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What is online business? Definition and examples

All activities where products and services are negotiated and paid for across the Internet are examples of online business. If somebody asks whether you are involved in online business, they want to know whether you buy and/or sell goods or services electronically. Electronically, in this case, means online or through the Internet.

Australia’s Northern Territory Government has the following definition of online business:

“Online business is any kind of business activity that happens over the internet. Running an online business can include buying and selling online or providing an online service.”

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Pixabay.com image adapted by Market Business News.

Online business means the activity or the company

The term online business may refer to the activity of buying and selling goods and services online, or specific companies. In other words, the focus might be on what a company does or what it is.

When talking about an activity, i.e., doing business online, it means the same as e-Commerce. E-Commerce is a type of business model where commercial transactions occur through digital or electronic networks. In most cases, this means through the Internet.

For example, e-Bay is involved in e-Commerce, it is an online business. PayPal, Netflix, and Booking.com are online businesses; they are also involved in e-Commerce.

What is online business - activity or company
Image created by Market Business News.

When the term refers to a company, we place the indefinite article (the word ‘an’) before it. When referring to just the activity, there is no definite article. Look at the two sentences below:

  • PayPal is an online business. (we use the word ‘an’ when talking about a company)
  • PayPal is involved in online business (we don’t use ‘an’ when talking about its activity).

When an online business refers to a company, it means the same as an e-Business.

Online business includes goods and/or services

All types of business activities that take place via the Internet are examples of online businesses. Somebody who provides a service online and has paying customers has an online business, as does an entrepreneur who sells products over the Internet.

Online business did not exist before the Internet - image for article
Image created by Market Business News.

The opposite of an online business is an offline business. Fifty years ago, all companies’ activities were offline because the Internet did not exist. If you wanted to buy something, you had to go to the physical premises of the seller, telephone them, or post a letter with a check (British English: cheque).

In the 1950s, customers had to walk into a branch of their bank if they wanted to take out money or make a transfer. There were no personal computers, mobile phones, tablets, or Internet, which means that online banking did not exist.

Online business grew and grew

Since the turn of the century, online business volume has increased dramatically. Unfortunately, many bricks-and-mortar companies, such as high street shops, have had to pay the price. If you walk down the high street (commercial street) of any town or city of an advanced economy today, you will see far fewer stores that there were a few decades ago.

Over the last couple of decades, consumers have become increasingly involved in online shopping and visited their local stores less often. Hundreds of thousands of physical shops could not cope and closed down.

Christmas shopping today and before
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People’s shopping habits during the weeks leading up to Christmas have changed significantly. Many people still enjoy walking up and down the street and entering stores when Christmas shopping. However, a significant number today opt to make all their purchases online. They can sit in the comfort of their living room or bedroom, avoid angry crowds and winter weather, and make comparisons much more quickly.

Giant Internet businesses today

Today, there are literally thousands of different kinds of online businesses. Amazon.com, for example, is a mega-giant. It is the world’s largest online retailer. It also focuses on digital streaming, cloud computing, and artificial intelligence.

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Fifty years ago, none of these companies existed. (Image created by Market Business News)

Amazon currently employs 1,335,000 workers globally. It is one of America’s ‘Big 5′ in the tech world. ‘Tech’ in this context refers to electronic-based technology companies that are involved in creating software, providing Internet-related services, cloud computing, AI (artificial intelligence), and digital electronics.

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