Electronic Commerce - ecommerce

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DEFINITION of 'Electronic Commerce - ecommerce'

A type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business. It can be thought of as a more advanced form of mail-order purchasing through a catalog. Almost any product or service can be offered via ecommerce, from books and music to financial services and plane tickets.

Also sometimes written as "e-commerce" or "eCommerce".

BREAKING DOWN 'Electronic Commerce - ecommerce'

Ecommerce has allowed firms to establish a market presence, or to enhance an existing market position, by providing a cheaper and more efficient distribution chain for their products or services. One example of a firm that has successfully used ecommerce is Target. This mass retailer not only has physical stores, but also has an online store where the customer can buy everything from clothes to coffee makers to action figures.

When you purchase a good or service online, you are participating in ecommerce.
Some advantages of ecommerce for consumers are:
- Convenience. Ecommerce can take place 24 hours a day, seven days a week.
- Selection. Many stores offer a wider array of products online than they do in their brick-and-mortar counterparts. And stores that exist only online may offer consumers a selection of goods that they otherwise could not access.

But ecommerce also has its disadvantages for consumers:
- Limited customer service. If you want to buy a computer and you’re shopping online, there is no employee you can talk to about which computer would best meet your needs.
- No instant gratification. When you buy something online, you have to wait for it to be shipped to your home or office.
- No ability to touch and see a product. Online images don’t always tell the whole story about an item. Ecommerce transactions can be dissatisfying when the product the consumer receives is different than expected.

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