What is ecommerce? Definition, types, examples, benefits

What is ecommerce?

Ecommerce is the buying and selling of goods and services via the internet, and the transfer of money and data to complete the sales. It’s also known as electronic commerce or internet commerce.

Online selling has changed tremendously since it began; the evolution and history of e-commerce is fascinating – and it’s advancing at an even quicker pace today.

Today, questions about e-commerce usually center around which channels are best to execute business online, but one of the most burning questions is the appropriate spelling of e-commerce.

The truth is, there isn’t any one spelling or abbreviation of electronic commerce that’s right or wrong, and it usually comes down to preference.Here’s a few variations of how e-commerce is spelled:

e-commerce
E-commerce
ecommerce
Ecommerce
eCommerce
e commerce

(In other words, “what is e-commerce” is far easier to answer than how to spell it, so we may have to agree to disagree on the proper spelling).

In this guide, we’ll cover nearly everything you wanted to know about electronic commerce:

How does ecommerce work?

The process of buying and selling goods and services online typically consists of the exchange of data or currency to process a transaction involving more than one entity or individual.

E-commerce allows a customer to place an order via online stores, websites, or social channels. After the customer places an order, the order details are relayed to a central backend system – an e-commerce platform, which facilitates or performs several tasks, including:

Receiving the order
Updating stock or inventory levels and confirming if there’s sufficient stock
Processing the payment for the order
Confirming adequate funds were received to fulfill the order
Notifying the customer that the order was successfully processed
Notifying the shipping department for the order to be shipped to the customer, or access to the service to be granted

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Types of e-commerce: Electronic commerce business models and examples

As commerce continues to evolve, so do the ways that it’s conducted.

The most traditional types of e-commerce business models and examples of how they work include:

Business to Consumer (B2C): B2C e-commerce is the most popular e-commerce model. Business to consumer means that the sale is taking place between a business and a consumer, like when you buy something from an online retailer.
Business to Business (B2B): B2B e-commerce refers to a business selling a good or service to another business, like a manufacturer and wholesaler, or a wholesaler and a retailer. Business to business e-commerce isn’t consumer-facing, and usually involves products like raw materials, software, or products that are combined. Manufacturers also sell directly to retailers via B2B electronic commerce.
Direct to Consumer (D2C): Direct to consumer e-commerce is the newest model of ecommerce, and trends within this category are continually changing. D2C means that a brand is selling directly to their end customer without going through a retailer, distributor, or wholesaler. Subscriptions are a popular D2C item, and social selling via platforms like InstaGram, Pinterest, TikTok, Facebook, SnapChat, etc. are popular platforms for direct to consumer sales.
Consumer to Consumer (C2C): C2C e-commerce refers to the sale of a good or service to another consumer. Consumer to consumer sales take place on platforms like eBay, Etsy, and Fivver.
Consumer to Business (C2B): Consumer to business is when an individual sells their services or products to a business organization. C2B encompasses influencers offering exposure, photographers, consultants, freelance writers, etc.
Business to Government (B2G): Also known as business-to-administration (B2A), business to government involves the sale of goods and services between the business sector as a supplier and a government entity as a customer. For example, government agencies may orders goods or services from external third-party contractors for cleaning and maintaining of public spaces like parks.
Consumer to Government (C2G): Also called consumer-to-administration (C2A), consumer to government enables consumers to provide feedback or request information regarding public agencies directly to the government administration or authorities. Examples include paying an electricity bill or taxes through a government website.

Types of e-commerce

Types of goods and services you can sell through an e-commerce business

Three types of goods and services you can sell online:

Physical goods
The sale of physical goods is the exchange of monetary value for the purchase of goods that are tangible and have physical mass, for example, merchandize. Physical goods include both durable (think: cars, TVs, furniture) and non-durable goods (e.g., food and beverages).
Digital goods
The sale of digital goods involves the exchange of monetary value for purchase of good that are intangible and exist in digital form, such as digital media like audio files, video files, and e-books.
E-commerce services
The sale of e-commerce services involves the exchange of monetary value in return for value to customers that want to achieve specific outcomes. Put another way, a service is a means of delivering value to customers by facilitating specific outcomes that customers expect to achieve. Examples of e-commerce services include transportation, healthcare, and education.

