, production processes, human resources, and web development.
On a very basic level, electronic commerce means exchanging money for goods or services over electronic networks. But while the actual sale falls under the category of e-commerce, the business of educating, retaining, and attracting new customers is considered e-business. E-commerce is an integral part of the entire e-business strategy, but is only one feature of the e-business plan.
There are several elements to e-commerce and e-business that make them markedly different from one another; though, when working together, one directly influences the results of the other. E-commerce concentrates on only those parts of the e-business with which a consumer, supplier, or external partner will interact. Customer service, sales, order taking and delivery, commercial web applications, and the acquiring of production materials and office supplies are all outward-facing processes and are thus classified as e-commerce.
For smaller businesses or businesses in the start-up phase, the difference between e-commerce and e-business may not be of major concern. After all, the aim of the new business is to generate interest and sell products or services. But as the company grows, so too does the company's perspective. Issues like customer retention, inventory management, and marketing strategies become paramount to the business's continued success. In a large company, the focus turns to these behind-the-scenes aspects, creating a larger e-business model; if the company fails to concentrate on these aspects, the future of the business could be in jeopardy.
The creation of an electronic business strategy highlights the differences between e-commerce and e-business. This broader scope often means reorganizing an entire business. Pinpointing the right time to undertake such a structural transformation is crucial to its success. New perspectives will be brought on board, responsibilities within the business will change hands, and more thorough understandings of electronic network technologies will be learned.
Internet marketing experts and business specialists tend to agree that having an e-business plan with a solid e-commerce division is vital to the longevity of a business. Even governments have been advised to get into the e-business game. A government's overall plan is referred to as an e-public service strategy, of which e-commerce plays a role.