Definition
E-business (electronic business / online business) = buying and selling goods and services, or exchanging business information, through digital systems like the internet — anytime, anywhere.
Price is the money value of any product (tangible or intangible). Normally it is set by demand and supply. But the internet has given buyers and sellers lots of information with one click, and this has changed how prices are decided.
Benefits for BUSINESS
- Studies different customers and their needs easily
- Less inventory → lower storage & admin costs
- Find business partners all over the world
- Fast, cheap marketing
- Little or no need for a brick-and-mortar shop
Benefits for CUSTOMERS
- Goods delivered to your doorstep
- Benefit from reverse auctions (sellers compete to offer lowest price)
- More choice → more consumer sovereignty (customer is king)
- Better bargains – easy price comparison
- Many products visible in one click
Factors that decide market price in the age of e-business
| # | Factor | Easy explanation |
|---|---|---|
| i | Price information (floor pricing) | Customers can see competitors' prices, so firms cannot charge too much. |
| ii | Lower costs | No expensive shop, less inventory → firms can offer cheaper prices. |
| iii | Many options | Easy to compare price and quality of many products. |
| iv | Less brand loyalty | Customers know about new arrivals and switch easily. |
| v | Attractive online prices | Online is often cheaper than offline → people change brands more often. |
| vi | Targeted marketing | Social media, SMS, internet ads create demand; by showing attractive features firms can charge higher prices. |
| vii | Buy what, when, where you want | Demand changes faster → demand curve shifts more frequently. |
In simple words
Online shopping makes markets more competitive: buyers know more, so prices tend to come down, and firms must work harder (better features, smart ads) to justify a higher price.