What is e-commerce-business: Examples of ecommerce revenue models

An e-commerce business is a business that exchanges or sells products and services online. Everyone from independent freelancers to small businesses to the largest of corporations can benefit from the ability to sell their goods and services online at scale.

Following are some the most common types of e-commerce-business revenue models:

Retail: Retail e-commerce is the sale of products or services through an online store directly to a consumer without an intermediary. This ecommerce delivery model is also referred to by other terms such as online retail, e-tail, electronic retail, or e-retail.

Drop shipping: Drop shipping is the sale of products that are manufactured and shipped to consumers via a third party. The key difference from the retail ecommerce delivery model is that the selling party doesn’t stock or own inventory.

Digital products: These are downloadable items like templates, courses, e-books, software, or media that must be purchased for use. Whether it’s the purchase of software, tools, cloud-based products or digital assets, these represent a large percentage of ecommerce transactions.

White labeling: The white label business model involves a company selling products with its own branding but manufactured by others. After a customer places an order, the electronic commerce company receives the white labeled product, applies their branding and packaging, then delivers the product to the customer.

Wholesaling: Wholesaling involves products sold in bulk. Wholesale products are usually sold to a retailer, who then sells the products to consumers.

Private labeling: Private labeling is a suitable approach for companies that may not have upfront capital or don’t have their own manufacturing space to produce goods. Typically, private label ecommerce businesses send their plans to a contracted manufacturer, which manufactures the product. The manufacturer, also referred to as Original Equipment Manufacturer (OEM), may also have the ability to ship directly to a customer or ship directly to the company receiving the order.

Services: These are skills like coaching, writing, and influencer marketing, that are purchased and paid for online.

Subscription: A popular D2C model, subscription services are recurring purchases of products or services on a regular basis.

Crowdfunding: Crowdfunding allows sellers to raise startup capital in order to bring their product to the market. Once enough consumers have purchased the item, it’s then created and shipped.

Benefits of e-commerce and the disadvantages of electronic commerce

Online commerce offers a plethora of benefits, from selling everywhere to personalized experiences that drive loyalty – and electric commerce provides a 24/7 storefront.

Let’s dive into the top benefits of e-commerce:

Convenience & accessibility. E-commerce can occur 24/7; for this reason, it provides customers with the best in both convenience and accessibility. They can find what they need, when they need it, and directly from their mobile or desktop devices. This level of convenience and access translates into sales and revenue opportunity round the clock for electronic commerce businesses.
Increased selection of products. Retail brands have the flexibility to offer a wider selection of products through their online store online compared to their physical brick-and-mortar stores. Many retail brands also offer consumers access to exclusive inventory and promotional offers that aren’t available elsewhere.
Lower start-up cost. Compared to traditional retail stores, pure-play e-commerce businesses can avoid a lot of upfront start-up costs associated with running physical stores such as rent, inventory, and in-store headcount. However, they can have warehouse costs and shipping costs.
International or cross-border sales opportunities. As long as a customers can place an order online and the e-commerce store can capture the revenue from the sale, then ship the product or service to the customer’s location, online stores aren’t limited by geographic location as brick-and-mortar stores are. An ecommerce store allows your business to reach more customers, globally — maximizing selling potential.
Easily retarget customers online. E-commerce stores regularly use retargeting as a way to attract and retain existing customers, or acquire new look-a-like customers. With retargeting, you can either target your existing customers, or your most profitable customers with products that are similar to the ones they love, or complement their past purchases. Retargeting is also a strategy used by online stores to recover abandoned carts.
Scalability with lower operational costs: As the customer base grows, brick-and-mortar retail operations are forced to either relocate to a larger location or expand their physical store footprint, all of which comes with significant costs. In contrast, an e-commerce platform can be equipped to handle high traffic volume and sales spikes, enabling an e-commerce businesses to scale with increased inventory and order fulfillment.
Delivery personalized experiences. E-commerce businesses can personalize everything from onsite search to dynamic pricing and curated product recommendations. With an AI-powered e-commerce platform, you can upsell, cross-sell, and present products that customers are most likely to be interested in, thereby increasing revenue-per-customer
Access to new technologies: With progressive enhancements to e-commerce platforms and technologies, you can always find ways to streamline your e-commerce business operations to save time and money. In contrast, there are limitations to what technology can do to streamline physical stores. Electronic commerce has the upper hand in its ability to leverage technology to streamline operations, market products, improve team collaboration, and provide faster customer service.

