Abstract: Electronic commerce has been growing rapidly over the past few years and has become one of the most important issues in business growth and development. The paper focuses how companies can exploit the benefits of E-commerce creating competitive advantages. The primary objective of this paper is to examine the impact of electronic commerce on the competitive advantage of companies. The benefits of electronic commerce are also discussed. It is found that with the benefits of E-commerce, firms are able to pursue any of the three generic strategies, which are cost leadership, differentiation and focus. This study also looks at Porter`s five competitive forces and discusses what strategies should be adopted to minimize the negative impact of the forces and to capitalize on the forces that can be used to gain sustainable competitive advantage of business.