E-commerce
E-commerce (short for electronic commerce) is the trading of goods and services over the Internet. It involves the transfer of money and data to execute these transactions. E-commerce is often associated with the buying and selling of products online and includes the exchange of data to enable payments, logistics, and supply-chain management.[1]
E-commerce draws on information technology, mobile commerce, electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern e-commerce typically uses the World Wide Web for at least one part of the transaction's lifecycle, although it may also encompass a wider range of technologies such as e-mail, mobile devices, and social media.[2]
E-commerce businesses may use a wide range of platforms, including online shops (e-tail), marketplaces such as Amazon and eBay that sell through third-party sellers, business-to-business buying and selling, and the extraction and use of consumer data through business-to-business (B2B) and business-to-consumer (B2C) exchanges.[1]
Etymology
The term e-commerce was coined in the early 1990s, shortly after the invention of the World Wide Web by Tim Berners-Lee in 1989. The first recorded use of the term is generally traced to academic and business publications of the early-to-mid 1990s, describing commercial activity conducted over the nascent Internet. The hyphenated form e-commerce and the unhyphenated ecommerce are both widely used.[3]
History
Precursors
Before the Internet, commercial transactions were conducted electronically using electronic data interchange (EDI), beginning in the 1960s, and via automatic teller machines (ATMs) introduced in the 1960s and 1970s. The first secure retail transaction over the Web was either by NetMarket or Amazon in 1994. By 2000, hundreds of retailers had established online storefronts.[1]
The 1990s: the dot-com boom
The launch of the World Wide Web in 1991 and the release of the first mainstream web browser, Mosaic, in 1993 created the conditions for commercial activity online. Key early e-commerce companies include:
- Amazon, founded by Jeff Bezos in 1994 as an online bookstore.
- eBay (originally AuctionWeb), founded by Pierre Omidyar in 1995 as an online auction site.
- Alibaba, founded by Jack Ma in 1999 to connect Chinese manufacturers with overseas buyers.
The dot-com bubble of 1997–2000 saw massive investment in internet startups, many of which collapsed when the bubble burst in 2000–2001. Survivors such as Amazon and eBay went on to dominate their respective markets.[4]
The 2000s: maturation and mobile
The 2000s saw e-commerce grow from a niche activity into a mainstream retail channel. The launch of PayPal (acquired by eBay in 2002) solved the online payment problem. Broadband adoption made shopping online faster and more pleasant. Google's advertising model allowed retailers to reach targeted customers. In China, Alibaba's Taobao (2003) and Tmall (2008) captured the world's largest e-commerce market.[2]
The 2010s: mobile and social commerce
The spread of smartphones transformed e-commerce once again. By the mid-2010s, more than half of e-commerce traffic in many markets came from mobile devices. Social commerce—shopping directly within social media apps—grew rapidly, especially in China with WeChat's mini-programs and social group-buying platforms. Amazon's marketplace business became the dominant retail platform globally.[1]
The 2020s
The COVID-19 pandemic of 2020–2022 accelerated the shift to online shopping by several years, as lockdowns forced consumers and businesses to transact online. By 2023, e-commerce accounted for roughly 15–20% of total retail sales worldwide, with the share highest in China and the United Kingdom.[5]
Types of e-commerce
E-commerce is typically classified by the parties to the transaction:
- Business-to-business (B2B) – electronic transactions between businesses, such as a manufacturer selling to a wholesaler or a wholesaler selling to a retailer. B2B e-commerce is far larger in dollar volume than B2C, though it is less visible to consumers. Examples include Alibaba.com, Thomasnet, and Amazon Business.
- Business-to-consumer (B2C) – transactions between businesses and end consumers—the most familiar form of e-commerce, including online stores such as Amazon, Net-a-Porter, and direct-to-consumer brands.
- Consumer-to-consumer (C2C) – transactions between consumers, typically facilitated by a third-party platform such as eBay, Craigslist, Facebook Marketplace, or Poshmark.
- Consumer-to-business (C2B) – transactions in which consumers sell products or services to businesses, such as freelance platforms (Upwork, Fiverr) and stock photography marketplaces.
- Mobile commerce (m-commerce) – e-commerce conducted via mobile devices, including in-app purchases, mobile banking, and mobile wallets.
- Electronic business (e-business) – a broader term encompassing not only sales but also servicing customers, collaborating with business partners, and conducting electronic transactions within an organization.[2]
Business models
Online retailers and marketplaces operate under several distinct models:
- Brick-and-click – established retailers with both physical stores and online channels (e.g., Walmart, Target, Tesco).
- Pure-play e-tailers – online-only retailers without physical stores (e.g., Casper, Warby Parker, Shein).
- Marketplace model – platforms that facilitate third-party sellers, taking a commission on each transaction (e.g., Amazon Marketplace, eBay, Etsy, Taobao).
- Dropshipping – retailers that do not hold inventory; orders are passed directly to a manufacturer or wholesaler who ships to the customer.