In comparison to a brick and mortar store, an ecommerce business has disadvantages, which include:

Limited interactions with customers. If customers have questions or an issue with a product they purchased, they can visit a physical store and speak directly with a store manager or customer-service rep to address their issue by returning or replacing the product. Ecommerce business are can’t provide direct in-person customer service and support. Some e-commerce websites employ online chat or click-to-call features to reach a live person, but it’s not a standard practice.
No ability to try-and-buy. Visual representation of products on e-commerce stores using images or video cannot deliver the full experience a physical store is able to provide its customers. For example, at a departmental or a footwear store you have the ability to try it and then buy it.
Lack of instant gratification. With e-commerce, you must wait for the product to be shipped to you. While e-commerce businesses like Amazon have made significant investments to improve last-mile delivery by offering same-day delivery for some of its products, they can’t offer the instant gratification physical stores provide customers.
Unreliable technology and security breaches. E-commerce businesses are susceptible to website crashes, or websites needing to be taken down, especially in the event of a security breach compromising personal customer data. This leads to loss of sales and revenue while the electronic commerce store is down.
Stiff competition. Due to low barrier to entry and low start-up costs, competitors can easily enter the market selling the same or competing products at lower costs, thereby cutting into your margins and revenue. As a result, e-commerce business must be hyper-diligent in their marketing strategies to remain competitive.

Top examples of e-commerce companies

E-commerce accounts for trillions of dollars in sales every year. Today it’s almost inconceivable that a company wouldn’t be using a digital space to drive sales and bottom lines.

Here are some examples of global e-commerce companies in 2024:

Amazon: By far one of the largest e-commerce brands worldwide with nearly U.S. $575 billion dollars in sales for 2023. With a market capitalization of over one trillion US dollars, Amazon captures 37.8% of all online sales, according to Statista. Amazon prioritizes a personalized and customer-focused approach, with the goal of making each shopping experience unique and customer-centric. Amazon was one of the first to introduce a review system on its website in 1995, improving consumer trust and engagement by allowing users to provide feedback on individual products.
Alibaba: Launched in 1999, Alibaba is the most successful e-commerce retailer in China; it’s sometimes referred to as the “Amazon of China.” Alibaba manages a network of delivery firms through Cainiao that can process up to 30 million items per day. Under the Alibaba Group umbrella, it boasts the largest B2B (Alibaba.com), C2C (Taobao.com), and B2C (Tmall) marketplaces across the globe.
Prosus: Based in the Netherlands, Prosus N.V. stands out as a top global e-commerce brand with a diverse portfolio that spans online classified ads, payments and fintech, edtech, and food delivery. Prosus prioritizes its customers and local communities, supporting entrepreneurship, investing in local talent, and nurturing businesses in dynamic markets to foster sustainable value and make a positive societal impact.
Booking.com: Based in Amsterdam, Booking.com is a market leader in the travel industry, known for its simple, user-friendly platform that offers a 24/7 online booking system. The website streamlines the process of finding hotels, enhancing the booking experience with tools that match users with services. The site offers discounts, promotions, and price guarantees. Booking.com operates as a subsidiary of Booking Holdings, an American travel technology company.
Uber: Starting as a ride-hailing app in 2009, Uber rapidly expanded into a global e-commerce brand, operating in about 70 countries and completing an average of about 26 million rides per day in 2023. The mobile app’s ease of use for both personal and business mobility needs, coupled with customer support and a commitment to enhancing the ride experience through community specialists, has helped Uber build and sustain a global customer base of 150 million users. Expanding into food delivery and freight, Uber now operates in the healthcare space by allowing organizations to arrange rides and services for patients and caregivers. Additionally, Uber has committed to an ambitious goal of becoming a zero-emission platform by 2040, with 100% of rides taking place in zero-emission vehicles.

