There are a number of ways to conceptualize the activities of an e-commerce system. In this paper we consider the knowledge management aspects of e-commerce, and demonstrate that knowledge management is an essential part of the system’s capabilities. Thereafter we present a detailed discussion of how the three main knowledge management functions (creation, transfer and application) take place in various parts of the system. Finally, we defend the claim that knowledge management is the base of adaptivity in an e-commerce environment.