What is ecommerce

What is ecommerce? Launch and grow an online sales channel

What is ecommerce?

"Ecommerce" or "electronic commerce" is the trading of goods and services on the internet. It is your bustling city centre or brick-and-mortar shop translated into zeroes and ones on the internet superhighway. An estimated 2.14 billion people worldwide buy goods and services online, and the number of Prime members shopping in sAmazon stores globally now tops 200 million.

Ecommerce is one way people buy and sell things in retail. Some companies sell products online only, while other sellers use ecommerce as a part of a broader strategy that includes physical stores and other distribution channels. Either way, ecommerce allows startups, small businesses, and large companies to sell products at scale and reach customers across the world.

What is an ecommerce website?

An ecommerce website is your digital storefront on the internet. It facilitates the transaction between a buyer and seller. It is the virtual space where you showcase products, and online customers make selections. Your website acts as the product shelves, sales staff, and cash register of your online business channel.

Businesses might create a branded store experience on a store like Amazon, build their own commerce site on a dedicated domain, or do it all for a multi-channel approach.

What is an ecommerce business?

An ecommerce business is a company that generates revenue from selling products or services online. For example, an ecommerce company might sell software, apparel, housewares, or web design services. You can run an ecommerce business from a single website or through multiple online channels like social media and email.

How does ecommerce work?

Ecommerce works by connecting buyers and sellers using various electronic channels. For example, you need a channel, such as a website or social media, so customers can find products and services to purchase. Then a payment processor enables the exchange of the goods or services. Once the transaction succeeds, the customer receives a confirmation email or SMS, and a printable receipt.

If the transaction is for goods, then the seller ships the items and sends the customer a tracking number via email or SMS. If the transaction is for a service, then the service provider can reach out to schedule and complete the service.

Steps to starting an ecommerce business

The steps to starting an ecommerce business can vary depending on factors like what you want to sell. For example, if you're selling services, then there’s no need to manage inventory or fulfillment. However, if you want to sell products online, then inventory and fulfillment will likely play a critical part in your operations.

Here are some steps you can follow to get started:
  1. Research business ideas
  2. Make sure there’s demand for the products you want to sell
  3. Determine how you'll sell and ship products to customers
  4. Find suppliers and manufacturers
  5. Choose which online channels you'll sell through (e.g., an Amazon store)
  6. Create a website or online storefront and upload products
  7. Create a plan for your fulfillment strategy
  8. Begin attracting customers with promotions
Check out this guide to starting an ecommerce business for more details.
Amazon trucks get ready for delivery outside of a fulfillment center

What are the types of ecommerce?

Ecommerce takes as many different forms as there are various ways to shop online channels. A few common business models that shape the world of ecommerce are:
  • B2C – Businesses sell to individual consumers (end-users). The most common model with many variations.
  • B2B – Businesses sell to other businesses. Often the buyer resells products to the consumer.
  • C2B – Consumers sell to businesses. C2B businesses allow customers to sell to other companies.
  • C2C – Consumers sell to other consumers. Businesses create online marketplaces that connect consumers.
  • B2G – Businesses sell to governments or government agencies.
  • C2G – Consumers sell to governments or government agencies.
  • G2B – Governments or government agencies sell to businesses.
  • G2C - Governments or government agencies sell to consumers.
Customer shopping online stores from the couch

Where and how does ecommerce take place?

Online shopping evolves and shifts daily. People shop from their computers, phones, tablets, and other devices. They patronize websites, visit social media pages, and participate in thriving virtual channels. Here’s an overview of three distinct methods of conducting ecommerce today.


Online transactions that take place on mobile devices are known as mobile commerce or “m-commerce.”

Many people now do their product research and online purchasing through their phones. This trend shows no signs of slowing, so it’s essential to optimize your online store for mobile.

Enterprise ecommerce

Enterprise ecommerce is the buying and selling of products to large companies or organizations. If a large business sells many different types of products or has multiple brand lines and transitions into selling online, then it is participating in enterprise ecommerce.