What’s hot: The ecommerce trends changing how we buy, sell, and consume

As they say, what got you here won’t get you there. Success will depend on how an electronic commerce business adapts to buyer preferences that are constantly changing.

Here are the top e-commerce trends you need to know in 2024:

Unified omnichannel experiences: Seamless omnichannel experiences will make or break online retailers in 2024. Seventy-three percent of retail consumers shop across multiple channels, and retailers who use three or more channels increase customer engagement 251% more than single-channel retailers.
Artificial intelligence: AI is revolutionizing e-commerce; it’s no wonder that 97.2% of businesses are investing in big data and AI. Furthermore, 91% of top businesses report having an ongoing investment in AI—which they’re hoping to increase.
Social commerce: Social commerce drives massive engagement in 2024: 96.9 million people in the U.S. shop directly on social media, and 83% of Gen Z consumers say their shopping starts on social media. It’s expected that social commerce will reach $2.9 trillion by 2026 ; in other words, the time for retailers to get social is now.
Sustainability: Consumers are increasingly seeking and prioritizing eco-conscious options, willing to pay premiums for sustainable goods and services. Yet 60% are wary of “greenwashing,” suspecting many companies merely pretend to be sustainable, as per Mintel’s latest report.
Hyper personalization: Consumers expect personalized experiences at every step of the journey, including customer service touchpoints. Their personal preferences, transaction history, and past service interactions should all inform how you engage with them. According to CMSWire, hyper-personalization is a fast emerging trend that’s expected to accelerate this year, primarily driven by advances in AI and ML.
Voice search: Smart speakers and assistants become even smarter, and consumers are using them more consistently. About 40% of US internet users use a voice assistant at least monthly. Major retailers like Walmart have already started making it possible for customers to place orders directly through smart speakers, and more are in the process of doing so.
Mobile-first UX design: 91% of consumers make online purchases on their smartphones. In 2024, m-commerce is expected to account for 40.4% of all e-commerce sales. Looking ahead, mobile commerce is expected to account for $710 billion , or 10.4% of all retail transactions by 2025. Mobile-first experiences are no longer just a nice-to-have; they’re table stakes.
Inflation and redefining value: Inflation continues to rank high on everyone’s mind. As consumers tighten their budgets and likely curb online spending, retailers should consider offering “basic” product options, as well as bundled and tiered service packages. This can make all the difference for the price-sensitive consumer.
ROPO (research online, purchase offline) + BOPIS (buy online, pickup in store): Consumers are increasingly blending their buying journeys across online and offline channels, expecting a seamless omnichannel experience. Trends like ROPO and BOPIS aren’t new, but they present challenges for retailers in tracking how virtual user experiences translate into physical sales. In 2024, retailers are investing in customer data platforms (CDPs) to boost their omnichannel capabilities.
AR and VR-enhanced shopping: A big drawback to online shopping has been the inability to try on clothing before purchase. Augmented reality and virtual reality technologies have transformed this, enabling shoppers to virtually try on everything from clothes to makeup using their smartphones. A survey by Snap/Publicis Media reveals that 80% of shoppers feel more confident in their purchases when using these technologies, and 66% of those who use AR are less likely to return their purchases.
Privacy and transparency: E-commerce customers like personalized experiences, but don’t want to risk their personal data and privacy. Gartner expects that by the end of 2024, 75% of the world’s population will have its personal data covered under privacy regulations. Companies found in breach of compliance will face hefty fines and legal consequences. Data privacy and transparency must be at the forefront of any e-commerce personalization or CX strategy.
“Human as a premium”: In the world of digital commerce, as business seek hyper-growth by adopting emerging technologies like AI, there’s a growing appreciation for the human touch. According to a report by Mintel, 58% of US consumers says that communicating with an actual human is what makes interactions with salespeople and customer service reps a positive experience. The report predicts that in the coming years, we can expect to see an emerging trend of “human-as-a-premium.”
Direct to consumer: The US market for DTC e-commerce is expected to reach USD 213 billion in 2024. As consumers increasingly favor brands offering easy interactions with better rewards or pricing, more brands and retailers are planning to optimize their direct-to-consumer experiences to collect high-quality data, improve personalization, and foster ongoing loyalty.
Subscription commerce: Subscription models remain popular, offering consumers the ease and convenience of automation while providing e-commerce retailers with predictable, ongoing revenue; global subscription e-commerce is expected to reach $904.2 billion by 2026.

