E-commerce

E-commerce, short for electronic commerce, covers any commercial activity where products or services are bought or sold electronically through online platforms or the Internet. It relies on technologies like 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. While e-commerce is a subset of retail and commerce, its expansion has been fueled by progress in the semiconductor industry.

The term "e-commerce" was first used by Robert Jacobson, Principal Consultant to the California State Assembly's Utilities & Commerce Committee, in the title and text of California's Electronic Commerce Act. That act, carried by the late Committee Chairwoman Gwen Moore (D-L.A.), was enacted in 1984. Typically, e-commerce uses the web for at least part of a transaction, though other technologies like email may also be involved. Common transactions include buying physical products, such as books from Amazon, or services, such as music downloads from the iTunes Store. The field has three main areas: online retailing, electronic markets, and online auctions. E-commerce is supported by electronic business, and its core value lies in letting consumers shop and pay online, saving time and space for both customers and businesses, improving transaction efficiency—especially for busy office workers.

E-commerce businesses often use some or all of these practices: online shopping for retail sales directly to consumers via websites and mobile apps; conversational commerce through live chat, chatbots, and voice assistants; participating in online marketplaces that handle third-party business-to-consumer (B2C) or consumer-to-consumer (C2C) sales, where drop shipping is common; business-to-business (B2B) buying and selling, defined as trade between businesses rather than with the general public; direct-to-consumer (D2C) sales, where manufacturers or brands sell to end customers without traditional retail intermediaries—a model that has grown rapidly with digital storefronts and social commerce platforms like Shopify, TikTok Shop, and Instagram Checkout; data-driven marketing that gathers demographic and behavioral data through web analytics and social media; B2B electronic data interchange; marketing to potential and existing customers via email or fax, such as newsletters; engaging in pretail to launch new products and services; and online financial exchanges for currency or trading.

There are five essential categories of e-commerce: Business-to-Business, Business-to-Consumer Retail, Business-to-Government, Consumer-to-Business, Consumer-to-Consumer, and Direct-to-Consumer.

Contemporary e-commerce falls into two categories. The first is based on the types of goods sold—ranging from ordering digital content for immediate online consumption, to ordering conventional goods and services, to "meta" services that facilitate other e-commerce. The second category is based on the nature of the participants: B2B, B2C, C2B, and C2C. At the institutional level, large corporations and financial institutions use the internet to exchange financial data for domestic and international business, with data integrity and security being pressing concerns. Beyond traditional e-commerce, terms like m-Commerce (mobile commerce) and, around 2013, t-Commerce have also been used.

In the United States, California's Electronic Commerce Act (1984) was enacted by the Legislature, and the more recent California Privacy Rights Act (2020) was passed through a popular election proposition to control how e-commerce is conducted in that state. Nationally, e-commerce activities are regulated by the Federal Trade Commission (FTC), covering commercial emails, online advertising, and consumer privacy. The CAN-SPAM Act of 2003 sets national standards for direct marketing via email. The Federal Trade Commission Act governs all advertising, including online, requiring it to be truthful and non-deceptive. Under Section 5 of the FTC Act, which bans unfair or deceptive practices, the FTC has brought cases to enforce promises in corporate privacy statements, including those about security of personal information. Thus, any corporate privacy policy tied to e-commerce may be enforced by the FTC. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 amended the Controlled Substances Act to address online pharmacies. Conflict of laws in cyberspace poses a major challenge for harmonizing e-commerce legal frameworks worldwide. To create uniformity, many countries have adopted the UNCITRAL Model Law on Electronic Commerce (1996). Internationally, the International Consumer Protection and Enforcement Network (ICPEN), formed in 1991 from an informal network of government consumer fair trade organizations, works to cooperate on consumer problems from cross-border transactions in goods and services and to help ensure information exchange.