Social media ecommerce

Social media can help you market and promote ecommerce stores to a broad audience. Just as social media enables you to connect with friends and family, it also has the potential to attract customers to your business. Done well, social media marketing engages customers in an informal setting.

Social media can help you:
  • Attract new customers
  • Build brand awareness
  • Generate online sales
Ecommerce retail seller celebrates an online sale

What are the advantages and disadvantages of ecommerce?

Like any sales method, ecommerce can have upsides and downsides. Is ecommerce right for you? It’ll depend on your business goals, your intended audience, and other factors. Here are some considerations.

Benefits of ecommerce

Conducting sales online has some significant advantages. Among the top benefits, ecommerce:
  • Is growing rapidly
  • Offers global marketing reach
  • Provides the ease of ordering products online
  • Generally involves lower operating costs
  • Gives direct-to-consumer access
All of these points offer strong incentives to participate in ecommerce. Let’s explore each in detail.

Global marketing reach

In the past, a business’s reach was limited by the number of people able to physically enter through a store’s front doors. Today, ecommerce allows you to reach customers across the world. The rise in internet usage and the growth of social media have made it easier for ecommerce business owners to reach a diverse new mix of customers.

Did you know?

Sponsored ads can help you boost your visibility, reach more shoppers and increase your sales.

Amazon Advertising helps grow businesses and brands of all sizes get products in front of over 200 million Amazon Prime global members that shop in Amazon. (source)

Ease of ordering products

With all the different types of ecommerce, customers can browse options and make purchases from anywhere with just a few clicks. Amazon makes it easy to sort and compare products by price or features. Online payment innovations can further streamline the checkout process.

Lower operating costs

Creating and maintaining a website is less expensive than running a traditional brick-and-mortar store. You can start an ecommerce business channel without leasing retail space, hiring a team of employees, or having a large warehouse.

All of these advantages add up to low overhead. You don’t need to pay rent or worry about building maintenance. Once online, your store is open 24 hours a day—without the need to be monitored or staffed like a physical store.

You can use website building tools and services to establish your own ecommerce store quickly, or you can forgo building a website and launch your brand on social media or a store like Amazon. Many businesses sell on numerous online channels.

Direct-to-consumer access

Because of the internet, ecommerce brands can directly build relationships with their audiences. You don’t need to pay for a giant billboard or TV ad campaign to capture your audience’s attention. You can tailor your brand and marketing to fit customer wants and needs down to special offers and personalized product recommendations.
Ecommerce retail seller planning his next move

Challenges of ecommerce

Some businesses may try to avoid ecommerce due to challenges like:
  • Limited face-to-face interaction
  • Technical difficulties
  • Data security
  • Challenges of shipping and fulfilling orders at scale
Let’s walk through each of these potential pitfalls.

Limited face-to-face interaction

Face-to-face interaction is necessary for some businesses and transactions. Depending on your product, service, or sales style, it may be challenging to bring the full force of your personality into an online space.

While there is no magic solution, keeping your brand how story at the fore of all you do can help you maintain authenticity online. Alternatively, if you prefer communicating with customers via email or phone, this drawback might be a huge plus!

Technical difficulties

Challenges related to technology can negatively impact sales. Just as a hiccup in your supply chain can prevent timely delivery of products, internet issues, or a hard drive failure can cost you time and money.

Remember, for every technical issue that may arise, there’s likely a solution or a preventative measure you can take. Be sure to back up your data regularly. Using a store like Amazon can help mitigate these risks with an established, trusted technical infrastructure.

Data security concerns

Customers care about how information is stored and shared. Build customer trust by giving details on your privacy policy. Doing so demonstrates transparency and reassures customers that you will safeguard their personally identifiable information.

Amazon has worked for decades to create a secure shopping experience, and businesses that sell in Amazon benefit from long-standing customer trust. When you host an ecommerce store on your own domain, you need to find a secure payment processing service and take reasonable measures to avoid putting customer data at risk.