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Looking back and forward: The future of e-commerce evolution

In the early days, electronic commerce was mainly driven by the B2C model, with retail as one of the early adopters. Apart from novelty, convenience played a major role in driving demand. Multiple players entered the field, intensifying the competitive landscape. Companies started to distinguish themselves through wider product selection and more innovative services.

After retail, the service sector was the next driver of e-commerce growth. There’s a wide range of services currently offered through the internet, including banking, insurance, travel and hospitality, education, media and entertainment, jobs and career sites, real estate, and broker services.

The global B2C e-commerce market, valued at $3.67 trillion in 2020, is expected to expand at a compound annual growth rate of 9.7% from 2021 to 2028. Increasing digital dependency, the convenience of online shopping, and a fast-growing digital population will help the electronic commerce boom continue.

B2C businesses today need an e-commerce solution with AI capabilities, which allow them to launch online stores in a flash. Plug-and- play with minimum coding and low maintenance are key requirements, along with a progressive web store optimized for mobile, tablet and desktop, which enables companies to create their own intuitive mobile apps in one click.

The pandemic forced B2B companies, which have historically relied on in-person sales, to use digital options. This gave rise to more B2B e-commerce solutions, which redefine buyer-seller interactions. B2B e-commerce is now much more transparent, efficient, and swift.

The other major factor in B2B electronic commerce growth is that 44% of millennials make buying decisions, while 33% make recommendations or otherwise influence the purchase process. In other words, the technologically adept millennial B2B buyer is calling the shots.

The market potential of B2B e-commerce is huge. Globally, the B2B ecommerce market was worth $12.2 trillion in 2019, having grown from $5.8 trillion in 2013, according to Statista. Double-digit growth is predicted for B2B ecommerce sales through 2024.

For B2B e-commerce to fulfill its potential, companies need an electronic commerce platform with these capabilities:

Robust, flexible, composable: Many companies operate in multiple business models, from B2C to B2B to B2B2C and various combinations. The solution should address all such scenarios in a single platform, providing flexibility to opt for headless commerce and traditional e-commerce and the ability to scale up without having to upgrade.
Integration: Easy, seamless, and real-time integration with existing cloud and on-prem, legacy applications.
Omnichannel personalization: An omnichannel platform with cloud-native architecture to provide personalization through context-driven services to help define customer segments based on intuitive conditions.

Transcending boundaries and distance, e-commerce digitalized the world into a single platform. From the initial spark in 1969 with the founding of CompuServe, e-commerce’s story is one of astounding growth fueled by incredible innovation – and it’s certain to keep growing in new and fascinating ways.

E-commerce everywhere.
Fast. Personalized. Shoppable.
It starts HERE.

Frequently asked questions (FAQs):

What does “online” mean?

What is commerce?

What is an e-commerce business?

What is an e-commerce website?

What is an e-commerce store?

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Jenn Vande Zande

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