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  • Writer's pictureRalph

What is Ecommerce?

People shopping using mobile phone

You’re on this page because:

One, you’re researching different online businesses to start. Two, you want to deepen your understanding of what eCommerce means. Third, you want to familiarize yourself with the term.

No matter why you are here, one thing is sure; you want to learn about the ins and outs of the industry. Thankfully, that’s what this piece is for – to let you into everything you need to know about e-commerce.

What is Ecommerce?

The meaning of eCommerce can be pieced together from its name — e for electronics and commerce for activities that involve buying and selling.

So, E-commerce is any transaction that takes place over an electronic medium, usually on the internet.

Interestingly, e-commerce covers a wide range of businesses. From retail, through to digital platforms, to auction sites, and websites focused on B2B transactions.

Ecommerce enables you to have a global reach. To sell or buy without a time limit – you can log in online at any time to conduct a transaction with someone on the other side of the globe. Care should be taken though, not to confuse e-commerce with e-business. While the former refers to buying and selling services and products over the internet; the latter refers to the full spectrum of operating a business on the internet.

Ecommerce had grown rapidly since the first successful transaction in 1994 when a young man sold a CD to his friend through his website NetMarket – this transaction indeed marked the beginning of conducting transactions over the internet. Since then, the industry has grown by leaps and bounds. According to the online data website, Statista e-commerce is expected to hit the $4.135 trillion mark that’s only for the retail sector.

Types of Ecommerce

Ecommerce is categorized based on the kind of clients the business focuses on and the business model it adopts.

Depending on buyer type, an e-commerce business can be:

Business-to-Business – Here, e-commerce focuses on other companies. An excellent example of a B2B e-commerce business is a Chinese website which focuses on selling to businesses.

Another perfect example is a construction material company selling their products to Architects and home designers through their website.

Business-to-Consumer – These are businesses that sell directly to consumers. B2C companies are prevalent, and usually the website you’d go to when shopping online. An excellent example of B2C e-commerce is Amazon.

Consumer-to-Business – This is an e-commerce platform that enables consumers to offer their services and products to businesses. Freelance marketplaces fall into this category.

Consumer-to-Consumer – A business that facilitates peer-to-peer buying and selling. Think of the eBays of the world.

Other types of e-commerce you could find in this category include Government-to-Consumer, Consumer-to-Government, and Business-to-Employer.

Business model-based types of e-commerce

Now, depending on its financial and business model, an e-business can be classified as:

Affiliate eCommerce – You’re not selling any product or services directly; instead, you direct the buyer to another website where they finally pay for the product. Commission junction, WarriorPlus are few examples of affiliate-based e-commerce.

Membership – In this business model, what you’re selling is membership into exclusive groups where members receive high-impact information or products you can’t get anywhere else.

Dropshipping – is an e-commerce model where you don’t owe any inventory. The buyer purchases a product from a site and a third-party business fulfills the order.

Online shop with its products – this is the most widely recognized model. It’s probably the one you thought of when you read e-commerce. Online shops have the same characteristics as a physical store; only that, this time, it is online.

Marketplace – Another widely recognizable form of e-commerce model; Amazon fits right in with this model. A marketplace creates a platform for different sellers to offer their products and services on the website.

Buyers can browse through different products offered by several sellers before completing a purchase on the platform.

Want to improve your eCommerce conversion rates? Contact us today and see how we can help you make small changes that make a big impact.



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