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E-commerce and M-commerce

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Business Studies

Information and communication technology (ICT) is the computing and communications system that a business uses to exchange information with its stakeholders. ICT is developing rapidly, and with this development businesses are changing how they work. ICT has impacted various sectors of businesses including the collection, storage, and analysis of information; digital communication; and e-commerce. Let's take a look at what e-commerce is and how it differs from m-commerce.

Definition of e-commerce and m-commerce

Before going into the details of e-commerce and m-commerce, let's consider the term ‘commerce’. Cambridge dictionary defines commerce as:

the activities involved in buying and selling things.

Now, once we are clear that commerce includes all the activities needed to trade, we can guess what e-commerce is. What do you think are the most important factors in commerce? You are correct if you think of a buyer, a seller, and a product of interest. E-commerce works the same, just electronically.

E-commerce

Electronic commerce or e-commerce is the act of buying and selling goods electronically using the Internet.

It is hard to find a single person who does not know what Amazon does. E-commerce may be a company selling its products via a website or different vendors selling various products on an e-commerce platform. Some businesses like Spareroom, Shein, Zalando, etc. run entirely on the Internet without any physical location. Companies that stayed away from e-commerce are now either regretting it or running hard to catch up.

Some platforms are trying to get small businesses on board to join the e-commerce revolution and compete with their giant counterparts. Platforms like Uber Eats and Getir are trying to get local restaurants and grocery stores onto food ordering apps. E-commerce is joining more countries than ever, and is a fundamental part of globalization.

A person sitting in their living room can start an e-commerce website that will serve customers all over the world. See two friends working on their website in the image below. So what do you need to start an e-commerce business? Just a laptop with working internet.

E-commerce and m-commerce, laptop to start e-commerce business, StudySmarterWhat you need to start an e-commerce business, Wikimedia Commons

M-commerce

M-commerce is a sub-part of e-commerce.

M-commerce, or mobile commerce, is the buying and selling of goods using mobile, handheld devices such as smartphones or tablets.

M-commerce can take place via a dedicated ‘app’ that customers may download on their mobile phones or by simply accessing the mobile version of the website. The Amazon shopping app and the Google Play store are examples of m-commerce apps.

Difference between e-commerce and m-commerce

Even though m-commerce is a part of e-commerce, there are some differences. M-commerce is a newer technology than e-commerce and hence comes with improvements implemented over time. Here are a few:

  1. Portability: Generally, e-commerce activities are done via desktops or laptops. These devices are not highly portable, as compared to m-commerce devices such as mobiles and tablets.

  2. Location tracking: Location tracking and providing localized offers can become tedious when using e-commerce, whereas location tracking is easy with mobile phones, as they have built-in GPS.

  3. Push notifications: A technology that is mainly associated with mobile devices and can make m-commerce a better and more secure option than e-commerce.

  4. Security: Mobile devices are used in e-commerce for 2-factor authentication. M-commerce has the advantage of additional security via biometrics like fingerprint and face recognition.

  5. Ease of use: Mobile apps are optimized for the best user experience. It takes fewer taps and less navigating as compared to its counterpart e-commerce website.

Importance of e-commerce

As per the Bank of England, inflation is the increase in price over time. E-commerce brings many sellers to the market. More sellers means more competition. More competition infers competing prices, which in turn assures lower price inflation. Thus, e-commerce is necessary for controlling inflation.

Take a look at our explanation on the Effects of inflation on business to find out more!

E-commerce is equally important to the customers as it is for businesses. The advantages and disadvantages of e-commerce are also present in m-commerce. As many businesses are going online, one may find high competition in every market. Is it worth it for businesses to go online? Or will it create a burden businesses won’t be able to handle?

Advantages of e-commerce for businesses:

  1. Cost reduction: Businesses do not have to put up any money to rent a fancy shop on a busy high street. Fully online operating businesses save extra costs such as energy bills and operating costs.

  2. New markets: e-commerce help businesses to tap into the global market. Goods nowadays are delivered across the globe. It also helps businesses to launch new products with minimum investment.

  3. Business expansion: Businesses that have established physical locations can expand their business by going online. This will be a source of an extra revenue stream.

  4. No working hours restriction: Customers can check products and place an order 24/7. Your e-commerce website will provide a personalized shopping experience to customers around the clock.