Shipping and fulfillment at scale

It may be easy to pack and ship orders from your garage or spare room when you’re starting out in ecommerce. But as your business grows, order fulfillment becomes a much more time-consuming process. Sudden increases in orders can leave you scrambling to fulfill orders. Using a service like Fulfillment by Amazon can help reduce the strain on your business and keep customers satisfied.

Learn how to choose the right ecommerce fulfillment service to grow your business.
An array of tools representing common implements of ecommerce

What makes an ecommerce store successful?

A few key ingredients go into every high-performing ecommerce business. To set yourself up for success, focus on the product and your audience, first and foremost. Also, consider your brand messaging and your store’s user experience. You should also consider your fulfillment process, ensuring the timely delivery of products for maximum customer satisfaction. Let’s explore each of these critical components in detail.

Great products

High-quality, reliable products and ecommerce services are at the heart of successful online brands. Your product should solve an unmet customer need or challenge. You must also offer it at a compelling price point.

Product quality and pricing can make or break your ecommerce business. Do some market research to get a sense of what types of products your competitors are selling, as well as the market value of similar items.

A compelling brand story

Unique brands stand out, but a great brand takes more than a great product. To catch a customer’s attention, convey your business’s purpose and vision.

Ask yourself, why does your business need to exist? How will the products make your customers’ lives better? Your branding should convey the answers to these questions.

Spend time thinking about the look and feel of your brand. Dig deep and find a simple, powerful way to convey the origin and mission of your business.

Did you know?

You can create an Amazon shopping experience unique for your brand.

A+ content helps businesses showcase their brand story and product features using rich text and images on the Amazon detail page to help drive conversion, and potentially increase traffic and sales.

A focus on the customer

Define your ideal audience to help attract loyal and enthusiastic customers. Who do you want to serve with the products? Direct your marketing efforts accordingly.

Once your business gains steam, keep the momentum going by considering who will be moved by your brand story. Instead of chasing after buyers who don’t need what you’re selling, focus your efforts on an audience that will appreciate your brand.

A smooth online experience

Online stores should be user friendly. When the online experience of a store is well-designed, making a purchase feels effortless. If customers have to jump through too many hoops, they will abandon carts before completing transactions, and sales could suffer.

Successful ecommerce stores keep the spotlight on products by streamlining the checkout process. Remove any unnecessary steps, make your user experience intuitive and straightforward, and bask in the glow of happy customers.

Timely order fulfillment

Customers want speed and efficiency, especially when shopping online. No matter what you sell, customers want purchases delivered intact and on time.

Fulfillment is the process of getting products to customers. It can include sourcing products, storing and packaging orders, handling returns, and maintaining customer communication. Successful ecommerce shops pay careful attention to the fulfillment process and make sure they have enough product on hand to fulfill their orders, even during their busiest seasons.
Have an ecommerce idea? Learn how you can go from thinking about an online store to launching your business on Amazon. Get access to more than 300 million customers worldwide, including 200 million Amazon Prime members who like to shop on Amazon. (source)

FAQ: Ecommerce

Get answers to the frequently asked questions about ecommerce
What is ecommerce?
Ecommerce is a method of buying and selling goods and services online. The definition of ecommerce business can also include tactics like affiliate marketing. You can use ecommerce channels such as your own website, an established selling website like Amazon, or social media to drive online sales. Some ecommerce businesses operate on a 100% digital basis, while others use ecommerce to complement a brick-and-mortar store or grow established brands.
What is an ecommerce business?
An ecommerce business uses digital methods to sell products and services to customers. Ecommerce businesses can be online-only or have a physical presence as well. Selling to customers online typically requires a website or digital storefront, plus a way to process payments digitally and ship orders to customers.
What is ecommerce marketing?
Ecommerce marketing is a set of strategies you can use to direct customers to products and services available online. For example, you can use social media marketing to attract shoppers to an online store. Or if you’re using an ecommerce solution like Amazon, you can advertise products using paid product listing ads (PLAs).

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