What is E-Commerce?

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E-commerce or electronic commerce is one of the main components of the Digital Economy. In its widest sense, it encompasses consumer and business transactions conducted over a network, with the help of computers and telecommunications. In other words, e-commerce refers to the exchange of goods or services for value on the internet. E-commerce, inter-alia, includes, online shopping, online trading of goods and services, electronic fund transfers, electronic data exchanges and online trading of financial instruments. The Indian Foreign Direct Investment (FDI) policy defines “e-commerce” to mean buying and selling of goods and services including digital products over a digital and electronic network.

OECD defines e-commerce as the sale or purchase of goods or services, conducted over computer networks by methods specifically designed for the purpose of receiving or placing orders. Accordingly, whether a commercial transaction qualifies as e-commerce is determined by the ordering method rather than the characteristics of the product purchased, the parties involved, the mode of payment or the delivery channel. The ordering process is considered as a crucial determinant of an e-commerce transaction in the OECD definition.

The Central GST Act, 2017 defines “electronic commerce” to mean the supply of goods or services or both, including digital products over digital or electronic network.

E-commerce facilitates trade across borders, increases convenience for consumers, and enables firms to reach new markets. E-commerce reforms have rapidly evolved through the development of new business models, which often integrate new and emerging digital technologies as well as new online payment mechanisms. Many e-commerce business models use online platforms, facilitating purchases between often unknown and dispersed buyers and sellers. Another emerging trend is the growth of subscription e-commerce business models, whereby users access goods and services in a continuous, recurring stream. E-commerce business models integrate digital ordering mechanisms alongside physical infrastructures, including within brick-and-mortar stores.

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