  5. Easy to track KPIs: E-commerce websites can track many key performance indicators (KPIs) that are difficult to find otherwise. Websites can check which items are in demand, what time people love to shop, how much money they are willing to pay, and what customers dislike. It is easier to provide good customer support online as more data becomes available.

    Key performance indicators (KPIs) are a set of quantifiable measures used to gauge a company's success. Some of the examples of KPIs are sales conversion rate, average time spent on a website, and frequently bought products. KPIs are measurable and they reflect performance.

Disadvantages of e-commerce for businesses:

  1. Website and mobile app building: Businesses have to invest in building professional websites that are secure and provide a good user experience. Both websites and mobile apps are necessary for m-commerce. To tap into more customers, the app must be available on leading app stores like the Google Play Store for Android or App Store for Apple users.

  2. Platform management: Just building apps and websites will not help. Businesses must have trained service staff to deal with potential issues and developers to manage the website.

  3. Complicated supply chain: Going global also means businesses have to sort out their supply chains and delivery around the globe. Businesses must be able to accommodate the scale of orders that may come with launching an e-commerce store.

  4. Security: It falls on the business to provide a secure purchasing experience for customers. Companies must extend security measures to financial transactions as well as personal data.

Types of e-commerce

Depending on how businesses operate their customer base, e-commerce businesses can be divided into three major types.

  1. Business-to-business (B2B): Businesses which sell their goods or services to other businesses only are called B2B. In other words, wholesalers. Imagine an auto garage ordering spare parts in quantity from the website of a car parts dealer. Another example of this would be Amazon. Amazon does not charge buyers, but they charge sellers to open their stores on the platform. From this point of view, Amazon is a B2B company.

  2. Business-to-customer (B2C): Online shopping websites of fashion brands such as Zara, H&M, and Superdry or grocery giants like Tesco and Morrisons are examples of B2C e-commerce. Some companies like Shein do not have physical stores and run entirely online. Businesses reach directly to end customers via these websites or apps.

  3. Customer-to-customer (C2C): eBay provides a platform to users to sell their goods. All the transactions take place securely on the platform.

Some companies base their business models on other types of e-commerce such as consumer-to-business and business-to-government. These operational models are not very common among businesses.

Some interesting facts about e-commerce

E-commerce and m-commerce have become an inseparable part of business and our daily lives. Everything we need can be ordered online. Even doctors do consultations online. Let's now take a look at some unique facts about e-commerce.

  1. There are more than 22 million e-commerce websites worldwide.
  2. Over 90% of Internet users have made at least one purchase online.
  3. 70% of e-commerce website visits are from mobile devices.
  4. In the UK, out of the total retail market, 36% was contributed by e-commerce in 2021
  5. The top three e-commerce websites in the UK are Amazon, eBay, and Argos with 437 million, 328 million, and 60.8 million monthly visits respectively.
  6. In the UK, 60% of e-commerce purchases are made via mobile phones.
  7. One estimation says that by 2040, 95% of retail will be online.

E-commerce and M-commerce are now inseparable parts of online businesses. In the coming years, e-commerce will be everywhere. Remember the news, Tesla cars can now order new tires on their own. But businesses should be cautious while trying to capture new markets via e-commerce, as e-commerce will not only open new markets but also create new risks for businesses.

E-commerce and M-commerce - Key takeaways

  • Electronic commerce (e-commerce) is the act of buying and selling things electronically using the Internet.
  • Amazon is the World's biggest e-commerce company.
  • M-commerce is a subpart of e-commerce.
  • M-commerce is buying and selling of goods using mobile, handheld devices such as smartphones or tablets.
  • M-commerce has advantages such as portability, location tracking, push notification technology, biometric support, extensive security, and ease of use over e-commerce.
  • E-commerce provides various advantages to businesses such as cost reduction, the ability to enter new markets, 24/7 availability, and ease of KPI tracking.
  • Some disadvantages of e-commerce include businesses having to invest in developing websites and mobile apps, extend their supply chain, and provide enhanced security to customers online.
  • B2B, B2C, C2C are major types of e-commerce businesses.

E-commerce and M-commerce

Electronic commerce (e-commerce) is the act of buying and selling things electronically using the internet.


M-commerce is the buying and selling of goods using mobile, handheld devices such as smartphones or tablets.