- Subscription e-commerce – recurring deliveries of curated products (e.g., Blue Apron, Dollar Shave Club).
- Social commerce – shopping integrated directly into social media platforms (e.g., Instagram Shopping, WeChat mini-programs, TikTok Shop).[1]
Major platforms and companies
The global e-commerce landscape is dominated by a small number of giant platforms:
- Amazon – the world's largest online retailer and cloud computing company, dominant in North America and Europe.
- Alibaba – operates Taobao, Tmall, and Alibaba.com, dominating Chinese e-commerce.
- JD.com – China's largest direct-sales B2C platform.
- Pinduoduo – Chinese group-buying platform focused on agricultural and discount goods.
- eBay – pioneer of online auctions and C2C commerce.
- Shein – Chinese fast-fashion online retailer that has grown rapidly since 2020.
- Shopify – provides e-commerce infrastructure and storefront software to millions of merchants.
- MercadoLibre – dominant e-commerce platform in Latin America.
- Rakuten – major Japanese e-commerce and internet services company.[5]
Payment and fulfillment
Two critical infrastructure layers make e-commerce possible:
- Online payments – credit/debit card processing, PayPal, Apple Pay, Google Pay, Alipay, WeChat Pay, and buy now, pay later services (Klarna, Afterpay).
- Logistics and fulfillment – warehouse automation, last-mile delivery, drone delivery, and the Amazon-built logistics network that enables one-day and same-day delivery. In China, Alibaba's Cainiao network and JD.com's self-operated logistics have similarly transformed delivery expectations.[2]
Impact
On retail
E-commerce has reshaped retail on a global scale. Traditional department stores and shopping malls have faced declining foot traffic and widespread store closures, a phenomenon sometimes called the "retail apocalypse." Pure-play online brands have opened physical showrooms. Omnichannel retail—seamless integration of online and offline shopping—has become the industry standard.[6]
On consumers
For consumers, e-commerce offers unprecedented selection, price transparency, and convenience. Comparison shopping is effortless, and reviews from other buyers inform purchasing decisions. Downsides include the inability to touch or try products before buying, return shipping costs, and concerns about data privacy and product quality.[1]
On the global economy
E-commerce has lowered barriers to entry for small businesses and entrepreneurs, enabling them to reach global customers without physical storefronts. It has also shifted employment from traditional retail jobs toward warehouse, delivery, and technology jobs. Cross-border e-commerce has expanded international trade in consumer goods.[2]
On privacy and security
E-commerce requires the collection and storage of vast amounts of personal data—names, addresses, payment details, browsing behavior, and purchase history. This has raised serious concerns about:
- Data breaches and identity theft.
- Surveillance and data brokerage.
- The use of personal data for targeted advertising and price discrimination.
- Compliance with data protection regulations such as the European Union's General Data Protection Regulation (GDPR) and California's CCPA.[7]
Challenges and regulation
E-commerce operates across borders, challenging national regulators. Key regulatory issues include:
- Tax collection – ensuring that online sellers collect and remit sales taxes and VAT.
- Consumer protection – return policies, product safety, and warranty enforcement.
- Platform governance – the liability of platforms for third-party sellers' products and conduct.
- Labor rights – warehouse and delivery worker conditions (see Amazon worker organization).
- Antitrust – concerns about the market power of dominant platforms (see Competition law).[2]
Future trends
Emerging trends in e-commerce include:
- Artificial intelligence-driven personalization and conversational commerce via chatbots and virtual assistants.
- Augmented reality fitting rooms and product visualization.
- Decentralized commerce and Web3-based marketplaces.
- Sustainable e-commerce and pressure on platforms to reduce packaging emissions.
- Social commerce growth through video and live-stream selling (livestream commerce).[1]
See also
References
- ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 Turban, Efraim; Outland, David; King, David; Lee, Jae Kyu; Liang, Ting-Peng; Turban, Deborrah (2015). Electronic Commerce: A Managerial and Social Networks Perspective (8th ed.). Springer. ISBN 978-3-319-10096-1.
- ↑ 2.0 2.1 2.2 2.3 2.4 2.5 Laudon, Kenneth C.; Traver, Carol G. (2021). E-Commerce 2021: Business, Technology and Society (17th ed.). Pearson. ISBN 978-0-13-738315-6.
- ↑ "E-commerce". Oxford English Dictionary. Oxford University Press.
- ↑ Cassidy, John (2002). Dot.con: The Greatest Story Ever Sold. HarperBusiness. ISBN 978-0-06-051965-5.
- ↑ 5.0 5.1 eMarketer (2023). "Global Ecommerce Forecast 2023". Insider Intelligence.
- ↑ Peters, Tom F. (2012). Building the Modern Cathedral: Architecture and the Department Store.
- ↑ Zuboff, Shoshana (2019). The Age of Surveillance Capitalism. PublicAffairs. ISBN 978-1-61039-569-4.