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Electronic Commerce Definition and Usage


Electronic Commerce popularly known as e-commerce refers to commercial transactions performed online via electronic means. They involve the use of computers and the internet to serve business entities and customers (Qin, 2009, p. 7). E-commerce has grown tremendously over the years due to the widespread usage of the internet. Not so long ago, commerce, which is exchange of products with a monetary value, especially in large quantities, has changed with the introduction of e-commerce. Thanks to e-commerce, the world has now become a global village since business transactions are usually conducted online. An individual or a business entity can advertise their products online being at home at the same time. Such transactions are possible due to the numerous online payment systems, such as master cards, visa cards and online-mobile banking systems. The widespread usage of e-commerce has made the cost of doing business easier and cheaper than it was before.

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E-Commerce: A Literature Review

According to Qin (2009, p. 25), there are five transaction classes of e-commerce that include “business to business (B2B), Business to customers (B2C), business to governments (B2G), governments to governments (G2G) and customer to customer (C2C).” E-commerce has been able to succeed in a secure way due to the gradual development of security and advancement of computer and communication science. E-commerce has developed under three phases. Namely, phase one means using Electronic Data Interchange (hereinafter, EDI) and Electronic Funds Transfer (EFT) which were used during the late 1970s and helped send and receive documents electronically via computers.

This happened through privately owned networks or virtual private networks (Bhusry, 2005, p. 8). Phase two is characterized by e-commerce on the internet but due to the high cost of Value Added Network (VAN) and EDI systems of communication, it was impossible to expand e-commerce that was EDI-based. EDI is suitable for large companies that have branches in other countries since it does not consider to share the information. In the 1990s, the internet gained popularity over a large number of people. This led to development of security protocols such as HTTP that contributed to setting a faster connection to the internet. The internet gained popularity over EDI because it was remarkably cheap, flexible to use and accomplished a lot of functions. The last phase occurred in the early 2000, and this happened when people realized that they could also integrate e-commerce into other fields that include medicine, education and technology.

E-commerce has been an extremely useful tool since its integration in the society. Some of the benefits realized from it include the following. First, marketing in terms of advertising products online creates the easiness in which clients are able to be maintained and the low cost incurred in advertising. Secondly, the banking sector has been able to leap from it in terms of banking online, sending money from oversea countries and online banking systems. Lastly, we have customers who have benefited due to faster and easier delivery of goods, a wide variety of products to choose from and time saved since they could access everything with a single click of a mouse button. Though being beneficial to the society, there was a negative side of it which included a high cost of accessing the internet for both the consumers and the business part. Moreover, there is not enough security and privacy, and cases of hacking and theft are reported constantly. In addition, there is no direct communication when the transactions are performed online (Gao, 1999).


Due to e-commerce, the world became a global village, and nowadays, one can get everything he/she wants with a click of a mouse button. However, as we try to embrace the ever expanding technology more, we ought to be exceedingly careful about it because the security systems should be also improved so as to reduce cases of theft.


Bhusry, M 2005, E-Commerce, Laxmi Publications Pvt. Ltd., New Delhi.

Gao, J 1999, Introduction to E-Commerce, San Jose State University. Web.

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Qin, Z 2009, Introduction to E-Commerce, Tsinhua University Press, Beijing.

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