E-commerce provides various advantages to businesses such as cost reduction, the ability to enter new markets, 24/7 availability, and ease of KPI tracking.

Depending on how businesses operate and their customer base, e-commerce businesses can be divided into three major types.


  1. Business-to-business (B2B)
  2. Business-to-customer (B2C) 
  3. Customer-to-customer (C2C)

M-commerce has advantages such as portability, location tracking, push notification technology, biometric support, extensive security, and ease of use over e-commerce.

Some disadvantages of e-commerce are businesses having to invest in developing websites and mobile apps, extend their supply chain, and provide enhanced security to customers online.

Final E-commerce and M-commerce Quiz

Question

What is e-commerce?

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Answer

Electronic commerce is the act of buying and selling things electronically using the internet.

Show question

Question

What is m-commerce?

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Answer

M-commerce is buying and selling of goods using mobile, handheld devices such as smartphones or tablets. 

Show question

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Are m-commerce and e-commerce the same?

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Answer

M-commerce is a subcategory of e-commerce. E-commerce via mobile devices is m-commerce.

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Question

What are the advantages of m-commerce over e-commerce?

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Answer

Portability, location tracking, push notifications, and security 

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Question

Which of the following is a disadvantage of e-commerce for a customer?

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Answer

Waiting for product to be delivered

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Question

Mention 2 advantages of e-commerce for businesses

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Any two from cost reduction, exploring a new market, no work hour restrictions, and ease of KPI tracking.

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Mention 2 disadvantages of e-commerce business.

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Any two from high initial cost for website and app development, complicated supply chains, and security.

Show question

Question

Mention two major types of e-commerce business.

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Answer

Any two from B2B, B2C, or C2C.

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Question

What is a B2B e-commerce business?

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Answer

B2B means business to business. If a wholesaler is selling goods online purchased in a large quantity by a retailer, then it is a B2B e-commerce operation.

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Question

What is B2C?

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Answer

B2C is Business to Customer. A shopper purchasing a pair of jeans from the Zara website is an example of a B2C operation.

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What is C2C?

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Answer

C2C is customer to customer. A person buying a used sofa from eBay is a customer-to-customer e-commerce operation.

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Identify B2B transactions from the following examples.

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Answer

A person paying monthly fees to sell his products on the Amazon platform

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Which of the following is not an example of an e-commerce transaction?

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Browsing Zara clothes online and purchasing in store

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What is the future of e-commerce?

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Answer

E-commerce is predicted to grow in the coming years and physical stores will hardly exist.

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Question

Which of the following is an example of an m-commerce transaction?

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Answer

Ordering food via the uber eats app

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Question

___ is the act of buying and selling goods electronically using the Internet.

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Answer

Electronic commerce or e-commerce 

Show question

Question

___ is the buying and selling of goods using mobile, handheld devices such as smartphones or tablets.


Show answer

Answer

M-commerce, or mobile commerce 

Show question

Question

It is impossible to run a business without a physical location.

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Answer

False

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Question

The Amazon shopping app and the Google Play store are examples of ___ apps.


Show answer

Answer

m-commerce 

Show question

Question

M-commerce can take place via a dedicated '___’ that customers may download on their mobile phones or by simply accessing the mobile version of the website. 


Show answer

Answer

app 

Show question

Question

___ is the increase in price over time.

Show answer

Answer

Inflation 

Show question

Question

___ are a set of quantifiable measures used to gauge a company's success.


Show answer

Answer

Key performance indicators (KPIs)  

Show question

Question

It is easier to provide good customer support online.

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Answer

True

Show question

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KPIs are not measurable.

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Answer

False

Show question

Question

Businesses which sell their goods or services to other businesses only are called...


Show answer

Answer

business-to-business (B2B).

Show question

Question

Businesses that reach directly to end customers via websites or apps are called...


Show answer

Answer

business-to-customer (B2C).

Show question

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eBay is an example of...

Show answer

Answer

customer-to-customer (C2C).

Show question

Question

 E-commerce websites can track key performance indicators (KPIs).


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Answer

True

Show question

Question

More competition infers competing prices, which in turn assures ___ price inflation. 


Show answer

Answer

lower 

Show question

Question

E-commerce and m-commerce are terms that can be used interchangeably.

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Answer

False

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